Top 10 FP&A Best Practices For 2025

Gartner’s 2024 survey reveals that CFOs in 2025 view financial planning, budgeting, and forecasting as their second-most important priority, with metrics, analytics, and reporting taking the top spot. Access to centralized, real-time, and coherent data is the key to achieving these priority goals.

 (Source)Gartner survey displaying the percentage of CFOs selecting a priority as critical 

However, according to the 2025 AFP FP&A Benchmarking Survey report, bad data remains a major financial planning and analysis (FP&A) challenge for professionals. 

While bad data means unreliable data for 61% of the respondents, 60% defined it as the lack of accessible data.

While businesses understand the importance of having the right insights, they still struggle to extract them. The findings of a 2022 Accenture report show that most finance teams spend 85% of their time on labor-intensive tasks like preparing data and only 15% of their time on generating insights from that data. This lack of efficiency limits visibility into data and insights, preventing businesses from becoming agile.

Without financial agility, companies struggle to adapt to changes quickly and risk losing opportunities to competitors.

Hence, “good” data—clear, consistent, and coordinated data—is vital to developing a thriving FP&A approach. Agile finance teams have their entire data infrastructure in order and can respond quickly to changing market conditions and business needs.

In this article, we'll explore FP&A best practices, focusing on leveraging quality data and efficient, automated processes. With the right tools, finance teams can anticipate risks and seize opportunities more effectively.

Top 10 FP&A Best Practices

Agile financial planning brings together technological integrations, effective collaboration, and enhanced decision-making. It empowers your business to adapt to changes quickly, improve cash flows, make more strategic decisions, and manage risk better.

These 10 FP&A best practices boost agility and drive your company’s growth:

1. Measure the financial impact of strategic objectives

What gets measured gets managed. Measuring impact turns strategy into actionable, trackable results. Gartner’s data reveals that 53% of organizations fail to fully achieve their strategic objectives, highlighting how a planning issue can quickly become a critical business crisis.

When companies establish a clear roadmap and actively track their progress, they set themselves up for greater success. Foster a culture of analytics by setting annual targets and regularly measuring performance against them. Keeping these metrics at the forefront enables your organization to align projects and operations with your FP&A goals. 

This approach encourages employees to integrate analytics into decision-making, using data to guide discussions and assess initiatives in line with company objectives. The result? Smarter planning, better collaboration, and a stronger business overall.

Let’s say your objective is to expand your e-commerce presence. Your FP&A teams would evaluate the costs and expected revenues of new marketing campaigns or product launches to determine their viability. 

This analysis helps decide funding amounts and allocate departmental budgets. You can also gain key insights, like determining how much of a discount to offer during a product launch without compromising quarterly revenue goals.

Further, impact measurement allows finance teams to reallocate resources for maximum returns. If a product line is underperforming, financial analysis can guide whether to invest further in improvements or phase it out altogether.

How to improve the process with data:

• Measuring the real-time financial impact of strategic objectives keeps you on track to meet goals.
• Ongoing evaluations enable timely strategy adjustments and ensure continuous progress.

2. Identify and gain budget approval for the required resources

Consider a technology firm planning to invest in research and development (R&D) for a new software product. The FP&A team conducts an analysis which involves the following steps:

• Identify Resources: The finance team determines the need for additional software developers, marketing specialists, and tools for project management.
• Budget Proposal: The team prepares a detailed budget that outlines costs associated with hiring, training, and software licenses.
• Approval Process: They present this proposal to senior management, highlighting how these investments will enhance innovation and market competitiveness.

An approved budget allows your firm to proceed confidently with its R&D initiatives. Without it, the project could have faced delays or cancellations, hindering growth. It maintains financial stability by preventing unnecessary expenses and permitting spending only within the approved limits.

Approval streamlines communication with senior management, stakeholders, and finance teams. Involving various teams in resource discussions fosters alignment on priorities.

How to improve the process with data:

• Cloud FP&A software like Limelight provides an Excel-like interface on the cloud allowing teams to improve their performance in a familiar environment that presents little to no learning curve. It streamlines budget reviews and approvals by up to 50%.
• Use clear, easy-to-interpret charts and tables to make data more actionable—leading to more meaningful discussions and faster approvals. Limelight, for example, visualizes your information in a variety of charts and dashboards which makes it easy for FP&A teams to spot trends and irregularities, unlocking valuable insights at a glance.
• Go beyond the numbers by providing context: highlight key insights, explain their significance, and demonstrate how they can drive better decisions and outcomes. FP&A software lets you “slice and dice” to visualize and explore your data in different contexts, and drill down on data points to gain clarity on the story behind the numbers.

3. Integrate FP&A with other departments

Every financial transaction (journal entry) should capture the amount and the vendor name—who the money is going to or coming from.

Why this matters:

• It’s like having a receipt with the store’s name rather than just a total amount, providing clearer context.
• When all transactions include vendor names (rather than blank or generic entries), the total accurately aligns with the company’s financial summary (trial balance).

This enables better tracking of spending patterns with specific vendors, improves forecasting accuracy by identifying trends in expenses, and shortens financial closing times by providing clear visibility into where the money is going.

How to improve the process with data:

• Seamless integration between FP&A and other departments is essential for maintaining accurate financials and ensuring strategic alignment across the organization. By connecting FP&A with teams like sales, operations, and marketing, businesses can eliminate silos and develop unified financial strategies that reflect the company’s overall goals. 
• Integrate your FP&A tool with the accounting system to automatically fetch error-free data. Automating these integrations keeps financial plans current, leveraging real-time data without the inefficiencies of manual data collection.
• When FP&A works closely with other teams—and leverages tools that facilitate seamless data sharing—financial planning becomes more accurate and efficient without disrupting daily workflows.

4. Develop a rolling forecast process

Rolling forecasts enable finance teams to maintain a forward-looking perspective, allowing businesses to adapt quickly to market shifts and internal changes. Unlike static budgets, rolling forecasts are updated regularly, providing the flexibility needed for better financial planning.

A study by the Aberdeen Group found that companies using rolling forecasts showed a 43% increase in revenue growth over a 24-month period versus companies that didn’t use rolling forecasts.

Companies using rolling forecasts showed a 43% increase in revenue growth

Here’s how to build an effective rolling forecast process:

1. Define the Forecast Period: Determine the duration of your rolling forecast, typically 12 months, though it can extend to 18 or 24 months. This period will be updated regularly.
2. Establish Key Metrics: Identify the key performance indicators (KPIs) that are critical for your business, such as revenue, expenses, cash flow, and other operational metrics.
3. Gather Historical Data: Collect past performance data to create a baseline for predicting future results.
4. Create Forecasting Assumptions: Develop assumptions based on historical trends and current market conditions to guide accurate projections.
5. Implement a Regular Update Schedule: Set a monthly or quarterly cadence for updating the forecast. At the end of each period, replace the completed month with a new one to maintain the forecast’s length.

Beyond improving flexibility, rolling forecasts also serve as an early warning system for potential risks and opportunities. For example, if forecasts indicate declining sales in a specific region, management can take proactive measures, such as launching targeted regional marketing campaigns, to mitigate the impact.

How to improve the process with data:

• Refine estimates with real-time data: Continuously adjust forecasts based on the latest financial and operational insights. Cloud-based FP&A software is transforming FP&A by enabling real-time data access, automation, and machine learning capabilities—key elements of FP&A best practices that drive faster results. 
• A modern FP&A platform serves as a centralized hub, seamlessly integrating with ERP systems to pull up-to-date financial data, ensuring a single source of truth.

5. Analyze the variance and uncover the story behind the numbers

Variance analysis compares actual results to budgeted figures. This helps identify where performance diverges from expectations. But simply noting that a variance exists is not enough. FP&A teams must dig deeper to understand why it happened. 

For example, if a manufacturing company budgets for a 10% increase in production output. However, at the end of the quarter, actual production only increased by 5%.

It signals a need to investigate further. This could involve analyzing market trends, operational issues, or unexpected costs. By uncovering the root causes, FP&A teams can implement corrective actions.

This is how the FP&A team conducts a variance analysis:

• They note a 5% unfavorable variance in production output.
• The team interviews production managers and discovers delays in raw material deliveries and equipment malfunctions.
• Based on this analysis, the finance team recommends diversifying suppliers and investing in maintenance for machinery.

Regular variance analysis also helps refine future forecasts. Investing in machines and suppliers not only addresses current issues but also sets the stage for improved performance in upcoming quarters.

How to improve the process with data:

• Cloud FP&A tools like Limelight help you instantly identify and understand discrepancies between your budget and actuals, so you can take corrective action quickly.

6. Focus on drivers, not details

Identifying the right drivers leads to actionable insights. Understanding which drivers matter most helps prioritize investments and initiatives without guesswork. Core business drivers often include sales volume, operating costs, and customer retention rates.

For instance, if a company discovers that customer retention rates significantly impact profitability, it can channel resources into improving customer service or loyalty programs.

How to improve the process with data:

• Leverage driver-based planning to extract granular insights. Identifying your company’s main operational drivers or activities enables financial forecasts to be made with more confidence and better accuracy.
• Advanced FP&A software helps streamline this process by offering benchmarking and tracking tools to monitor key drivers in real time.
• Another FP&A best practice is to utilize software that tracks your KPIs in real-time, helping you identify trends, adjust strategies, and make informed decisions in record time without sacrificing accuracy or larger strategic goals.

7. Link human resource and capital allocation plans

Integrating human resource (HR) planning with capital allocation ensures that staffing decisions support broader financial and strategic goals. When finance teams link workforce planning to key business initiatives, they can allocate resources more effectively, ensuring the right talent is in place to drive growth.

A critical part of this approach is evaluating the return on investment (ROI) of hiring decisions—not just in terms of costs but also in measurable business impact. This means assessing how new hires contribute to revenue growth, productivity gains, or operational efficiencies, helping finance leaders make data-driven staffing decisions that maximize value.

For example, consider a tech startup plans to launch a product, and the FP&A team is working with HR to understand the necessary headcount for this project. The team comes to the conclusion that the product launch requires five additional developers and two marketing specialists. 

The finance team then allocates a budget for salaries, training, and onboarding based on these needs. Following this, they set performance metrics to evaluate the hires based on project timelines and revenue targets.

Headcount modeling provides a clearer picture of future costs and revenues. For instance, if turnover rates increase, it impacts recruitment costs and productivity.

How to improve the process with data:

• Create your own headcount drivers or utilize Limelight's pre-built templates, for example. You can incorporate headcount scenarios into your financial planning using FP&A tools that automatically apply the right calculations to the right records, ensuring accuracy and saving you valuable time. 
• Capture hiring plans directly in FP&A tools, eliminating the need to chase down managers for updates.

8. Conduct “what-if” scenario modeling

Basic scenario modeling requires manual input of variables with linear calculations and comparisons. Besides being time-consuming, this provides only qualitative insights rather than precise numerical predictions. 

The lack of exact probabilities makes it difficult for decision-makers to gauge the likelihood of various outcomes accurately.

How to improve the process with data:

• Advanced tools like Limelight enable FP&A teams to model complex interdependencies that current scenario planning solutions don’t address.
• Analyze past data—sales figures, market trends, and customer behavior—in a consolidated manner for accurate predictive forecasting 
• Refine the model continuously with new data and insights to improve its accuracy 

9. Mitigate risk and uncertainty 

By identifying potential risks early, FP&A teams can craft fail-proof risk mitigation strategies. This proactive stance helps avoid costly surprises and ensures smoother operations.

Understanding risks saves time and resources on risky and unrewarding activities. FP&A can prioritize investments in areas with lower risk profiles or higher potential returns by testing the “what-if scenarios”, maximizing the overall effectiveness of financial strategies.

When finance teams actively manage risks, it builds trust among stakeholders. Investors and executives feel more secure knowing that potential challenges are being addressed systematically.

How to improve the process with data:

• Unify data from all internal and external sources in one place to have a holistic risk analysis, for example, using FP&A software.
• Uncover hidden patterns from structured and unstructured data with advanced analytics.

10. Anticipate management reporting changes

Anticipating changes allows FP&A teams to refine their reporting frameworks, ensuring they align with evolving strategies, market conditions, and regulatory requirements.

By staying proactive, finance teams can provide timely, accurate insights, allowing senior management to make informed decisions based on the most up-to-date data rather than outdated reports.

Cross-departmental collaboration plays a crucial role in this process. Engaging stakeholders in discussions about changes fosters transparency, promotes smoother transitions, and ensures alignment across the organization.

How to improve the process with data:

• Connect and merge data from all internal and external sources for consistent and comprehensive reporting. No more hunting for information. 
• Create updated, detailed reports without changing datasets manually. 

Reach Your FP&A Goals with Limelight 

Limelight helps businesses gain financial agility with robust FP&A features, enabling teams to adopt FP&A best practices for streamlined financial planning and analysis. Here’s how Limelight keeps you at the forefront of these practices.

• 360-Degree Data Visibility: Integrate data from sales, accounting, and CRM ERPs into a single platform, ensuring a unified source of truth. Build budgets, forecasts, and reports in real time, adhering to FP&A best practices by eliminating data silos and improving accuracy. Limelight ensures that all stakeholders work from the same reliable data, which fosters collaboration and drives better decision-making.
• Extract Actionable Insights to Identify Growth Drivers: Leverage customizable dashboards that provide instant insights into key financial metrics, helping teams follow FP&A best practices for data-driven decision-making. Visualize data in interactive formats to uncover trends and anomalies that might otherwise go unnoticed. Drill down into financial performance details to better understand true growth drivers and refine forecasts accordingly.

Limelight’s modern FP&A software dashboard

• Plan Better with Advanced Analytics: In January 2024, Limelight launched its analytical engine, designed to help teams develop multi-dimensional models that enhance financial planning, forecasting, budgeting, and reporting.  Supporting various budgeting models—including top-down, bottom-up, zero-based, and hybrid approaches—Limelight enables businesses to run what-if scenarios, model multiple outcomes, and navigate uncertainties more effectively.
• Ensure Compliance and Streamline Reporting: Generate detailed reports using pre-built templates or customize them to specific datasets, making it easier to maintain compliance and adhere to FP&A best practices. From high-level summaries to granular metrics, turn numbers into meaningful insights. Automate reporting schedules to reduce manual effort, giving your team more time to focus on strategic tasks.
• Accelerate Approvals and Shorten Closing Cycles: Enable seamless collaboration by sharing dashboards and reports with stakeholders for real-time analysis. Users can add comments and annotations directly within dashboards, fostering a more interactive and team-oriented approach to financial planning, accelerating approval processes, and shortening closing cycles.
• Take Faster, Informed Decisions with Rolling Forecasts: Don't rely solely on quarterly or year-end reports to measure performance. Limelight gives you visibility into real-time metrics and key growth drivers. With rolling forecasts, you can adjust projections using the latest data—improving agility and enabling proactive decision-making in response to market shifts. Regular updates help model various scenarios for both short-term and long-term goals, making planning more resilient and adaptable to change.

Adopt FP&A best practices with Limelight. Schedule your personalized demo today and streamline your financial planning.