Finance directors hear the term outsourced FP&A more and more, usually from a provider trying to sell it. This article explains what the service actually involves, when it makes sense, and what to check before you buy it.
FP&A in one paragraph
Financial planning and analysis is the part of finance that looks forward. Where the accounting team records what happened and closes the books, FP&A builds the budget, maintains the forecast, analyses variances, models scenarios and produces the reporting that the leadership team and the board use to make decisions. In a large company it is a department. In a business of £2m to £50m revenue it is usually a part of the financial controller's job that never quite gets the attention it needs.
What an outsourced FP&A service covers
A well-run outsourced FP&A engagement replaces that missing capacity. In practice it covers six things.
Budgeting. Designing and running the annual budget process so it takes weeks rather than months, involves the budget holders who will be accountable for it, and produces a budget the business recognises as its own.
Rolling forecasts. Re-forecasting the full year every month or quarter, starting from actuals and the drivers that explain them rather than from last year plus a percentage. This is the single most valuable habit a finance team can build, because it means the forecast is never more than a few weeks old.
Driver-based modelling. Building a model in which headcount, pricing, volumes, churn and utilisation connect to revenue, cost and cash. When an assumption changes, the effect flows through every statement. This is what makes scenario analysis possible: what happens to cash if hiring slips a quarter, or if a major contract renews at a lower rate.
Cash flow forecasting. A 13-week direct cash forecast reconciled to the bank, plus a 12-month indirect forecast tied to the P&L and balance sheet. For a lender or an investor, this is the number that matters.
Management and board reporting. A monthly pack that explains variance rather than just presenting it, with commentary written for directors rather than accountants.
Ad hoc analysis. Pricing decisions, make-or-buy questions, acquisition models, investment cases. The questions that arrive on a Tuesday and need an answer by Friday.
What it does not cover
Outsourced FP&A is not bookkeeping, month-end close, statutory accounts or tax. It sits on top of those. If your ledger is late or unreliable, the forecast will be too, and a good FP&A provider will tell you to fix the close first.
It is also not a fractional finance director, although the two are often confused. A fractional FD brings senior judgement, governance and a seat at the board table. Outsourced FP&A brings the models, process and reporting that an FD relies on. Many businesses need both, and they work well together.
Fractional versus project-based
Most outsourced FP&A runs as a fractional, retained service: a fixed number of days a month that covers the forecast cycle, the board pack and a reasonable amount of analysis. Some businesses instead buy a one-off project, such as a budget model build or a fundraising forecast, and then run it themselves. The project route is cheaper up front but models decay quickly without someone maintaining them. If nobody in the team has time to own the forecast every month, the retained model is usually the better value.
How it compares with hiring
A full-time FP&A manager in the UK costs somewhere between £60,000 and £90,000 once employer costs are included, more in London, and takes three to six months to recruit. They also need tools, data and a process, none of which come with the hire. A fractional FP&A service typically costs a fraction of that, starts within weeks, and brings its own models and process. The trade-off is that you are buying days rather than a person, so the service has to be well scoped.
The hire becomes the right answer when the planning workload consistently exceeds the fractional days, or when the business needs someone physically present in the finance team every day. A good provider will tell you when that point arrives and hand over cleanly.
Signs your business is ready
You are probably ready for outsourced FP&A if two or more of these are true:
- The budget takes more than two months and is out of date before it is approved
- The forecast is updated less than quarterly, or not at all
- Board meetings spend more time reconciling the pack than discussing what to do
- A lender or investor has asked for a forecast you could not produce quickly
- The financial controller is doing planning work at evenings and weekends
- Decisions about hiring, pricing or investment are made without a model
What to check before you buy
Ask who will actually do the work and what their finance background is. Ask to see a model they have built and whether it reconciles to a ledger. Ask who owns the models and the data at the end of the engagement; the answer should be you. Ask how they handle the technology: a provider who can only work in a spreadsheet will struggle once your data outgrows it, and a provider who only builds dashboards will miss the finance logic.
The best outsourced FP&A combines finance experience with the ability to build the tooling, so the forecast is not just well designed but reliably produced every month. That combination is what we offer at Profitcura, and it is what to look for wherever you buy.