How FP&A can drive shareholder value

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A great FP&A business partner drives shareholder value. This is one of the mantras of an influential finance professional with a seat at the decision-making table. But what does ‘driving value’ look like in day-to-day business? How can we be sure that this goal is being met when we are deep in the details of finance, planning, and reporting?

One of the challenges with all businesses, whatever their size, is ensuring that the purpose of the business is clear. Larger organizations will have their vision and mission front and center and strategies to build shared values and a common culture among their workforce. Smaller organizations may not have articulated their purposes, but they will have social values that they adhere to and an overarching need to survive and thrive.

But above all of these are the shareholders, the ultimate owners of the business who expect a return on their investment. For a listed company, the market tells you if the shareholders are not happy with the value being delivered. It’s the role of the Board to protect the value that is delivered to shareholders, and FP&A plays a key part in ensuring that the Board is satisfied and the business is fulfilling its purpose.

We are in an ideal position to make an impact. Drivers of shareholder value are granular and aligned with the data streams we analyze and report upon. An FP&A professional working at any stage of the data value chain will be able to identify individual underlying drivers and effect changes to build shareholder value.

Value Drivers

Over the next few weeks, we’re going to look at the four key areas where FP&A can drive shareholder value: Revenue growth, operating margins, asset efficiency, and the expectations of stakeholders.

• Revenue growth is a function of volume and price. FP&A is perfectly placed to identify the trends and bottlenecks on both sides of the equation. Driving shareholder value could be a question of managing the supply chain, analyzing product mix, easing the flow of cash, or improving business processes.
• Operating margins as a value driver can address every other line on the accounts from internal corporate services to marketing, cost of goods sold, and even efficient tax planning.
• Asset efficiency is drummed into accountants from training onwards, starting with inventory management which can be a quick win for some organisations. Managing fixed assets also falls under the remit of FP&A, and we are seeing the development of systems using emerging technologies for managing maintenance and obsolescence.
• Managing expectations may be the most contentious of these four, but possibly the most important. It encompasses governance, strategic planning, and effective reporting, but also addresses external factors. The world is changing and businesses can no longer push for profit at any cost. Corporate reporting has to take into account non-financial measures such as sustainability, emissions, ethical practice, and social responsibility.

The primary focus of driving value for shareholders is a return on their investment, but that return has to be delivered in a way that satisfies the sophisticated investor and meets the market’s behavioral expectations.

Diving deeper

We’re going to look at each of these areas in turn and discuss what are the granular elements of each value driver, how you can work with them, and what your next step should be to start building shareholder value and enhancing your effective business partnering. We’ll also be speaking to several FP&A professionals about their experiences of value creation.

What are the primary drivers that you focus upon for value creation? Has this short post inspired you to look closer at something you hadn’t previously considered? Let us know about your experiences in the comments.

This was the first article in our new series "How FP&A can drive shareholder value". Subscribe to catch the upcoming articles and continue reading below the previous series about the use of AI in FP&A.

An artificial intelligence on the FP&A team

Your AI is only as good as its data set

AI can improve data collection

AI can find new patterns and insights in data

Can AI write your management report for you?

Keep reading to catch our full previous series "It's time to fix management reporting" below.

It's time we fix management reporting once and for all

Here are eight steps to transforming your management report

What are the key messages in your management report?

How to build great slides for a finance presentation

How to structure your management reporting for maximum impact

The slideless monthly management meeting - do you dare?

Don't forget to check out our series "Building the FP&A team of the future". You can read all the articles below.

The FP&A team of the future

The key roles you need on your FP&A team

Re-inventing the modern FP&A leader

How to assess if your FP&A team is fit-for-purpose

How to recruit stellar FP&A professionals

How to boost collaboration in your FP&A team

Branding your FP&A team toward the business

Building a diverse FP&A team

Are you ready to build a world-class FP&A team?

Developing the potential of FP&A teams

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box” where you set the ambition for your transformation. You should join the Finance Business Partner Forum, which is part of the Business Partnering Institute's online community.

Great planners always plan with contingencies (the latest article in my series about the ten commandments of planning and forecasting)

Can't help falling in love FP&A (the last article in my series about charting the course for a successful FP&A career)

Can we trust the machine for financial planning and analysis? (the last article in my series "Planning (as we know it) is dead")

The secret sauce of FP&A transformation (the last article in the series "FP&A Transformation Talks")

How Finance should use its seat at the table (the last article in the series "The Unfair Advantage of Finance")

The ultimate guide to decision-making for finance professionals (the last article in a series about the decision-making process and how Finance should impact it)

The Mindset Change Checklist For Finance Professionals (the last article in a series about the mindset change that finance and accounting professionals should make to become business partners)

It's Time To Decide If You Want To Be A Business Partner (the last article in a series about the personality traits of business partners)

All Successful Business Partners Are "Leaders" (the last article in the series about our new capability model)

Should We Keep Talking About Business Partnering? (part of a 17-article series where we deep-dive into the WHY, WHAT, and HOW of business partnering by putting it on a formula)

Your Journey To Successful Business Partnering Explained

How To Create Value Through Business Partnering

Everyone Can Adopt A Business Partnering Mindset (part of a six-article series about FP&A Business Partnering)

From Business Partner To Working Within The Business (part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)

Is Your Product Optimized For Value Creation? (part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)

How Business Partners Turn Analysis To Insight (part of a case study series where I interview business partners about how they drive value creation using real cases)

The Future Of FP&A: Two Ways To Take The Reins

What Is The Accounting Profession Paradox?

What Defines A Finance Master?

The New Career Path For Finance Professionals

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How To Become A Finance Business Partner

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Anders Liu-Lindberg is the co-founder and a partner at Business Partnering Institute and the owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 11,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 235,000 followers and 290,000 subscribers to my blog. I am also an advisory board member at Born Capital where I help identify and grow the next big thing in #CFOTech. Finally, I'm a member of the board of directors at PACE - Profitability Analytics Center of Excellence where I support the development of new analytics frameworks that can improve profitability in companies around the world.