Even the best FP&A professionals can slip up sometimes. It’s not about lack of skill—it’s often because of ingrained habits, outdated processes, or just being too deep in the numbers to see the bigger picture.
Financial Planning and Analysis (FP&A) is all about helping businesses make smarter financial decisions, but certain missteps can weaken its impact. Let’s break down seven common mistakes FP&A experts make—and how to avoid them.
1. Overcomplicating Financial Models
We get it—building complex financial models feels like an accomplishment. But sometimes, less is more.
Where Things Go Wrong:
- Models become so intricate that only the creator understands them.
- Extra variables and complex formulas don’t actually improve accuracy.
- Decision-makers don’t trust (or even use) the model because it’s too convoluted.
A Better Approach:
Simplicity wins. Focus on key drivers, keep models transparent, and document assumptions clearly. A model is only valuable if it helps make better decisions. If executives don’t understand or trust it, they won’t use it.
Real-world example: A tech company’s FP&A team built an ultra-detailed revenue forecast with 30+ variables. The executives ignored it and relied on a simpler five-driver model that actually helped them make decisions.
2. Sticking Too Much to Historical Data
“We’ve always done it this way” is one of the most dangerous phrases in FP&A. Just because something worked in the past doesn’t mean it will work in the future.
Where Things Go Wrong:
- Assuming past trends will always continue.
- Clinging to outdated processes that don’t fit the current business model.
- Resisting new forecasting techniques or data-driven insights.
A Better Approach:
History matters, but it shouldn’t be your only guide. Challenge old assumptions, try zero-based forecasting, and incorporate forward-looking indicators.
Real-world example: A manufacturing company kept using SKU-level forecasting even after shifting to a subscription-based model. Their forecasts missed the rapid growth in recurring revenue because they were stuck in an old way of thinking.
3. Obsessing Over Precision Instead of Accuracy
FP&A professionals love numbers—but sometimes, they love them too much. Spending hours fine-tuning a forecast down to the dollar doesn’t necessarily make it more useful.
Where Things Go Wrong:
- Over-focusing on tiny details that don’t impact big decisions.
- Presenting unrealistic precision (e.g., predicting revenue as $10,254,387 instead of a simple $10.3M).
- Missing the bigger picture while perfecting minor variables.
A Better Approach:
Understand that forecasts are never 100% accurate—what matters is getting the key drivers right. Use ranges instead of fixed numbers and communicate confidence levels. Real-world example: A retail FP&A team spent weeks perfecting expense forecasts for each store—down to the dollar. Meanwhile, they completely missed a major shift in customer shopping habits that cost the company millions.
4. Not Building Strong Business Partnerships
FP&A isn’t just about numbers—it’s about influencing decisions. Yet, many FP&A teams stay stuck in finance silos instead of embedding themselves into the business.
Where Things Go Wrong:
- Speaking in finance jargon instead of business language.
- Staying in reporting mode rather than driving strategic discussions.
- Not collaborating enough with other departments.
A Better Approach:
Get out from behind the spreadsheets. Build relationships with business leaders, understand their challenges, and translate financial insights into real-world impact.
Real-world example: A software company’s FP&A director had analysts spend one day per week working directly with product teams. The result? More relevant insights and a seat at the table when key investment decisions were made.
5. Ignoring Operational Drivers
Financial results don’t just happen—they’re driven by operational activities. Yet, many FP&A teams focus too much on financial metrics without understanding what’s driving them.
Where Things Go Wrong:
- Treating financial results as the end-all-be-all without connecting them to real business activities.
- Not incorporating operational KPIs into financial planning.
- Missing early warning signs hidden in operational data.
A Better Approach:
Partner with operations teams and build driver-based models. Look at leading indicators—not just financial outcomes—to predict future performance.
Real-world example: A healthcare company’s FP&A team revamped their forecasting process by using patient flow data instead of purely financial trends. The result? They spotted revenue shifts before they hit the financial statements.
6. Over-Relying on Technology
Yes, automation and AI-powered tools can make FP&A more efficient. But they don’t replace critical thinking. Some teams assume that buying the latest finance tool will fix their forecasting problems—but it won’t if the underlying approach is flawed.
Where Things Go Wrong:
- Assuming a new software platform will solve all FP&A challenges.
- Automating broken processes instead of improving them first.
- Losing sight of the “why” behind the numbers because of too much reliance on tech.
A Better Approach:
Technology should support decision-making, not replace it. Focus on business understanding first, then use tools to enhance—not dictate—your process. Real-world example: A consumer goods company spent millions on an advanced planning tool. The problem? Their forecasting methodology was flawed, so the tool just automated bad predictions faster.
7. Neglecting Talent Development
Many FP&A teams focus so much on technical skills that they forget about the softer—but equally critical—skills like communication, influence, and business acumen.
Where Things Go Wrong:
- Hiring primarily for technical ability without looking at business skills.
- Training focused only on tools rather than strategic thinking.
- Not rotating team members to build a broader understanding of the business.
A Better Approach:
Develop well-rounded FP&A professionals. Invest in training beyond Excel and Power BI—think storytelling, negotiation, and cross-functional collaboration. Give team members exposure to different areas of the business.
Real-world example: A global industrial company created an 18-month rotation program where FP&A analysts worked in different departments before returning to finance. The result? A more strategic, business-savvy FP&A team.
The Future of FP&A: Thinking Beyond the Numbers
The best FP&A professionals don’t just crunch numbers—they drive business impact. That means:
- Prioritizing strategic insights over technical perfection.
- Partnering with business leaders instead of just reporting to them.
- Using history as a guide—not as a limitation.
- Embracing technology while keeping critical thinking at the core.
Avoiding these seven common mistakes can take FP&A from a financial reporting function to a true strategic powerhouse.
Need help optimizing FP&A for your business? Let’s talk! Reach out today, and let’s take your financial planning to the next level.