Building an FP&A Function from Scratch: Hiring, Tools and Operating Cadence

What FP&A Is and Why It Matters

The distinction between accounting and FP&A is one of the most important and most frequently misunderstood organisational questions in the finance function. Accounting is backward-looking: it records what happened, produces the statutory accounts, processes payroll, and ensures the business meets its compliance obligations. FP&A is forward-looking: it analyses what happened and why, produces the management information that helps leaders make decisions, and builds the models that allow the business to plan its future.

Both functions are essential. But they require different skills, different mindsets, and often different people. The finance professional who is meticulous, compliance-focused, and excellent at maintaining accurate ledgers is not necessarily the same person who is commercially curious, analytically confident, and able to build a credible financial model from scratch. The best controllers and the best FP&A analysts both describe themselves as "finance people," but they do very different work.

Most seed-stage businesses have one or two finance people who do everything: they process invoices, run payroll, produce the monthly accounts, and also provide whatever financial analysis the board requires. This works up to a point. The inflection point at which it stops working is typically somewhere around Series A: when the board starts requiring more rigorous forecasting, when the business has multiple revenue streams that need separate analysis, when the CFO is being asked to model the financial impact of commercial decisions in real time, and when the monthly accounts alone no longer provide adequate visibility of the business's trajectory.

What FP&A Does and Does Not Do

Being clear about the FP&A function's scope matters for hiring, for team design, and for setting expectations with the board and CEO. The following activities belong in FP&A:

• Monthly management accounts analysis and commentary: FP&A does not close the month (that is accounting's job), but it does analyse the closed accounts, explain the significant variances against budget and prior year, and produce the narrative commentary that goes to the board.
• Budget and reforecast process: FP&A owns the annual budgeting process and the quarterly reforecast cycle. This includes coordinating department inputs, challenging assumptions, building the integrated financial model, and producing the final board-ready budget pack.
• Scenario modelling: when the business is evaluating a significant commercial decision — entering a new market, hiring a large cohort, raising a new round, launching a product — FP&A builds the financial model that quantifies the upside, the cost, and the risk.
• KPI reporting: FP&A builds and maintains the KPI dashboard that gives the leadership team real-time visibility of the business's key metrics: revenue, churn, CAC, LTV, headcount, cash runway.
• Ad-hoc financial analysis: commercial questions (should we discount this customer's contract? What is the payback period on this marketing campaign? What does the unit economics of the new product look like?) are answered by FP&A.

FP&A does not process payroll, manage accounts payable or accounts receivable, prepare the statutory accounts, file tax returns, manage the audit, or handle treasury operations. These are accounting function responsibilities. Blurring this boundary in either direction creates inefficiency: FP&A analysts doing bookkeeping are underutilised; accounting staff attempting strategic financial modelling are typically out of their comfort zone.

When to Build an FP&A Function

The most common question is: when is the right time to make the first dedicated FP&A hire? The answer depends on the complexity of the business and the demands of the board and investors, but a useful working rule is that FP&A becomes necessary when the monthly accounts alone are no longer sufficient to answer the financial questions the leadership team is asking.

Three conditions typically co-occur at the trigger point. First, the business has multiple revenue streams or customer segments that require separate financial analysis. A single revenue line with a single product and a single customer type is adequately analysed by a competent controller with a spreadsheet. Once the business has recurring revenue plus professional services plus usage-based revenue, or enterprise customers plus SME customers with different economics, the analysis required goes beyond monthly accounts production. Second, the headcount is above 30 to 40, making the business complex enough that workforce planning, headcount cost analysis, and departmental P&L reporting require dedicated attention. Third, the board is requiring financial analysis that is not being delivered: scenario models for strategic decisions, quarterly reforecasts with variance analysis, cohort-level revenue analysis.

Who to Hire for the First FP&A Role

The first FP&A hire is the most consequential. If the role is too junior, the business will need a second hire quickly and the first person will not be credible in senior management discussions. If the role is too senior, the business will pay for capability it does not yet need and likely experience frustration from a senior person doing work below their level.

The ideal profile for a first FP&A hire at a Series A or early Series B business is: two to five years of experience in investment banking, corporate finance, or FP&A at a larger company; analytically rigorous (can build a three-statement model from scratch, comfortable working with large datasets, able to perform sensitivity analysis without prompting); commercially curious (interested in why the business makes money, not just how to account for it); technically strong in Excel and ideally comfortable with Tableau, Power BI, or a similar data visualisation tool; and able to translate numbers into narrative (the deliverable of FP&A is not a spreadsheet; it is an insight, and communicating that insight clearly to a non-finance audience is the most important skill).

Former investment bankers can be excellent first FP&A hires if they can make the transition from producing financial models to communicating commercial insights. The risk is that they are accustomed to a highly structured, task-driven environment and may struggle with the ambiguity of building a function from scratch. Former management consultants with a finance specialism are often strong on communication and structured thinking but may need development on technical finance depth. Experienced FP&A analysts from larger corporates are often technically strong but may find the pace and ambiguity of a high-growth startup difficult initially.

FP&A Tools: Excel vs. Dedicated Software

The FP&A software market has grown significantly in the last five years. Platforms such as Pigment, Mosaic, Workday Adaptive Planning, and Anaplan offer purpose-built planning and forecasting capabilities that are materially more powerful than Excel for complex, multi-dimensional modelling. They also cost materially more and require significant implementation effort.

The honest assessment is that Excel remains entirely adequate for most businesses up to £20 to 30 million ARR, and for many businesses beyond that. The case for a dedicated FP&A tool is strongest when: the business has more than 10 FP&A users who need to collaborate on the same model simultaneously; the financial model has too many dimensions (business unit, product, geography, scenario, time period) to be manageable in Excel without version control errors; or the business has outgrown Excel's row and calculation limits for large data sets.

The migration cost and implementation risk of FP&A tools is consistently underestimated. A mid-market implementation of Workday Adaptive or Anaplan typically takes three to six months, requires dedicated project management, involves significant data cleaning and migration effort, and costs £50,000 to £150,000 or more in implementation fees. During the migration, the existing Excel model must continue to run in parallel, creating double-running costs and confusion. The business disruption of a poorly managed FP&A tool implementation is real. The decision to migrate should be taken carefully and at the right stage of the business's development, not simply because the platform looks impressive in a demo.

Operating Cadence: Monthly, Quarterly and Annually

The FP&A operating cadence is the rhythm of recurring deliverables that structures the finance team's time and ensures the business always has current financial visibility. A well-designed cadence prevents the finance function from lurching from deadline to deadline in a reactive mode; instead, it creates predictable, high-quality outputs on a schedule that the board and leadership team can rely on.

Within the monthly cadence, the sequencing matters. The accounting team should close the month by a defined date (typically working day 5 to 7 after month-end). FP&A then has working days 7 to 10 to produce the variance analysis, KPI commentary, and board-ready management accounts pack. The board pack is typically sent to board members on working day 10 to 12, in advance of the monthly or quarterly board meeting. This sequence is only achievable if the month-end close process is disciplined and the FP&A deliverable timeline is agreed in advance with all stakeholders.

The quarterly reforecast is the most important planning process after the annual budget. A reforecast is not just updating the budget with actual trading data; it is a genuine reassessment of the business's outlook for the remainder of the year. It should incorporate updated commercial assumptions, any changes to the headcount plan, revised cost expectations, and a honest view of whether the full-year budget is achievable. A reforecast that simply updates the actuals and leaves the budget assumptions unchanged is not a reforecast; it is a database update.

Key Takeaways

• FP&A is the forward-looking, analytical arm of the finance function. It does management accounts analysis, budgeting and forecasting, scenario modelling, KPI reporting, and ad-hoc commercial analysis. It does not do accounting, payroll, AP/AR, or tax.
• The trigger for building FP&A is typically Series A or B: when multiple revenue streams, 30+ headcount, and board demand for rigorous forecasting exceed what the accounting function can deliver alongside its compliance work.
• The ideal first FP&A hire is 2 to 5 years post-qualification with IB, corporate finance, or FP&A experience: analytically rigorous, commercially curious, technically strong in Excel, and able to communicate numbers as narrative. London salary range 2024: £55 to 75k for analyst, £75 to 100k for senior manager.
• Excel is sufficient for most businesses up to £20 to 30 million ARR. FP&A software (Pigment, Mosaic, Adaptive, Anaplan) adds genuine value at scale but requires 3 to 6 months of implementation effort and £50,000 to £150,000+ in fees. Do not implement to solve a people problem.
• The operating cadence should be: monthly management accounts with variance commentary; quarterly full reforecast; annual budget process (6 to 8 weeks); long-range plan annually or for fundraising.
• The reforecast is not a database update. It is a genuine reassessment of the business's full-year outlook incorporating updated commercial assumptions. A reforecast that simply plugs in actuals without revising assumptions is not an FP&A deliverable.
• Start by identifying the decisions the CEO makes each month without adequate financial information. Build that analysis first. FP&A that no one uses adds no value.