Cash. Plan. Decide. Always know how much runway you have.
Financial planning and analysis (FP&A) is the operating discipline of modeling cash, revenue, costs, and scenarios — and using the model to make decisions. For private-company operators, FP&A often falls to the COO or founder until $5M ARR. After that, the most valuable FP&A artifacts are: a rolling cash forecast, scenario plans, and a board-ready P&L view.
What is financial planning?
Financial planning and analysis (FP&A) is the function and discipline that owns financial modeling, scenario planning, budget vs. actual variance, cash management, and board-level reporting. It bridges accounting (what happened, GAAP) and operating decisions (what to do, forward-looking).
Why financial planning matters in 2026
- 01
Cash runway under 12 months requires weekly cash management; over 18 months allows quarterly.
- 02
Burn Multiple replaced "growth at all costs" as the FP&A north star — under 1.5 is best-in-class.
- 03
Scenario planning is the single highest-leverage FP&A activity — knowing your downside paths prevents panic decisions.
- 04
Budget vs. actual variance >10% indicates either planning or operating-rhythm problems, both costly.
- 05
For operators, FP&A is the language of the board — speak it fluently or get over-managed.
Core metrics & concepts
Every metric below has a definition page in the Fairview glossary — formulas, benchmarks, and worked examples.
Cash Runway
Cash runway = cash in bank ÷ monthly net burn. The conservative survival floor — no revenue growth, no new fun
Burn Rate
Burn rate = how fast a company spends its cash. Gross burn = total monthly outflows. Net burn = gross burn min
Gross Burn
Gross burn = total monthly cash outflows before any revenue. For a 10-person SaaS team at $120K gross burn and
Net Burn
Net burn = gross burn minus cash revenue collected per month. At $200K gross burn and $80K cash revenue, net b
Burn Multiple
Net cash burn divided by net new ARR added in the same period. A burn multiple of 1.5x means the company burne
Budget vs Actuals
Budget vs actuals (BvA) compares planned vs realised spend by line and department, monthly. Foundation of oper
Gross Margin
Revenue minus cost of goods sold ( COGS ), expressed as a percentage of revenue. Gross margin measures how muc
Gross Profit
The dollar amount remaining after subtracting cost of goods sold ( COGS ) from total revenue. Gross profit rep
Operating Margin
Operating margin = operating income / revenue × 100. It measures operational profitability before financing an
Operating Income (EBIT)
Operating income = revenue − COGS − operating expenses. It measures core operational profitability before fina
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA strips out non-operating costs to show
EBITDA Margin
The percentage of revenue that remains as earnings before interest, taxes, depreciation, and amortization. Cal
Net Income
Net income is revenue minus every expense category — COGS, operating expenses, interest, taxes, depreciation,
Net Margin
Net margin = net income / revenue × 100. It is the percentage of every revenue dollar that flows to shareholde
Rule of 40
A SaaS benchmark stating that a company's revenue growth rate plus EBITDA margin (or free cash flow margin) sh
Rule of X
Rule of X generalises Rule of 40 by varying the weight of growth vs profitability. Variants: Rule of 60 (highe
Cash Conversion Cycle
The number of days between when a company pays its suppliers and when it collects payment from its customers.
Working Capital
The difference between a company's current assets (cash, accounts receivable, inventory) and current liabiliti
Working Capital Days
Working capital days = DSO + DIO − DPO. It measures how many days of cash are tied up in operations. A company
DSO (Days Sales Outstanding)
DSO measures the average number of days between issuing an invoice and receiving payment. For B2B SaaS, health
DIO (Days Inventory Outstanding)
DIO measures how many days of inventory a company holds before selling it. For D2C brands, 30–60 days is healt
DPO (Days Payable Outstanding)
DPO measures how many days a company takes to pay its suppliers. Higher DPO preserves cash — a company paying
ARR (Annual Recurring Revenue)
ARR is the total value of recurring subscription revenue normalized to one year. The north-star metric for Saa
MRR (Monthly Recurring Revenue)
The predictable revenue a company earns each month from active subscriptions. MRR normalizes all recurring con
CARR (Committed ARR)
CARR is total annualised value of all signed customer contracts — including ramps and future-start contracts n
ARR Per Employee
Total annualized recurring revenue divided by the number of full-time employees, expressed as a dollar figure.
Expansion Revenue
Additional recurring revenue generated from existing customers through upsells, cross-sells, seat additions, o
Contraction Revenue
Contraction revenue is the umbrella metric for all recurring revenue lost from existing customers — combining
Net Revenue
The actual revenue a company collects after subtracting returns, refunds, discounts, chargebacks, and allowanc
Gross Sales
Gross sales = total invoiced value before returns, refunds, or discounts. Not GAAP revenue. Use net sales for
Net Sales
Net sales = gross sales minus returns, allowances, and discounts. For D2C brands with 15–25% return rates, the
Fixed Cost
A fixed cost stays constant regardless of revenue or production volume. For B2B SaaS, fixed costs run 65–80% o
Variable Cost
A variable cost scales directly with revenue or production volume. For B2B SaaS, variable cost ratio (VCR) is
Semi-Variable Cost
A semi-variable cost has both a fixed floor and a variable component that scales with activity. Also called mi
Customer Concentration
Customer concentration = % of revenue from largest accounts (top 1, 5, 10). >20% from one customer or >50% fro
Payback Period
Payback period = months to recover CAC through gross-margin-adjusted revenue. Formula: CAC / (ARPA × Gross Mar
Magic Number
A SaaS efficiency metric that measures how much net new ARR is generated for every dollar spent on sales and m
Net Magic Number
Net Magic Number = (Net New ARR × 4) / Prior Period S&M Spend. Net New ARR includes expansion minus churn — be
SaaS Quick Ratio
SaaS Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR). Best-in-class: >4. Median: 2–3
Frameworks operators use
Rule of 40
A SaaS benchmark stating that a company's revenue growth rate plus EBITDA margin (or free cash flow margin) sh
Read frameworkRule of X
Rule of X generalises Rule of 40 by varying the weight of growth vs profitability. Variants: Rule of 60 (highe
Read frameworkUnit Economics
The revenue and cost analysis of a single unit of a business — typically one customer, one order, or one subsc
Read frameworkThe definitive guides
Long-form references on the core jobs — written for operators, not analysts. Updated 2026.
The 8 Best Financial Planning Software for SaaS (2026)
SaaS FP&A requires ARR/MRR modeling, headcount planning, and scenario analysis. Eight tools compared across pricing, Saa
Burn Multiple: SaaS Benchmarks, Formula, VC Targets
Burn multiple is the capital efficiency metric every SaaS VC uses. Learn the formula, 2026 benchmarks by funding stage,
The 12 Metrics Every SaaS Board Deck Needs
The 12 SaaS board deck metrics every investor expects — ARR, NRR, CAC payback, Rule of 40, burn multiple, and more. With
All financial planning articles
- Annual Operating Plan Template: A Framework Guide
- Budget Variance Analysis Template: FP&A Methodology
- Monthly Investor Update Template: What VCs Want
- Monthly Business Review Template: Agenda and Metrics
- Quarterly Business Review Template: Free Download
- Board Meeting Agenda Template: Structure and Timing
- Cap Table Management for Founders: The Complete Guide
- How to Calculate the SaaS Magic Number (Formula)
- CAC Payback Period: Formula, Benchmarks and Why It Matters
- The 8 Best Financial Planning Software for SaaS (2026)
- 6 Best Mosaic Alternatives for 2026 (FP&A and OI)
- 8 Best QuickBooks Online Alternatives (2026)
- 7 Best Xero Alternatives for Small Business (2026)
How operators use Fairview for financial planning
Use case
Board-Ready Forecast
Ship a forecast the board trusts — without a week of reconciliation.
Use case
Revenue Forecast
See next quarter's revenue — with confidence scoring.
Use case
Weekly Operating Review
Run the Monday meeting off one operating view.
Use case
Find Profit Leaks
See where margin is leaking — before it shows up in the P&L.
For your business model
Fairview vs. alternatives
Frequently asked
When does a startup need dedicated FP&A?
Most SaaS startups can survive on founder-led FP&A through ~$5M ARR. Hire a dedicated FP&A lead at $5–15M ARR. Build a team at $15M+ ARR or after Series B.
What is the difference between FP&A and accounting?
Accounting reports the past (GAAP, audit-ready). FP&A models the future (forecast, scenario, decision-making). Accounting is backward-looking and rules-based. FP&A is forward-looking and judgment-based.
What is a good Burn Multiple?
Burn Multiple = Net Burn / Net New ARR. Best-in-class: <1. Good: 1–1.5. Average: 1.5–2. Above 2 indicates capital inefficiency. Above 3 is a red flag for VC investors.
What templates do FP&A teams use?
Annual operating plan (AOP), monthly variance report, board deck financial section, scenario model (base/upside/downside), 13-week cash flow, cap table, and headcount plan.
What tools replace spreadsheets for FP&A?
Mosaic, Cube, Causal, Pigment for full FP&A platforms. Operating intelligence (Fairview) for operator-friendly variance and scenario views. Mostly mid-market+ companies graduate from spreadsheets.
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Sources & references
Fairview maintains a public bibliography for every topic hub. Each citation below was verified at publication. We update sources every 12 months as new benchmark studies are released. See our editorial standards.
- 1 AFP Treasury Benchmarks 2025 — Association for Financial Professionals, 2025. View source .
- 2 Bessemer Burn Multiple Study — Bessemer Venture Partners, 2024. View source .
- 3 OpenView SaaS Benchmarks — OpenView Partners, 2025. View source .
Fairview cites primary sources only — government data, academic research, industry benchmarks from named publishers, and official vendor documentation. See our editorial standards.