Cracking the FP&A Code for SMBs: the one-size-fits-all does not exi…
Breega Watch #4— Your Monthly Insider’s Guide to Tech Verticals. Why is this sector grabbing our attention ? Why now? What investment opportunities do we see arising ? This month, we’re exploring FP&A for SMBs. Let’s dive in.
Crafted with 💚 & 🧠 by Benjamin Deplus & Paul Mussillon.
Why it Matters ?
For small and medium-sized businesses (SMBs), financial planning and analysis (FP&A) can easily feel like this.
With a landscape of 1.5 million SMBs in Europe, finance leaders face a mountain of work — especially CFOs, who spend over 40% of their time on budgeting, preparing financial data, and ensuring metrics are up to scratch.
Many are working with outdated, poorly connected legacy tools, leaving room for productivity gains in about 350,000 companies that would highly benefit from upgrading their tech stack.
Let’s break down the biggest pain points and how tech can fix them.
The CFO’s Nightmare is Data-Related.
Integrations
CFOs of SMBs deal with a chaotic financial ecosystem, often relying on fragmented and legacy systems that don’t communicate well with each other. Sales data, HR data, and treasury information all come from different platforms, and that means finance teams of today are still stuck in manual processes that belong to yesterday, frequently forced to import data manually, increasing the risk of errors and limiting their ability to forecast efficiently.
Data Quality Management
To make CFO tools work well, the first step is to connect and organize data between different software systems. This involves matching, labeling, and formatting the data properly. Clean and well-organized data is essential for accurate financial planning. If the data is messy or incorrect, it can lead to unreliable forecasts and ultimately misguided decision-making.
The bottom line? CFOs need tools that allow for seamless data integration and high-quality financial insights in real-time.
The Opportunity is AI.
So, how can these pain points be solved? As very often these days, one of the answers is AI.
Some companies have started implementing AI features for FP&A, from data integration to automated finance tasks.
Here are the main AI use cases reshaping FP&A:
- Predictive Forecasting: AI uses historical data to make forecasts more accurate, allowing finance teams to make smarter, data-driven decisions.
- Data Automapping: AI automatically matches and labels data from various sources, eliminating much of the manual work traditionally required by finance teams.
- Risk Identification: Advanced algorithms can detect financial risks early, giving businesses a heads-up before small problems snowball into major issues.
- Conversational Agents: AI-powered chatbots can answer basic finance questions, enabling team members to get information quickly without the need to sift through complex reports.
- Reduction in Human Error: By automating manual processes, AI helps finance teams avoid the costly errors that come with manual data entry and reconciliation.
The Challenge is Pricing.
Affordability is always top-of-mind for SMBs, so in this case, pricing is critical and FP&A startups need to take it into account.
Prices*
Treasury management softwares cost roughly €300 per month, but don’t automate CFO’s tasks while traditional FP&A tools can run between €800 and €1,500 per month. Fractional CFO services, on the other hand, range from €1,000 to as high as €5,000.
*Note: Benchmark of 5–10 companies per category
Budget
SMBs with revenues below €50M typically allocate around 4% of their revenues to IT (that share decreases to around 3% for SMBs with higher revenues), depending on the industry. With a generous hypothesis that 5–10% of that budget is used for a CFO tool, it makes 0.2–0.4% of the company’s total revenue. For a business making €5 million annually, this would mean spending up to €10–20k per year.
At this cost, FP&A startups must not only match their pricing models with SMBs’ budgets but also make their solutions indispensable to the finance team — moving beyond “nice-to-have” and becoming a core part of the business infrastructure.
The FP&A landscape is crowded and ready for consolidation as most players in Europe targeting SMBs have raised <€30M.
Our Take : The one-size-fits-all doesn’t exist for SMBs.
Each subsegment has unique needs & requires different features.
The “S” segment : For small businesses that typically operate without a CFO, we see a clear opportunity to introduce an AI-fueled CFO.
The “M” segment : For medium-sized businesses that already have a CFO and and can afford a more expensive tech stack, there’s still room for orchestration opportunities, including AI-powered.
The “M+” segment : Reaching the “M+” of SMBs, opens up an much more complex and broad environment. These businesses require a middleware that can centralize and map both financials and non-financials data in the same stack making it possible to justify the higher pricing for advanced, comprehensive solutions.
More generally, to make these solutions work, it is mandatory for FP&A startups to leverage state of the art integrations technologies ensuring great data quality and smart mapping.
We’re still looking at potential champions in Europe. Reach out to benjamin.deplus@breega.com if you’re building a FP&A software!
