The basic characteristics of the best modern FP&A professionals are:
- A high level of professionalism in financial planning, forecasting and analysis.
- Strong skills in business insight, opportunity planning and risk forecasting.
- A keen eye for detecting business inconsistencies, flaws and under-deliveries.
- A strong will that can effectively make the case to business owners or boards of directors for better options to pursue when executing company strategy.
All these elements provide the landscape for a determined professional to grow further into a full-scale CFO. What does it take to make the next step though? Why is FP&A a great path to achieving the top finance position at a company?
Moderns CFOs face many significant challenges:
Change is so prominent inside and outside the business that it cannot be avoided. Financial professionals should learn to follow and embrace change, or risk getting left behind in the stale business attitudes of previous eras. Surely it’s better to look forward and find new options to aim for.
Risk is simply the other side of opportunity. Whether you feel it or not, it can either let you up or down, depending on the position you defend. Individuals who regard risk as being an inevitable evil will end up spending all of their time and efforts in mitigating it. All the potential growth in new, unlooked-at areas is killed by such an approach. A far better approach is for the financial professional to keep his or her eyes open – to watch for the gaps of risk and the windows of opportunity in a well-balanced, unbiased fashion.
Compliance is a word many CFOs have yet to become used to hearing without fear. One can argue about the specific forms and formats, propose new ones and defend them before industry boards and commissions. Yet most often, we take them for granted and grab our teams to crunch the numbers from a new angle, to collect the already-available figures into the procrustean bed of a recently-published regulatory reporting package. The financial professional can instead opt to use his/her skills and determination right from the start to have the data available for reporting, and run software capable of fitting the loads of financial data at hand into clear-cut, visible and clickable material.
Analysis is the key to develop yet-unseen ways to sustain growth in the current unpredictable business and political environment. Financial professionals are equipped with the best-known tools of trade such cloud financial solutions, drill-down data warehouses, multidimensional reporting packages and forecasting tools for carrying out this task.
The Modern CFO
The CFO of the past has, in too many cases, been looking in the rear-view mirror. Trained in (Association of Chartered Certified Accountants (ACCA) accounting, highly detailed, specific and no-nonsense, the CFO adopted an autopsist, post-mortem view of business activity. It is based on booking the numbers in certain dimensions, reporting a few months back on what happened and explaining what went wrong or right. This accounting-oriented approach caused all financial systems – both people-based and computer-based – to be developed in the same accounting-oriented dimensions. The management view was possible to implement only when it fitted the accounting and statutory reporting principles.
By contrast, the modern CFO is emerging as a physicist of the profession – analytical on current developments; searching for targets, aiming and ready to hit them due to strong incentives; well-aware of shocks and hazards that may be encountered en-route; on the lookout for fresh signals indicating if he/she is heading in the right or wrong direction; and sure about the tools of trade that keep the business on the right track.
Anyone who is getting these ready in their current controlling role, is well on the way to becoming a modern CFO:
- Growing analysts to build your team with as soon as you become a CFO.
- Analytical tools interacting with main business information systems, able to drill through to a source figure, and to build an insightful actionable report in a few clicks.
- Business systems – reflecting the company’s functions, projects, and information flows – that answer important questions posed by business owners and boards of directors as their representatives.
- Business drivers causing various scenarios to unfold, depending on the environment in which the company operates.
- Predictors (looking-forward key performance indicators) and triggers that pull one or more drivers to develop in a certain direction.
The more an individual prepares their own future, the better the chances of it becoming reality. In a way, the financial professional pulls the triggers on his/her own career and moves their pawn steadily to the last finance row – to ultimately become the company’s king or queen of finance. Of course, the CFO may subsequently develop further on the corporate chessboard, but that involves beginning a whole new game.
A US study, based on the quick service restaurant chain Chick-fil-A, offers conflicting evidence on whether a TMS is the best option when upgrading from Excel-based forecasting.
With four hikes since late 2015 - three of them in the past six months - US interest rates are moving higher in line with a strengthening economy. However, for many American corporates the trend has raised concerns over their working capital management.
Uncertainty surrounding the UK’s exit terms from the EU is preventing businesses from being able to accurately hedge foreign-exchange risks.
Why a career in sales proposal writing should be a no-brainer for bright young finance graduates.