What is FP&A, Who Am I, and Why Should You Care?
This is an acronym that you seemingly see everywhere but may not fully understand what it is or what someone in FP&A does for work. FP&A stands for Financial Planning & Analysis generally, but there are also some that describe it as Forecasting, Planning, and Analyzing. I am the current VP of Finance for the Kellstadt Marketing Group, an evening MBA student in the Kellstadt Graduate School of Business at DePaul University, and my day job is in FP&A as a Senior Financial Analyst. I have been working in FP&A full-time for the last 5 years, and there is so much about this career that I enjoy.
The FP&A function is relevant to all, even for those with a focus in marketing. Being knowledgeable in the processes of FP&A will benefit a marketing professional because this strategic partnership encourages conversations that can better equip a team to implement new investments and projects while strengthening the financial team’s accuracy. This ensures professionals in all lines of business are well-rounded in their understanding of the company and their budgets. To broaden your knowledge of FP&A, this post will highlight what financial analysts do and how it’s tied to other areas of the business.
What Do Corporate Financial Analysts Do?
The title can mean so many different things at different companies, but the core responsibilities are usually forecasting, reporting, modeling, and communicating financials. A common misconception is that the only thing required to work in finance is to be good with numbers and have math or technical software skills. It is true - in finance you work with a plethora of numbers and spreadsheets and being detail-oriented and analytical are necessary skills for the underlying finance work. However, it is massively important to have interpersonal and story-telling skills to back up the numbers. Finance starts with partnerships with associates in various business segments such sales, strategy, marketing, etc. and then organizing those conversations in a monetary fashion that is easily digestible by the business.
Let’s walk through an example to paint a picture of this: I have a monthly checkpoint with Jane Doe in the marketing department. She informs me that her department is planning on investing in a contractor to work on a new logo for a product and that new project logo has the potential to increase revenue by 5%. She also states the new equipment she ordered will no longer be delivered this month but is now to be expected two weeks later instead. From this conversation, a FP&A analyst must build a new forecast including the new contractor expense and revenue potential. The forecast must now be re-timed for the delayed equipment and it’s also important to communicate the change with the accounting team to aid in the monthly process as they close the books. The timing of the new contractor expense and payment of the equipment may be out of balance with the planned expenses from upper management which means the analyst must analyze all other business verticals and see if these costs can be implemented. Otherwise, an analyst may have to work with the partner to create a new business investment ask to get more funding for the project.
Now think about multiplying that example for all the business partners one supports in the FP&A role. This includes many projects, costs, delays, new revenue wins, etc. There are many moving parts in finance, so the is where being very detail-oriented is necessary. After digging into the detail, an analyst must report and model these changes to communicate the finances in a more consolidated consumable way to greater finance management and the business stakeholders. To portray this, a report must be generated to show the new forecast with numeric comparisons, graphic visuals, as well as commentary. The best way to get to the heart of the forecast and current state of the finances is to provide high-level bullet points that tell the story of what is occurring within the finances and where the business is going.
Why Would Someone Become a Financial Analyst?
1. Working with Many: In this role you interact with many different teams and meet a variety of people within your organization inside and outside of finance. You cannot forecast what will happen in the organization if you’re not engaged with all the stakeholders. The FP&A teams are often involved in organizational high-level projects from the beginning to aid in the finances, therefore as an analyst you get to learn so much about a company, their products, and team structure just by going through the forecasting process. If you enjoy meeting new people and broadening your scope on your organization, FP&A is a great place to work.
2. Project Autonomy: My favorite part of working in corporate finance has been the people I’ve called my teammates, but I have gotten the most satisfaction from completing stretch goal projects that I worked on autonomously. Finance is open to collaboration, but when it comes to process automation of current reporting, owning a forecast segment, or working on business models for investments you can find yourself having a big role seeing something from an idea to a completed project. These projects are the best way to show your analytical skills and further your professional development.
3. Transferable Skills: A great reason to work in FP&A is that the skills you learn in one team are often extremely transferable to another team. You can easily move within an organization to forecast for certain business segments you find interesting, engage in a new high-level project, or to broaden your network. Within the finance team you learn a lot about the company products and business strategy, and you can find yourself moving to business roles beyond finance after working closely with those business partners and beginning to anticipate their needs. From a systems standpoint, having analytic and technical skills in financial systems and data visualization are highly transferable within teams, organizations, and in the job market.
What are the Pain-Points for a Financial Analyst?
There are so many great aspects being a financial analyst, but like any role there are also a few pain-points in the job you should know before considering a career in corporate finance.
Here are a few challenges:
1. Tasks can feel repetitive: While there are always new projects and high-level goals to focus on during the year, the nature of the job includes repetitive monthly task work. After every month, there is a close process in which you will need to review how the results compare to your forecasts and prepare reporting and communication to various stakeholders on the state of the finances. If you prefer a routine, this is a great line of work for you to join. Personally, I enjoy knowing exactly what needs to be completed and having very clear and definitive deadlines for my routine tasks, but it does feel repetitive from time to time.
2. Money can be emotional: The money involved belongs to the corporation and not an individual, however, there is a sense of ownership by many in the business that can be a challenge to navigate since resources are finite. Working in finance means there will be times when you may have to say no to your business partners who may want to start a new project or hire a new employee that isn’t in the financial plan. While everyone in a corporate office can understand that revenue and cost challenges will come, you may find yourself dealing with someone who takes these decisions, which are not personal, personally. Always make sure to stand your ground, it’s just business.
3. Things can change quickly: Although it may feel like you’re always working on forecasts and gathering the latest and greatest information, the truth is, there will be multiple things that will not go as expected and things can change quickly. Because of this, one must be agile and adaptable. In the role of an FP&A analyst, you may find that one day a project is full steam ahead and the next there is a priority change and all cash flow and sales momentum changes direction. I personally feel this keeps the job very exciting. However, if you feel very confident in your forecast and want a high degree of accuracy, you will see that in business there is no such thing as 100% accuracy over time, as things can change rapidly.
Final Thoughts:
If you have ever wondered what a financial analyst does or how the FP&A team works within the corporate matrix, I hope this has given a high-level idea of what that means from my perspective. Being an active listener, having insightful conversations, and knowing the detail behind the numbers are the keys to success for a role in financial planning and analysis. Through my MBA program and involvement in the executive board of KMG, I have had the opportunity to gain more exposure into the finance behind marketing. Finally, finance impacts all aspects of the business, so understanding the dynamic between finance and marketing will enable better informed financial decisions and benefit your career.