Financial Planning & Analysis provides one of the most critical and powerful functions in the business. Are you resourcing and employing your FP&A Team properly? You need to be continually planning the team’s functions and capabilities as technology changes and the business grows. The FP&A function cannot remain static. It must be growing and changing as conditions change. Your pathway to understanding the key metrics of the business AND if you are achieving your strategy, lies in the commitment to investing in your Financial Planning and Analysis team.
Episode outline:
Please connect with me on:
1. Instagram: stephen.mclain
2. Twitter: smclainiii
3. Facebook: stephenmclainconsultant
4. LinkedIn: stephenjmclainiii
For more resources, please visit Finance Leader Academy: financeleaderacademy.com.
Financial Planning & Analysis provides one of the most critical and powerful functions in the business. Are you resourcing and employing your FP&A Team properly? You need to be continually planning the team’s functions and capabilities as technology changes and the business grows. The FP&A function cannot remain static. It must be growing and changing as conditions change. Your pathway to understanding the key metrics of the business AND if you are achieving your strategy, lies in the commitment to investing in your Financial Planning and Analysis team.
Episode outline:
Please connect with me on:
1. Instagram: stephen.mclain
2. Twitter: smclainiii
3. Facebook: stephenmclainconsultant
4. LinkedIn: stephenjmclainiii
For more resources, please visit Finance Leader Academy: financeleaderacademy.com.
Hi, this is Stephen McLain of the Finance Leader Podcast. This is Bonus Episode no 70. I hope you are having a great day and another great week. In last week's episode, episode no 114, I discussed financial agility and digital transformation. I asked does your organization have the ability to overcome a crisis or overcome rapidly changing business and economic conditions? Is decision-making lagging due to financial systems that cannot adapt or because of legacy processes that don't support change? If you missed that episode, please go back and listen. I believe financial agility and digital transformation are big topics for our fields. I think it will help. So this week I want to share an encore replay of Episode 91 on financial planning and analysis.
Stephen McLain:The FPNA provides one of the most critical and powerful functions in the business. Are you resourcing and employing your FPNA team properly? You need to be continually planning the team's functions and capabilities as technology changes and the business grows. The FPNA function cannot remain static and must be growing and changing as conditions change. Your pathway to understanding the key metrics of the business and if you are achieving your strategy lies in the commitment to investing in your financial planning and analysis team. So here is the episode outline. Number one is the business achieving the strategy. Number two how FPNA can add huge value. Number three do they have the right tools? Number four invest in the FPNA team. And five where is FPNA going in the future? I will be doing more FPNA focused episodes in the future and I can't wait to share. Also, please check out Finance Leader Academy. Please download the free Become a Finance Leader Guide. The link is in the show notes Now please enjoy this encore episode, episode 91, financial Planning and Analysis. Now have a great rest of your week. Don't forget to think about and start planning on your 2024 goals, I am for sure. Thank you for choosing the Finance Leader Podcast. Until next time. Thank you for listening. Take care. Financial planning and analysis provides one of the most critical and powerful functions in the business. Are you resourcing and employing your FPNA team properly? You need to be continually planning the team's functions and capability as technology changes and the business grows. The FPNA function cannot remain static. It must be growing and changing as conditions change. Your pathway to understanding the key metrics of the business and if you are achieving your strategy lies in the commitment to investing in your financial planning and analysis team. Please enjoy the episode.
Stephen McLain:Welcome to the Finance Leader Podcast, where leadership is bigger than the numbers. I am your host, stephen McLean. This is the podcast for developing leaders in finance and accounting. Please consider following me on Twitter, facebook, instagram and LinkedIn. My usernames and the links are in this episode's show notes. And also please join the Facebook group I have for this podcast community. Thank you.
Stephen McLain:This episode number 91, and I will be talking about the importance of the financial planning and analysis team, and I will highlight the following topics Number 1 is the business achieving the strategy? Number 2, how FPNA can add huge value. Number 3, do they have the right tools? Number 4, invest in your FPNA team. And 5, where is FPNA going in the future? Economist, author and professor at Imperial College Business School, jonathan Haskell, said I'll often joke that when people ask what is business analysis, I say you know all those times that people say somebody should look into that. Well, I'm the person that looks into that.
Stephen McLain:Welcome to season 11 of the podcast. I am so glad to be back from the break. Season 11 is going to be amazing. Today's episode is about financial planning and analysis. I'm also going to talk about data validation and also the future of artificial intelligence and finance, and another episode will be about problem solving and decision making, along with leading during the annual budget development process. Again, I'm very happy to be back and sharing episodes that can help you become a leader not just someone who works numbers on a spreadsheet, but someone who can have a positive impact in your organization every day and in every task you do. I want this podcast always to help you build your leadership ability. It is meant to provoke you to evaluate yourself, your abilities, your mindset and many more other aspects of yourself, your career and your life.
Stephen McLain:In this first episode for season 11, I am talking about the importance of financial planning and analysis and how this team helps the business achieve its strategy and helps to develop key insights about the metrics of the business so that better decisions can be made. And this is assuming the FPNA team is properly resourced and staffed. We will talk about this more in detail later. Financial planning and analysis is a function and a team that requires a lot of attention from the CFO and even the CEO. This is where you need to invest your time and commit the right resources so they provide the best possible knowledge and usable information for the decision making and the formulation and execution of organizational strategy. The four major roles of the FPNA team are analysis, planning, reporting and forecasting. The FPNA team evaluates the performance of the company's product and service portfolio to determine gross margin and other key metrics. They also examine investment projects and key expenses that affect profitability. Additionally, the FPNA team plays a major role in planning the organization's budget and evaluating the current year's execution of the budget, plus many more other tasks focused on growing the business and adding value to a multitude of stakeholders.
Stephen McLain:To develop and execute a strategy and to guide the company, the executive team and other senior leaders need relevant data and insights to make timely decisions. It is also helpful that they know what they want, but sometimes they don't. Not until you show them the real data, actually validated data and realistic projections and analysis, along with the story behind the numbers, will they truly understand their impact. This is where a leadership, focused and forward thinking FPNA team can help guide and deliver information that can make a positive difference. Keeping in mind that the business strategy is how you commit resources and how the business is structured and how the company will be positioned, executives must make decisions and communicate where they want the organization to go when senior leaders in the FPNA team can properly partner and trust each other, we will see the potential for the organization be truly fulfilled and almost unlimited journey of strategy execution. However, this is often an area that needs improvement. I would like for everyone who works in FPNA to embrace the leadership aspect of the role. You get to lead with the numbers. If done properly, you can partner with those leaders who own the deliverance of the metrics you analyze so you help them with additional insights. The ability to think strategically is to find key business insights, and the FPNA team can do that. Your analysts should become experts within their portfolio and then partner with the stakeholders. This will help build trust and better cooperation.
Stephen McLain:The typical financial analyst wastes a lot of time pulling raw data and formatting, also cutting and pasting that very same data. This is a huge waste of effort because the tools and processes they are using are probably outdated. We need systems and processes that support more real-time access to data that is already formatted and ready to be analyzed. There will always be the need to export some data to a spreadsheet and do some analysis, but I don't want analysts spending the majority of their time doing that. I want more of their time to be value-added and focused on delivering data ready for decision-making or evaluation. How much time do your analysts spend on formatting or cutting and pasting instead of analyzing and leading discussions on how that data can change the company?
Stephen McLain:What do I want organizations to do differently with their FPNA team? I want them to literally release them, to act, to empower them, to use their leadership, to dig into the numbers and to partner with senior leaders to further understand what is happening with key metrics and performance indicators. If your team is doing the same analysis every week and every month, then what true value are they providing? Are you still doing monthly close? The same, with the same slides every month? Do the slides even tell a story? Do you know what is really happening on every monthly closed slide, you see, and how it impacts the business? Most monthly closed presentations fail to deliver because they present the same old, tired data.
Stephen McLain:My most intriguing and interesting work assignments were when I was working on a financial planning and analysis team. This is where metrics and analysis meet, decisions and then strategy. This is where you can make a huge impact on how the strategy is developed and executed. Financial analysts must exercise leadership to ensure change occurs based on their findings, using new and innovative ways to look at their numbers. Now let's talk about the importance of the financial planning and analysis team. Number one is the business achieving the strategy. Strategy comes down to the choices you make about the resources you have and how you use them and align them to the market position you will take. Does your organization have a realistic and achievable strategy? Does it have a strategy that everyone can understand and actions must be prioritized. How are you evaluating your strategy execution? Your FPNA team should be working and assisting to evaluate if the strategy is being executed properly, and this can be done by analyzing key metrics and how well the product and service lines are performing to the target market position. Number two how FPNA can add huge value.
Stephen McLain:The key to knowing insights to the business is to break down the key metrics. But what are those metrics and how do you break them down? To make sense, you need to know what components make up each of the metrics you are responsible for. How and why do they change in value? What are the variables? That moves them each month? Now let's say shipping expense is a key metric for your business. What components of this expense do you need to know to help find an insight? Maybe shipping options for late products that are going to be late to the customer. This can be revealing, because why are we so late on product delivery? Is it material to the business and how can we improve Further? Are we losing business because we are late on delivery? There are so many areas to deep dive other than just knowing how much shipping expenses were each month To better understand. This is why I ask FPNA analysts to partner with the metric owners. Try to find out everything that can affect the metric. You may find savings or how to do it better.
Stephen McLain:How do you link your key metrics to strategy formulation and execution? Fpna is in a unique place where they can determine which metrics and which lines in the profit and loss statement that directly affect strategy execution. What moves the strategy, which products and services move the strategy in the right direction and which expenses affect the strategy the most? How can FPNA positively affect this? What can you do to look further? Are the processes right? Are you putting together the right information to help decision makers?
Stephen McLain:Number three do they have the right tools? To help the FPNA team be successful, they need to be resourced properly and have the right tools Plus have the right vision for what they should deliver to the company. By tools, I mean the finance systems they are using. What analytics applications do they have? Does it include consulting on how to build out the right analytical tests? And what financial models in the framework does the team use for projections and analysis? Are these tools from 10 or 20 years ago or have they been refreshed recently? As a consultant, I have cleaned up and refreshed many Excel files that were still being used many years after they were first built, but now had errors in them after being passed around and sure they still work. You will be surprised by what you will find in old Excel models. And what tasks is the team doing? What are they spending their time doing? If your FPNA team is spending large amounts of time downloading and formatting data or just cutting and pasting, they are not being used wisely.
Stephen McLain:Number four invest in your FPNA team. Your FPNA team can deliver great value when resourced properly, which also includes having bold and caring leadership in place. We talked about the right tools a few minutes ago. Your FPNA team members also need time and funds for training and development. What is your company's plan to resource the FPNA team so they can properly assist the executive team in guiding the company. Consider hiring the right leadership with the right mindset. Ensure you also hire analysts who are right, fit and not just for hard technical skills, but also key soft skills. Ensure the team has the time and resources to train and develop. Invest in them. It will give back huge returns.
Stephen McLain:Number five where is FPNA going in the future? The FPNA team of the future will involve some amazing features and abilities. It will be determined by how real time and accurate your data will be and how well your systems can predict what will happen next. We will see more use of artificial intelligence to calculate projections, to run antelinical testing and streamlined real time information for decision makers. We will see more use of cloud based applications with real time data and our data warehouses will also be cloud based. All of this means we are not gonna wait hours or days for analysis anymore. We need usable information at our fingertips right now or close to now. We need to run models and projections more quickly using real time data. The gap will be closing between when the data is available to when usable and relevant information will be used by decision makers. Be ready to invest in your FPNA team to close that gap.
Stephen McLain:When resourced and utilized properly. The FPNA team can add tremendous value to decision making and evaluating what is happening in the business. When working or consulting with a new team, I like to examine what is being analyzed and reported today and how long they have focused on this, and does it still make sense now? What might be missing? What other metrics should be analyzed? Even senior leaders can get stuck looking at the same reports weekly and monthly, that they may miss or not understand what really should be analyzed. So shake things up occasionally. Look at what you are presenting and does it still make sense For action today?
Stephen McLain:If you are in leadership, is your financial planning and analysis team being utilized properly? Are they resourced properly and do they have a long term plan for making them better according to your market, your strategy, the economy and currently available in emerging technology? If you are an analyst, there are a few areas you can start improving today. How much do you really know about your portfolio? Do you really know the metrics and other areas you are responsible for analyzing, or are you just pulling the same data all the time without any true added value? What are you doing to make a difference, to help the company to grow and in the execution of the strategy.
Stephen McLain:Don't forget to grab my free guide for you, called the Leadership Growth Blueprint for Finance and Accounting Managers. Are you a finance or accounting professional who is also leading people, but have questions about how to lead more effectively? I know you are expected to be the technical expert in our field. Learning leadership can set you apart from your peers, which can then lead you to more opportunities. In the free guide, I talk about three leadership areas communication, team development and empowerment, plus a few recommendations around challenges with the financial systems you are using to complete your work. The link to this free guide is in the post or the bio. You can also go to financeleaderacademycom to download it. Please use the guide to help you with a few leadership wins today. Thank you.
Stephen McLain:Today I talked about the importance of the financial planning and analysis team and I highlighted the following points. Number one is the business achieving the strategy? Number two how FPNA can add huge value. Number three do they have the right tools? Number four invest in your FPNA team. And five where is FPNA going in the future? The FPNA team can be a powerful force in the organization if resourced properly and if they are empowered to act and take action by partnering with senior leaders on finding relevant insights. A careless senior leader can just as easily deny what FPNA can deliver by being pessimistic and unbelieving in data, but also believing in gut decisions only, or upset when the data suggests something that is threatening to their own kingdom in the company. And yes, this happens. Believe in and invest in your FPNA team so they can deliver incredible value. I would expect CFOs and CEOs to invest their time in this team so they have the right tools to do their jobs properly. Next week, I will be talking about data.
Stephen McLain:I hope you enjoyed the Finance Leader podcast. I am dedicated to helping you grow your leadership skills, to change your mindset and to clarify your goals so you advance your career. You can find this episode wherever you listen to podcasts. If this episode helped you today, please share and leave a quick review so that others may find the podcast Until next time. You can check out more resources at financeleaderacademycom and sign up for my weekly updates so you don't miss an episode of the podcast. And now go lead your team and I'll see you next time. Thank you.