Embarking on an FP&A career

By John Reynolds, CPA

When I left public accounting for a role that included FP&A, many at my firm were unsure what that acronym meant. FP&A — financial planning and analysis — is a relatively new title, but it has begun working its way down from only the largest, most robust finance organizations to more moderately sized companies.

FP&A is a future-forward role that is picking up steam. Many small- or mid-sized businesses might have never had someone titled FP&A, but they should. FP&A is a team of financial professionals who plan and partner with business leaders to steer their organization’s future. Below are the main roles for FP&A professionals.

Budgeting

The FP&A team is primarily associated with budgeting and maintaining those budgets. It builds, monitors, maintains and updates as needed every aspect of the budgeting process. More frequent budgeting is no longer simply “nice to have”; it’s a requirement. The days of organizations budgeting once a year and simply throwing in the budget to actual as part of monthly reporting are in the rear-view mirror. Today’s FP&A team is more deeply embedded with the business’s needs than ever before and will constantly seek approvals and modifications to budget or plan as needed throughout the business cycle.

When the pandemic hit, one of the first things our team did was reevaluate the budget given our understanding of potential disruptions to business. This wasn’t a static-point estimate, but a range of potential outcomes and what effects they might have on business operations and ultimately the financials. The modern FP&A team will not just monitor variances from budget but update expectations once they are known or knowable. How do you navigate a boat in a storm if you have no map, compass or, in modern times, GPS? What if the metaphorical GPS says recalculating until next year’s budget? How can your business respond?

Business partnering

Another major part of a modern FP&A team includes heavy business partnering — another area where the “CPA of the future” comes into full view. We aren’t just “bean counters” giving a post-hoc view of performance. The business partners on an FP&A team are there from the beginning of any new project, product offering or process change. When I first took on an FP&A role, I went to every development team to truly embed myself in an understanding of what they do every day, and be first in line to know if something was going wrong. This is truly the windshield view of a finance team — the eyes and ears for the CFO.

FP&A team members work to deeply know the business and help the business owners (those managing business decisions) make the right call from the beginning. They act as a sort of mini-CFO for sections of the organization, generating and providing valuable insights as an integrated partner of the organization. This could be through projected financials, supportive data, or simply the perspective of a finance-minded person within the operational team. It is for this reason that FP&A shouldn’t be buried in the back office. These team members need to be equally comfortable in a collaborative environment, communicating quickly and effectively as they analyze data through spreadsheets and modeling tools.

Decision support

The role of FP&A cannot truly be captured without an understanding of its role in decision support. Any time there is a major call to make, the FP&A team gathers as much data as possible and creates models to help the CFO and entire management team or board have useful views to aid their decision. The team can help answer questions like: Should we push forward or kill this business line? Should we acquire this company? If our revenues fall by X, Y or Z% due to COVID, how can we respond effectively? These are all questions that may come up and FP&A can tackle them with the discreet preservation of trust CPAs are known for. Any truly major decision by management can and should be aided by the analysis of the FP&A team. 

Is this for you?

If all the roles and responsibilities I noted above sound fun to you, this may be your next great career path. I have certainly enjoyed the role and learned a ton along the way.

One of the fears I often hear for those interested in moving to an industry role is a fear of boredom or monotony. As someone who left public accounting and moved into FP&A, this could not be further from the truth. This gave me an opportunity to get deep in a topic. I began to deeply understand the business, its drivers of success, and the levers of optimization that management has at its disposal rather than blazing by it as fast as possible. That said, I hardly feel like I have slowed down. The general cadence of FP&A is tied to the financial reporting deadlines but is not exclusively married to them. You will be involved in the business all month long with new product initiatives, supporting business process improvements, and constant agile budget support. As a business partner you are needed all year — not just at month, quarter or annual close. 

Someone in this role needs to be a true financial analysis wizard. The core competency of the role is financial analysis, so data cleansing, mapping and modeling should be second nature. The good thing about these skills is that they can be taught pretty easily. Software is designed to be easy to use and even the most complex of tools can be learned with enough motivation. Often, this skill is a gatekeeper to an entry-level role, but if you need to build your skills in this area, put in some time learning the basics and you will go a long way.

Be the CPA of the future

I have talked a lot about the future CPA and how that may be different from CPAs of yester-year. Here are a few of the differences I hear over and over: 

The CPA of the past was:

• In a back office away from others.
• Evaluating and categorizing historical data.
• Using rules and regulation memorization as a cornerstone for success.
• Allowing speed and accuracy to define performance.

The CPA of the future:

• Partners with the business to make critical decisions.
• Focuses on the future first, driving forward-looking projections, analyzing financial and non-financial metrics, and giving management the tools to pivot ahead of the storm.
• Uses tools and software to automate compliance work so time and effort can be focused on adding value through perspective rather than computations.
• Are, at their core, communicators. This skill cannot be overlooked at any level. 

It is my firm belief that FP&A and the roles it fills are the future of the CPA profession in private practice. FP&A represents an opportunity to be future forward, a true business advisor and a strategic communicator. If you are a finance leader, consider adding FP&A staff to your team. If you are a training provider, continue to build out your offerings supporting these skills. And if you are a CPA looking to shift careers and continue growing into a true business partner, consider a role in FP&A. 

John Reynolds, CPA, is the controller for Tracepoint Group in Fredericksburg, which provides innovative solutions for cyber incident response mediation and recovery. He formerly served as U.S. lead FP&A analyst for Block.one. A 2019 recipient of the VSCPA Top 5 Under 35 award, he sits on the VSCPA Board of Directors. John lives in Blacksburg.