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Defining FP&A: How Are We Supposed to Do This Job?

  • By Bryan Lapidus, FP&A
  • Published: 6/25/2019

There is a mismatch between formal education and the role of the financial planning and analysis (FP&A) professional. It is partly due to the evolving role of the CFO, as well as the relative newness of FP&A as a discipline. As a result, FP&A as a whole has become increasingly difficult to define.

“My university business school does not have an FP&A track. We have programs for investment bankers and accountants, traders and marketers. But the skills of FP&A are spread across the accounting, finance and operational decisions tracks,” said D.J. Masson, CTP, FP&A, professor of finance at the Indiana University Kelley School of Business, and member of the AFP FP&A Advisory Council.

Add to that the changing role of the CFO, and you have perhaps an even more complex problem. As the Google nGram below shows, the use of the term CFO has shot up in the past generation as complexities of treasury, tax and now FP&A have been added to the traditional role of financial control.

COMPANY-BY-COMPANY DIFFERENCES

Another challenge in defining this job is that FP&A looks different in every company. Size, maturity, specializations, and organizational structure all play a role in determining what the job and function look like. 

The AFP FP&A Advisory Council, a diverse group of practitioners and experts in FP&A, discussed this challenge at length in our annual meeting at the AFP global headquarters. Their opinion reinforced what I was hearing from members—we still need to define what FP&A is to all audiences in order to sell our services and add the value that we are capable of. I was surprised to hear that confusion existed even within the office of the CFO. “We need to continually reinforce the difference between FP&A versus finance versus accounting,” said Eric Ellis, vice president of FP&A, National Restaurant Association. Otherwise, the group becomes the leftovers, i.e., “everyone who works for the CFO who is not in accounting, tax or treasury,” as one large company CFO said.

ELEVATOR PITCH

AFP already has several tools to define FP&A, including the certification and corresponding body of knowledge, and is developing several tools and articles to help define the FP&A department. We are also borrowing a common idea—the short elevator pitch that explains who you are, and why someone would want to work with you. This pitch needs to provide a vision to other groups that explains how you create value for/with them, and to provide expectation and motivation for your team. What you choose as your vision needs to reflect your values and aspirations. Here are a few examples to start your thinking:

FP&A exists to:

  • Improve decision-making to achieve strategic goals
  • Deploy capital and resources to the most efficient use
  • Plan the future.

We do this by:

  • Becoming your internal consultants, helping you achieve your business objectives
  • Suppling the “Three Whats”—What (happened), So What, Do What?
  • Understanding the root causes of past performance, analyzing the actions and levers in the present, and creating views of the future
  • Partnering with the business, understanding enterprise scope and vision.

We deliver:

  • Strategic, financial and operational alignment
  • Clarity and foresight.

Your elevator pitch is a good start to differentiate yourself from other finance groups and describe the value you will create. The next step is trickier—defining the services and setting up your organization. The second element that can help you is our newly released AFP Guide to the FP&A Maturity Model, a roadmap for FP&A excellence in the near term that establishes the competencies to address changes on the horizon. The guide was created by a subset of the Advisory Council and research on trends in the marketplace. Our hope is that you will find in the Maturity Model inspiration and aspiration to improve your craft and advance the profession. Feel free to reach out to me directly with any questions you may have.

Download the new AFP Maturity Model here. And don't forget to check out the FP&A Track at AFP 2019.
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