In this episode of Being Planful, I welcomed Carl Seidman, FP&A Advisor at Seidman Financial. Carl is an FP&A practitioner and educator. Through his eponymous firm, Carl helps financial leaders solve their most pressing challenges so they can enjoy their work and contribute in a more unified, empowered manner. He’s a firm believer in people-driven organizational success, no matter how big or small an organization might be.
Carl and I dug into exactly those topics so we could understand how organizations can leverage modern FP&A resources for growth. We talked about the variations in continuous planning mindsets at companies of different sizes, how company culture is critical to supporting growth, and the differences between upskilling versus empowering your finance team.
Here are a few highlights from our conversation. Or, you can listen to the full episode here.
Growth Requires FP&A Maturity
Carl has a deep understanding of FP&A, which he acquired through his own time in Finance, and then by helping CFOs build, scale, and turn around their finance functions. But he’s found there’s not a one-size-fits-all approach to continuous planning and it revolves around data, agility, and connectedness. And yet, while company size and complexity define FP&A, it’s usually the smaller companies that are “fractured” and struggle the most with collaboration and data integration.
“They’re using Excel as their primary forecasting and planning tool, they might be on QuickBooks or Sage or some other accounting platform, they might be on another separate inventory or purchasing platform,” Carl explained. “So you have all this disconnect across the finance function. And in order to be able to forecast and plan and conduct analysis, you end up having to take all these little pieces of information, get them to the right person in the right way, and then it often takes a long time to do that.”
Of course, being a larger company doesn’t instantly solve these problems. And, growth usually introduces new issues because of size. Carl points to the relative lack of speed in larger organizations because the data, while connected, needs to find its way through the process. That data then struggles to get out to the business. And, even with big technology investments, or maybe because of them, larger companies tend to rely on spreadsheets more than one would expect.
Good Processes are the Foundation
One area where all organizations, regardless of size, need help is in shifting their culture. Growing companies need to realize they’re no longer small, Carl said, and that takes time. Another area where companies need help is in changing how Finance works, and getting teams to accept that change is required to eliminate the frustrations and disconnects. The third area, according to Carl, is technology. But first, you need to understand what you’re doing well.
“If you have a company that is fractured in its people and processes and strategy, if you bring in software, it’s going to address some of those problems, but in some cases, it may even make it more splintered,” said Carl. “It’s really important to understand and redefine what your processes are, and make sure that they’re working the right way, that they can be well articulated so that when a platform comes in, those processes can be well migrated.”
The goal, he said, is to find the right technology that not only fits into your business, but that enhances and improves what you’re already doing. But that doesn’t mean technology can’t quickly move your business forward.
“I think what is really interesting about this current time is just coming to terms with what is needed that we don’t have, and then identifying what is possible,” Carl added. “Several years ago, to be able to forecast at the speed at which we now can, that was just in people’s imagination. This was maybe about a year and a half ago. To go into a company where they’re able to update their planning, redo their forecasts in less than a week’s time, the equivalent of a Fortune 500 or Fortune 100 company, and mostly done by non financial people, was unheard of. And that is what technology should be able to do.”
Today’s FP&A Must Act for Tomorrow
We pivoted to talk about what companies are experiencing today, with the impact of the pandemic, reduced cash flow, interrupted supply chains, and more. Carl said that companies are trying to understand how their business will look in the coming years, which then lands right back in the lap of FP&A.
“So much of that has been revisiting the budget and the forecast and saying, ‘How do our assumptions need to change?’,” Carl explained. “It’s taking a look at contingency and scenario planning and saying, ‘Okay, if we lose this customer, or if we lose 80% of this business, or 20% of that business, what does that mean and how do we need to act? And we need to have those answers now.’”
Oh, and Carl said, add in remote work to that need for agility, speed, and scenario and contingency planning. And that uncertainty still rules the day. And that most teams are trying to manage it all with spreadsheets and email. Add it all up and, according to Carl, companies need to start preparing for what comes next.
“When a company is going to move into a more mature connected or integrated FP&A function, they start to act like the entity that they want to be,” said Carl. “Because if you don’t do that and you start to become a high-growth organization without that infrastructure, you’re going to end up being exposed to significant error, multiple sources of truth instead of a single source of truth, and you expose yourself to vulnerabilities.”
Carl and I went on to talk about the stark differences between companies whose FP&A acts bigger than they are — they dress the part, so to speak — and those who still see themselves as scrappy and having room for “error and forgiveness.” But what Carl has discovered is that being prepared for change is better than being forced to change. And if you’re prepared for growth, you’re better able to grab those opportunities when they present themselves. Culture means a lot, as does leadership and a willingness to give your people the skills and opportunities they need to grow along with your business.
Listen to the full episode to hear all of Carl’s valuable insights on growth, the role of technology in FP&A, and how finance professionals can best position themselves to grow within FP&A.
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