FP&A planing foreacasting and budgeting process? please help
Hey guys, I have a phone interview next week for the fp&a role. I’m in the financial service industry before and wanted to switch to a more financial analyst role. I know the basic stuff of accounting and finance, but I don’t have the actual experience in fp&a position (even though I put some related things in my resume). Can someone please tell me the specific process of how to do the planning, forecasting, and budgeting? or something related to cost analysis?
The phone interview should be 45 mins, what questions do you think I'll be asked? or what experience should I present to the hiring manager?
Thank you!
Is this for a BB or Fortune 500?
Fortune500
Without getting into too much detail...
On an annual basis, a company will prepare its long range forecast (or 'strategic plan'). This lays out the near-term actions the company needs to take to achieve its mid-term objectives (typically 1-3 or 1-5 year horizon). Year 1 of the LRF should form the foundation of the operating plan for the following year. Periodically (i.e. monthly or quarterly), the company will re-forecast its expected performance against the op plan. The re-forecasts form a better expectation of where the company will finish the year and are fed into the next planning cycle. Rinse, wash, repeat.
The frequency and depth of these exercises will vary depending on the maturity of the business and savvy of the management team.
This is a good summary.
At my firm, we in corp dev help with the strategic plan, though we are trying to get FP&A to take over because quite frankly, it's a pain. In addition to what pplstuff mentioned, you may involve segment controllers in this process. My firm is an industrials manufacturer, so it is important to get insight into which projects we can realize in the future. One trait you might want to highlight in your interviews is your ability to interact with cross-functional teams. If you lack FP&A experience, you will most likely be depending on controllers to assist in your projection (though, your firm might be different than mine).
Thank you so much for your summary! The company I will be interviewing with happens to be an industrial manufacturer as well. A few follow up questions:
Thank you!!
Thank you so much for your detailed reply! A few follow up questions: 1. When do you start to prepare the long range forecast (budget)? 2. What would an analyst usually do in this process? 3. How would you collect the budgeting data? with which department? 4. Do you do the budgeting by department, project or by product line?
Thank you!
- LRF: 2Q/3Q (board review at the end) - Op plan: 4Q (board approval) - Forecasting: year-round (no board involvement)
Analyst level will consolidate data and, perhaps, make pages depending competence/trustworthiness
Depends on a lot of factors... I tend to create budget templates for each P&L/'cost center' owner to submit to ensure accountability (headcount roster, sales by customer/salesman, full income statement)... this will depend on the business
I've done it many ways... the type of business will determine what needs 'more detail' built around the assumptions. Smarter boards ask more detailed questions that require more backup... my rule of thumb has always been to 'collect enough data to answer questions one layer deeper than you anticipate being asked'
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