Part of FP&A team establishment - Advice appreciated

gc21995's picture
Rank: Chimp | banana points 13

Good afternoon and happy Friday.

This is a first time post as I have been a long time stalker on this site since my freshman year of college. I am very grateful and credit everyone on WSO for being a major factor in developing a passion for finance. A little background about me. Graduated in May from a non-target with a good finance program. Internships included PE, research, and leasing/financing large asset company.

Post-graduation I took some time off and in the fall I started as a Financial Analyst at a regional independent company of a major food and beverage company. The company is currently one year off an acquisition of more territory that tripled their revenue to >$2b. Currently, the company does not have any traditional corporate finance or FP&A structure. My two supervisors, the lead accounting manager and director of strategy has indicated that their goal is to set up a traditional FP&A team and modernize the entire finance/accounting division.

I have been with the company for over 4 months now and I have developed a couple of deliverables so far; forecasting, cost to serve analysis, cost/benefit analysis, etc.

As mentioned before, the company is in chaos with all that is going on, and I have realized that in order to gain all the benefits from being part of the establishment of a finance structure, I will have to take a leading role and push my supervisors as they have a million things on their plate.

Are there any resources, articles, tips, advice that any of you could give me to try to get everything possible out of this challenge. I will be presenting to my boss' ideas about how to bring together the processes and deliverables of the FP&A team. I am very exciting for what this could mean for me, but also a bit overwhelmed as I feel I am extremely underqualified for this opportunity. Any advice on how to rise to the top of this challenge would be greatly appreciated.

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Comments (11)

Feb 1, 2019

gc21995, hey, look at the bright side, at least you didn't get a ton of monkey shit thrown at you...here is my best guess on threads that might be helpful:

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  • Fortune 50 FP&A Summer Offer or Take a chance on IB? here is almost non-existent! For those of you that suggest I wait for FT recruiting how significant ... part time/internships at a local hedge fund and served as a financial analyst intern at a local company ... BTW) I would greatly appreciate feedback, suggestions, comments! ...
  • FP&A analyst. Move to Merger Integration & Business Planning team or stay till promotion in FP&A? Wondering what the thoughts are on "Merger Integration / Business Modelling" type teams ... ? most seem to stay in these teams all career. post merger integration ...
  • More suggestions...

Fingers crossed that one of those helps you.

Feb 12, 2019

bump

Feb 4, 2019

Are you looking for advice about what the FP&A team does and what the deliverables should be, or more general advice about how to present your ideas to the stakeholders?

Feb 12, 2019

More about the deliverables and structure of an efficient FP&A team. Currently, the responsibilities that the team would have are spread out through individuals in the company (for example, the treasurer is from the parent company and presents to the board to them all official forecasting). That will ultimately be taken over by the FP&A team. I know there is a low more and I have no previous CF experience so the help is greatly appreciated.

Most Helpful
Feb 4, 2019

Gotcha. I can give some limited insight- I've had minor FP&A responsibilities in two of my three roles, and I was on a product line FP&A team for one of my 3 roles.

At the beginning of the month, once the books were closed from the prior month, we would refresh our "actuals" file that would sort actuals by product area. We could then see actuals compared to forecast and see which areas where coming up short, and which specific contracts were coming up short. I made a tool in this file to sort by the top 10-15 deltas, and once I knew which contracts/areas were coming up short for bookings/sales/profit/net cash I would call up the financial analysts for those contracts and get a variance explanation.

This file would also generate charts and graphs for each product area. Once I had combed through the data and made sure everything ticked and tied I'd send it out to the analysts and product area managers.

That first week was mainly about analyzing actuals and getting variance explanations. The next two weeks of the month were about re-forecasting- for each program/contract we had, we would establish a new forecast that was adjusted for the prior month of actuals. We had to make sure every forecast made sense- we were executing at a reasonable rate, we were forecasting cash payments at reasonable times, etc. We spent a lot of time trying to get the individual pieces right because they are the building blocks that comprise the total product line forecast.

In the last week of the month, the individual forecasts were locked down, and it was time to tweak the forecast at the total product line level. We'd go through a couple iterations since sometimes the forecast came out too high or too low and our product line VP didn't want to commit to so much or knew he needed to commit to more. We would tweak all parts of the forecast at a product line level to make sure that it made sense and, more importantly, it told the story we wanted to tell.

We'd interface with supply chain to make sure we were forecasting material purchases appropriately, we'd interface with HR to make sure we were correctly forecasting manpower requirements, we'd work with Business Development to adjust future contract booking expectations.

We had deliverables for each of those groups- Supply chain, HR, BD. We also built a weekly summary to track how we were trending intra-month, and report up to our product line leadership.

My experience will be different from yours since I am at an A&D company, so feel free to ask questions so I can clarify!

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Feb 12, 2019

This is phenomenal, thank you for the long write up and great details

I will definitely be consulting your advice as I continue forward with my role!

Feb 5, 2019

Hope I can help out a bit - The below is a very high-level look at some of the considerations / deliverables that I've previously encountered on FP&A / Corp. Finance teams.

KPIs - We established a set of KPIs that adequately depicted the company's performance and built these into dashboards / budget / 5 yr plan

Budget - Annual deliverable. We utilized zero-based budgeting in some areas and simply budgeted based on drivers / growth rates in others. Once completed, Budget was locked.

Forecast - Monthly deliverable. The forecast model was used to update the budget based on actuals / operational changes

Actuals - Monthly deliverable. We reported on actuals each month and ran variance analyses to budget / forecast then provided commentary as necessary

5 YR Plan - Annual deliverable (updated ad-hoc). This was based on broader assumptions and used to analyze impact of longer-term initiatives on performance

Profitability / Sensitivity analyses - ad-hoc but may become more frequent depending on new initiatives / management

Other:

Covenant tracking, dividends / distributions, cash flow analyses, special projects, etc. - your company may have a unique capital stack, restrictive debt covenants, high demand for distributions, or just a penchant for detailed reports. It's important to converse with business leaders to understand the operational focus of management and add tailored reports to your process.

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Feb 13, 2019

I currently work as a Treasury analyst for a super-regional bank, but was previously an analyst in a FP&A type CF role (at the same company). I am by no means an expert, but will try to add some thoughts from my limited experience. While the product is different (money vs. food) ultimately, the responsibilities should be similar: Budgeting (forecasting), Tracking, Analyzing (save opportunities), Reporting. Wash, rinse, repeat.

The nuances of how my organization works, and what functions we explicitly cover in the various finance departments may vary greatly from yours, however, I will try to add some color on the day-to-day, month-to-month, and annual periods at a high level.

Budgeting: Necessary for businesses to plan, develop strategies, and benchmark performance. The next-year annual budget process was formally done once a year, with supplementary monthly forecasts and a large 3 year strategic plan peppered in. These various forecasts (budget, strategic plan, and monthly forecasts) provided the basis by which most analysis was performed.

Tracking: On a weekly and monthly basis we would track the financials of the various LOBs compared to our various forecasts. Because monthly forecasts were continuously being updated it was useful to track against both longer term budgets and recent forecasts to develop a better understanding how accurately we had planned, and to identify where our operational shortfalls were. Tracking the financials is a vital component of FP&A as it provides a basis to ask "why/how" and to develop an understanding of how the business(es) operate and where savings opportunities, strategic developments, etc might exist.

**Analysis/Save Opportunities: **The analysis part of run-of-the-mill FP&A comes from reviewing the financials and digging into the performance drivers: What drove such unusual revenue growth? Is it sustainable? Why were our forecasts off? Were we too conservative? Why are expenses clipping higher when we have a company-wide cutting/save initiative? Are there opportunities to out-source/offshore some of our expenses? Are there different vendors that might offer lower costs? Etc. This function rolls into the next, Reporting.

Reporting: Presenting the actual results to key stakeholders (LOB directors/division heads, CFO(s), Corporate Development, etc). This can be both a fun and dreadful part of FP&A. Often, your reports might simply be a matter of refreshing templates and presenting the month/month change in a particular line item, describing the drivers and identifying opportunities to an uninterested audience of LOB directors. Other times, however, you may be presenting on material big-picture information and analysis that is being used by 10 different groups in your organization to develop cost saves, identify growth opportunities, etc.

FP&A can be very interesting. Depending on the organization, FP&A teams may have access/influence on the entire business and all of its LOBs, while other times it may be more product/region specific. You can have the opportunity to dive into your company's performance at various levels ranging from company-wide big-picture level to the granular invoice/unit level. However, FP&A can also become very mundane and "automatic" as the process of budgeting, forecasting, updating forecasts, presenting on actuals vs. forecasts, reviewing LOB performance and reporting to managers where they can cut costs, etc. can be a persistent cycle.

I can try to answer any specific questions you may have, however there may be someone here better positioned with greater experience to take your more advanced/granular questions. Good luck!

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Feb 12, 2019

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Feb 5, 2019

I work in Corporate FP&A environment for 10B sales region of Global500 company. For us, FP&A is the CFO's go-to group so I can say that we are at the top of finance food chain. We do a lot of prep work for CEO/CFO with their presentations (board, investors, internal to global CEO/CFO,etc.) so we have to know everything that goes on in our organization.

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Feb 12, 2019