What Accountants need to know to succeed in FP&A

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Accounting is a great foundation for forecasting and analysis work. But these are the five things you must learn if you want to succeed in FP&A:

#1 How to look forward

As an Accountant, you are very familiar with how to report the last period. But as FP&A professional, you need to learn to turn that into a forecast. It shouldn’t just produce a set of numbers we think we’ll land on in the future.

Instead, you need to provide a range of likely outcomes to help leaders prepare scenarios that allow rapid and intelligent decision-making.

#2 Process optimization

You likely get your transactional data from a single system, such as Netsuite or Quickbooks. But in FP&A, we look at all the data that could tell us the direction of the company, including non-financial metrics such as leads or inventory.

These data sets may not even be available in a system. So instead, you collect them from other people. In those instances, optimizing the process of how information flows is critical to functioning efficiently.

#3 Influencing people

Your objective as an Accountant is to inform the leadership team about how the company did in the last period and how that impacted the three statements according to generally accepted accounting principles. In addition to informing your stakeholders, FP&A requires challenging and influencing. That’s because the departments you are working with have narrow incentives.

For instance, the sales team mostly cares about volume, while the marketing team focuses on lead generation. As a result, growing profitably is often ignored. FP&A needs to avoid that through smart business partnering.

#4 Separating signal from noise

Accountants must report according to accounting standards. When creating a P&L, they aren’t allowed to leave anything out, even if it’s less meaningful to the current business issues.

FP&A, on the other hand, needs to help executives determine what matters and what doesn’t. You need to have the business acumen to determine which KPIs need discussing and which should be left out to ensure the company has the right focus.

#5 Matching financial models to the business case

P&L, Balance Sheet, and Cash Flow statements are models accountants are very familiar with. But to succeed in FP&A, you need to know several others, such as Discounted Cash Flow, break-even, or Lifetime Value models.

And knowing how to use them isn’t enough. You also need to decide which type best matches the business case you are dealing with.

While this may sound like a lot to learn, I’m here to help.

I created “FP&A Bootcamp” to teach you everything I mentioned in this post.

It’s a live online course to help Accountants (and other finance professionals) learn the best practices of Financial Planning and Analysis.

To learn more about the course, click here.