We asked 200 CFOs: What do you expect from a well-performing FP&A function

Here is what they said and what it means for FP&A professionals:

#1 Supporting company decision-making [25%]

#2 Completion of budgeting and forecasting on time [21%]

#3 Directly impact topline growth [20%]

#4 Understanding profitability and cash needs [19%]

#5 Risk management [12%]

(We are still defining our expectations [4%])

My company, Datarails, surveyed 200 UK and US CFOs who lead finance functions at companies ranging from 100 to 1,000 employees.

Let’s take a closer look at what the findings mean for us FP&A professionals:

Supporting company decision-making

Most CFOs see this as the most crucial responsibility of the FP&A team. What does it mean? FP&A teams support decision-making via a 4-step process:

Gather accurate data at the right time
Separate signal from noise
Question business partners to understand root causes
Turn raw data into insights through financial analysis and modeling

A mistake I often see is skipping or not spending enough time with step 3, talking to business partners in the functions responsible for generating the results. That’s critical because it’s how you connect the numbers to strategy and action plans.

Completion of budgeting and forecast on time

Timeliness when it comes to planning and forecasting is critical. That’s mainly due to 3 reasons:

CFOs want to use changes in the forecast to make recommendations on strategic adjustments to the CEO.
CFOs need to update investors on the outlook for company performance. The more time they have to craft the message, and best tell the story of the business, the better.
No one likes last-minute surprises.

What can you do to complete these tasks faster? When you go through the next forecast cycle, write down how long each sub-task takes. Then compare how much time you spend gathering data and crunching the numbers to more value-adding tasks like analysis and discussing the forecast with business partners. If you don’t like the result, create a plan to eliminate, simplify, automate, or delegate non-value-adding tasks (in that order!).

Directly impact topline growth

CFOs don’t want FP&A to be merely a support function. You need to be a revenue driver. So, don’t stop your analysis until you find the actual root cause. Because once you do, it’s easy to make a concrete recommendation on what your CFO should do to drive the business forward. For example, “organic sales are unfavorable to forecast by 15%” is not a root cause. But “customer XYZs orders were delayed from April to May due to their ongoing inventory audit.” is one.

Understanding profitability and cash needs

Most companies have strong incentives to encourage people to grow the top line. For example, sales teams have volume goals, and Marketing teams are incentivized to generate as many leads as possible. But typically, few incentives exist to ensure the company's margins and cash needs are fulfilled. That’s where the FP&A function has a significant role to play. By being a strategic advisor on resource allocation (funds, capital, people, time), you make sure that the company grows at the right level of profitability.

Risk management

Accountants apply “fiduciary conservatism” to ensure profits aren’t overstated.

But FP&A teams have to step out of that mindset. Your job is to encourage smart risk-taking. Often, that means recommending that the company takes MORE risks instead of less. You are uniquely set up to do that when you back up your recommendations with thorough financial modeling and scenario planning.

If you’d like to learn more about FP&A, I offer help in three ways:

1️⃣ Subscribe to my free newsletter “FP&A Tuesday” here.

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