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Don’t get stuck in the cycle of backward-looking reporting and drawn out planning cycles. We pulled insights from 9 finance leaders to assemble this list of FP&A best practices and tips that can elevate your role as a strategic finance leader. Find out how the best leaders set themselves apart from the norm.

Finance teams have fought for years to earn a strategic seat at the table. And now that you finally have it, the work is only just beginning.

Once you’re sitting at the decision-making table, you have to make the most of it. Doing the primary functions of a financial planning and analysis (FP&A) team is table stakes. The business expects you to build models, run scenarios for different business outcomes, handle ad hoc analysis requests, and add the financial perspective to growth strategies.

How are you going to go above and beyond to show that you’re an indispensable value driver for the business?

That’s not an easy question to answer. But these FP&A best practices and tips from nine finance leaders who have been guests on The Role Forward will help.

Check out how these great finance leaders have set themselves and their teams apart from the crowd to help guide their high-growth companies.

Table of Contents

1. Understand the Common Heuristics for Headcount Forecasting to Strengthen Your Financial Models

While there’s plenty of information you can dig up about common heuristics for revenue forecasting, there’s surprisingly little content out there about headcount planning heuristics. That’s why one of the biggest tips from Brian Weisberg, CFO at Tidelift, is to spend time understanding the right rules of thumb for your headcount mix. You can listen to the full episode to hear all of Brian’s thoughts on forecasting headcount.

The episode is loaded with great insight about building financial assumptions for headcount growth, but some of the high-level best practices to mention here are:

  • Before reaching 50 employees, think about having 1 full-time sales and marketing employee for every 2 in R&D
  • As your company scales to 100 employees and beyond, flip that assumption to add 2 sales and marketing employees for every 1 R&D person
  • For a sales-led go-to-market motion, consider adding one or two BDRs for every 2 new sales reps
  • Likewise, add 1 new solutions architect for every 2 new AEs
  • On the R&D side, think about adding a product manager and designer for every 3-4 software engineers
  • Expect to bring on more employees in G&A (5-6 hires until the company reaches 100 employees) but reduce that pace at scale

2. Leverage Software Wherever Possible and Lean on Automation to Optimize Processes

The pace of business change puts far too much pressure on teams to be agile for all of your FP&A processes to live in spreadsheets. While innovation in the CFO software stack has historically been lacking, there have never been more opportunities to bring finance automation into your business.

Lauren Bahr, VP of Finance at Occupier, believes that while spreadsheets aren’t going anywhere, there’s no choice but to optimize the finance function by embracing FP&A software.

I would love to get to the place where we can eliminate [spreadsheets] entirely, but I don’t think we’ll ever get there. But it would be really nice to put much less emphasis on them…. I don’t care if you are amazing at Excel in the future because I want you to be leveraging software, and I’m more curious about how you think through problems and use your analytical skillset.

Lauren BahrVP of Finance at Occupier

Technical financial modeling skills are a must for any effective FP&A pro. But the more you emphasize the ability to automate and leverage technology to focus more on putting your analytical skills to work, the further ahead you’ll get.

Understand the Impact of Every Decision with Modeling Software

3. Don’t Settle for Traditional Budgeting Processes and Annual Planning Cycles

Running the business based on one detailed planning process per year used to be the norm. But the best FP&A professionals have evolved far beyond making planning an annual affair. This is what Enrique Esclusa, Co-Founder of Assemble, sees as a critical part of elevating finance’s strategic role in the business.

There’s always a big annual lift toward the end of your fiscal year. It’ll take multiple weeks and, in some cases, can take more than a month to do all the work that you need to do… You can’t skip the annual process, and you must always expect that you’re going to have quarterly plans. But if you’re keeping track of things on a monthly basis, it allows you to iterate and change the plan as needed, so you maximize the chances of hitting your goals.

Enrique EsclusaCo-Founder of Assemble

Your ability to maintain a rolling forecast and continually reforecast to add new context to financial and FP&A models is crucial to making data-driven business decisions across the organization. The more iterative you can make the planning process, the more strategic value you can deliver to the company.

4. Focus on Flexibility and Consolidation in Your Operating Model

The last thing you want to do is spend weeks building a financial model for the business, only for the file to sit unopened in a folder once you’re done. Your goal should be to create an operating model that perfectly represents the business and remains flexible enough for practical use cases.

Jenny Jao, Head of Finance at Sprig, explains why a flexible operating model is so valuable to any business.

The first benefit is having one source of truth for all financial data. It makes the model the go-to place to look for any metric about the business. The second is the ability to run different cases… We weren’t able to do that before [having the flexible model] because if it’s not consolidated, you can’t see how all the different metrics shake out… And then the third is just general comfort in the forecast. I would say the accuracy of the forecast… is at an appropriate level for where we’re at… and I don’t know if that was the case before.

Jenny JaoHead of Finance at Sprig

Build your model so that it’s a tool for partnering with stakeholders across your business. If it’s not, you risk wasting valuable time and effort creating a model that can’t actually help the company move forward.

5. Build Strong Relationships with Business Partners to Get a Unique Perspective of the Data

It’s easy for finance professionals to get caught up in the cyclical nature of the role and a transactional relationship with department leaders. That’s where the perception of finance as budget gatekeepers and number crunchers often comes from.

Matt Wolf, CFO of ChartHop, says that strategic FP&A functions resist this dynamic. The more you push to build true partnerships with people across the business, the more successful you’ll be in your role and as a value driver for the company.

Knowing how teams are organized and being able to see them; knowing who’s in charge of what and what they’re working on — whether it’s tenure or whatever data you’re trying to look for — you can get a perspective on the business that you don’t normally have. And so, taking that information into a planning meeting gives you just that much more context for when people are asking for things, justifying things, or asking for feedback on whether or not they should do something.

Matt WolfCFO of ChartHop

Better partnerships lead to a better understanding of the business. And a better understanding of the business is what makes department heads feel like they can trust you. Consistently building that trust is the difference maker for strategic finance functions.

6. Surround Yourself with the Best Talent Possible

Success in FP&A doesn’t revolve solely around your own skills. According to Alex Song, Head of Finance and Capital Markets at Ramp, the people you surround yourself with — inside and outside of the finance function — can make all the difference in your growth.

One of the many things that I can take away from my career so far is to work with A-team people to the best of your ability. And the A-team doesn’t just mean your boss or your coworkers or colleagues, it also means your partners and your vendors and folks you work with even outside of your company and your immediate comfort zone. When you have a highly-motivated, highly-driven, very ambitious team around you, it’s so much easier to unblock certain things.

Alex SongHead of Finance and Capital Markets at Ramp

Making the shift from traditional FP&A to a true strategic finance function isn’t easy. But it’s a lot easier when you have the right people and partners around you.

7. Establish a Solid Data Infrastructure as Early as Possible

Your ability to answer critical questions about the business at the pace your partners demand comes down to the strength of your data infrastructure. It doesn’t matter how good your modeling or analysis skills are if the data is a mess.

That’s why one of CFO Aneal Vallurupalli’s top priorities when starting at Airbase was to bolster the company’s data infrastructure.

We [in finance] are the ones who are oftentimes looking at datasets that touch various parts of the organization, everything from product usage to customer data, software subscriptions, etc… With that in mind, you can see that if we can’t answer questions quickly, then we’re unable to make strategic decisions quickly. And at this stage, waiting months to make strategic decisions makes the difference between incremental or hockey stick growth.

Aneal VallurupalliCFO of Airbase

8. Learn Your Business from the Bottom Up

Even though your overarching goal may be to elevate your strategic role in the business, you can’t lose sight of the day-to-day work that finance has to do to keep the lights on. Don’t think of these lower-value tasks as menial work to automate away as soon as possible.

Automation is critical for your ability to play a strategic role long-term. But according to Kalor Lewis, getting your hands dirty in every single finance workflow gives you the foundational understanding of the business needed to succeed in that strategic role.

Being more technically savvy and more data-savvy was helpful [to my early success as Fivetran’s finance leader]. But ultimately, it was just getting my hands dirty in as many workflows as I could, learning things from the bottom up, and wearing as many hats as I possibly could. That really helped with where I am today, building things and really understanding how they work, understanding dependencies through and through. It’s been a tremendous help just being able to speak the language of all the different finance functions.

Kalor LewisVP of Finance at Fivetran

9. Show Business Partners the Disruptive Impact of Finance

It may seem obvious, but the best way to make a reputation as an FP&A team that adds strategic value to the business is to prove that tangible value as early and often as possible.

For Ajay Vashee, former CFO at Dropbox, that meant finding ways to showcase the “disruptive impact” of the finance function.

The second thing that comes to mind is disruptive impact. The more you can find a way to have a transformative impact on the company through your work, demonstrating that that’s going to be your philosophical and cultural approach goes a long way. If you’re really focused on going above and beyond to deliver impact to the company and transform not only the way your organization or team works but how the company works and what the company does… can really set you up for success.

Ajay VasheeFormer CFO of Dropbox

The Future of Financial Planning & Analysis Is Strategic Finance

If there’s one thing to take away from all of these FP&A best practices, it’s that you should focus your initiatives beyond the baseline tasks and workflows you’re responsible for. Do everything you can to set yourself and your team up to focus more on building relationships and doing work that delivers tangible value your partners can understand.

In many cases, that means revamping your CFO software stack with solutions that automate the transactional, repetitive work of the job. But it also means embracing a philosophical shift from FP&A to strategic finance.

If you want to learn more best practices for strategic finance, check out The Role Forward podcast. Every other week, we release an interview with a strategic finance leader who shares their best advice for elevating your role.

FP&A Best Practices FAQs

How can you improve FP&A?

The best way to improve FP&A is to make a philosophical and cultural shift toward strategic finance. Automate the repetitive data management and reporting tasks as much as possible and free yourself up to focus on achieving higher-level strategic objectives — building partnerships with cross-functional leaders, proactively analyzing operational data, and adding valuable insights and actionable plans through scenario planning.

What are the most important trends in FP&A?

Can you automate FP&A?

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