FP&A skills are more relevant than ever thanks to a more dynamic role that was adopted during the pandemic. Instead of focusing on internal data and budgets, companies are turning to finance teams to use data driven skills in order to drive value to the organization.
Although the role has changed dramatically in recent years, perhaps the most important difference is the term FP&A team. Working together and with all other departments in the organization, FP&A teams bring out a unique combination of hard and soft skills in order to set the company on the right financial track- both in the short and long term.
With technology leading big changes and the need for larger and faster data always at the forefront, other FP&A skills and development can be left behind in the dust. It is important to look ahead in order to understand not only what FP&A will look like in 5-10 years from now, but also what skills, trends, and developments will be needed in order to succeed in the future.
Building on Previous Roles
Traditionally, financial planning was made up of the hard skills of accounting and reporting. While this was a career in its own right, the work was more rigid and set in stone. Today, finance experts need to have a grasp of multiple ways of both accounting and reporting as well as keeping up with new trends in their business and the market as a whole.
Accounting- Instead of the traditional way of budgeting that has been around for so long, finance experts need to be aware of the multiple types of budgeting that are becoming more and more popular. Driver-based, incremental, and zero-based budgeting are just a few of such examples that companies implement based on what is best for them during different stages of growth.
Reporting- While accounting and reporting used to go together in a consistent yearly/ monthly format, today reporting is a whole new job description. Today, FP&A teams strive to be far more involved in what happens with the data after it is collected, and try to be less involved in the collection and entry of data. This is because as finance experts, their time and analysis skills are extremely valuable to the company.
The evolution of these traditional roles is just the beginning of FP&A changes. The big revolution is how the new and improved accounting and reporting has led to a completely different FP&A job description altogether:
The New Roles of FP&A
Reporting is no longer submitting a pile of spreadsheets and numbers to the CFO’s office at the end of the month, but rather compiling and analyzing data with the intent to tell a story. But just like storytelling in the classic sense requires knowing the audience, so too does FP&A storytelling.
- Who is your audience? Is it C-suite executives, employees at the company or stakeholders?
- What are the audiences’ needs and what can you bring to the table to solve or advance this issue?
- What is the action that needs to be taken in order to reach this goal?
Storytelling is a lengthy, thought-out process and needs to be adjusted according to the circumstances. It can essentially be broken down into 3 parts:
- The Narrative – Understanding the business and the decision thought process.
- The Visuals – Using data visualization can uncover insights clearly and conceptually.
- The Data – The foundation of the narrative and the story being told.
2) Soft skills
Storytelling is the best example of how soft skills are becoming an essential component of FP&A teams. Long gone are the days of finance teams sitting in their own cubicles from 9-5 with little interaction, influence, or say in broader company matters (think Kevin from The Office). Collaboration with other departments, developing business acumen, and influencing skills are a few examples of what companies are looking for in FP&A experts today.
What ties it all together and allows these changes to happen is technology. But first off is the difficult task of FP&A experts being able to adapt to new technologies all while keeping up with intense workloads and deadlines. Companies integrating new cloud based technologies that involve the finance department is not an uncommon occurrence, and although it helps in the long run, it can be frustrating and time consuming to spend time and effort on integrating into the new systems.
However, without technology none of the new skills and roles are possible. The main reason why FP&A was so rigid and orderly in the past was because doing all of the manual and repetitive tasks took up the vast majority of the workday- leaving no time for other skills. Today, with a large array of FP&A automation solutions available, finance experts spend far less time on manual tasks, and more time on actions such as analyzing, storytelling, and decision making. Technology is the biggest cause of the transformation of finance teams.
Research has found that the average FP&A employee still spends 75% of their time on gathering data, which leaves only 25% of their time left to analyze it. Companies are not taking full advantage of all of the benefits of automation, but without technology, acquiring and using the new FP&A skills is extremely difficult because there is hardly any time for it.
4) Scenario Planning/ Modeling
The final skill, scenario planning, encompasses how and when the data is analyzed. Instead of the typical yearly budget of the past, planning today involves a single integrated strategic financial and operational model with on-demand frequency that is both producing short term results and being flexible for the long term. Planning involves the hard and soft skills of business partnering as well as a high level of understanding the business in depth and business acumen that wasn’t necessarily needed in the past.
The FP&A skill sets that are needed in order to succeed today are larger in number and very different from the past. Instead of a separate department, finance teams now need to be aligned with all of the drivers of the company. This includes developing skills such as storytelling, being technology leaders, and soft skills that will help add value to the organization and lead the companies long term goals.