FP&A Eco-system best practices
- be obsessed with context
- corporate context includes investor relations feedbacks, earnings call feedbacks
- regulatory context includes important past and current financial regulations that impact the marketing, the pricing, the disclosure, the servicing, the capital requirements etc
- macro context includes the key consumer indexes, fiscal policy, geo-political tensions
- market competitiveness
- be religious of the financial management routines
- prioritize review routines with the appropriate accountable audiences
- foster the habit of looking data, trends in a consistent manner
- map general ledgers into profitability drivers with accountability
- routinely review the short term and periodically review the longer term and annually refresh the five to ten-year forecasts
- analysis includes variances to expectations, rate vs volume driven, assumption vs decision drive
- understand/identify strategic metrics to demonstrate the strengths and weaknesses of supply - demand - leverage
- supply strategy - sourcing, vendor, differentiated service levels; financial metrics, unit cost over time
- demand strategy - cost consideration at the time of targeting, acquisition, and onboarding; financial metrics, early-stage profitability
- leverage - technology-driven productivity gains; yield management; customer engagement; financial metrics, per customer metrics
- integrate with business planning
- for levers, proactively think of "what does it take to deliver"
- prepare to rank order financials, operational complexity, certainty, ranges of the outcome, customer experiences
- influence product roadmap, tech roadmap by attending offsite and giving updates on overall strategy and financial priority incl. option value, the economic value of the tech build
- invest in technology to facilitate on-demand forecast to reflect the dynamic change in business, to allow quick adjustment between business intent and financial outcome
- Everyone can use some time to learn Finance
- draw on our personal financial management experiences
- "how do we make money" helps put meanings to the work we do
FP&A value creation
- Outlines organizational connectedness. Revenue, costs, and losses in one place will facilitate supply-demand-leverage discussions across the multiple AEs
- Gives quick feedbacks on the short term portfolio performances against expectation. The accounting system is an early warning system, eg. variance analysis with rate vs volume, assumption vs decision insights. This allows the quick adjustment with short term levers if needed / "lesson learned"
- The forecast of the longer term will enforce disciplined decision making, gives economic values/meanings to the capital investment, process improvement and technology modernization
- integrated planning will ensure no surprises between goal setting, intent, execution, and the measurement
- evolve from a support function to an operational partner with enterprise analytics, on-demand forecasts, organizational alignment, and overall financial literacy for the general managers
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