The CFO job description continues to expand and drive an organization’s FP&A strategy. Just as CFOs now take a greater role with M&A, investment banking, engineering, so too with FP&A.
For FP&A experts, both the changing role of the CFO and the new technologies involved in the change have a major impact on how this discipline is changing business strategy. And according to experts, CFOs have a much more efficient and successful FP&A process and execution plan by addressing data silos, improving communication across finance teams, and building a strong peer network.
Create an FP&A-Friendly Environment
Creating an FP&A friendly working environment and communication cadence between CFOs and their teams makes all the difference, according to Paul Barnhurst, founder of the advisory firm FP&A Guy, former host of the FP&A Today podcast, and soon-to-be host of his latest podcast venture, FP&A Tomorrow.
"The CFO needs to ensure the FP&A team has a seat at the table and that the business sees them as a strategic business partner, not a back-office function," said Barnhurst. “They also need to ensure that the FP&A team understands the strategic objectives and can link them to the planning process."
"Help create a data-driven culture by funding data projects and ensuring the company is using data to make decisions," he said. “Ensure that FP&A has the support of the CFO to do integrated or extended planning so that the strategic, financial, and operational plans are integrated and aligned not built in a silo."
Barnhurst identified a key focus for CFOs on giving their finance teams the tools and time they need. "The CFO needs to ensure that the FP&A team has the time to learn the commercials and operations of the business. The best FP&A professionals understand much more than just the financials."
“The CFO needs to ensure that the FP&A team has the time to learn the commercials and operations of the business."
Paul Barnhurst
Founder, FP&A Guy
Empathy, Barnhurst said, is also a major component of how FP&A teams function. "This might sound funny, but CFOs must show empathy for their teams," he said. "Often, FP&A teams spend many late nights building the budget and work a lot of hours and this goes unnoticed.”
“Make sure as a CFO you appreciate the work your team is doing and show empathy and understanding for the challenges they face and work to solve them."
The Three Pillars of Focus
"FP&A is a whole new skill set, mindset, value and impact that finance professionals and CFOs should be focusing on," said Chris Ortega, CEO and fractional CFO at Fresh FP&A, an advisory firm for small to medium-sized businesses. Ortega, who has spoken extensively about how good FP&A capabilities can help transform and extend businesses, says there are three pillars of FP&A today that CFOs must focus on if they want to be "fresh" with their FP&A practices.
It's all about how different approaches to FP&A can turn into wins for a particular business. "The first pillar is knowing traditional FP&A is where software, technology and GenAI wins," he said. "The second is FP&A in the name of financial partnership and advising — that's where humans win."
“The first pillar is knowing traditional FP&A is where software, technology and GenAI wins.”
Chris Ortega
CEO, Fresh FP&A
The third pillar and FP&A win are a proper leveraging of the first two, he said. “[CFOs should] let technology do traditional FP&A and empower their people to bring the best style of FP&A to the business," Ortega said.
Avoid Data Silos, Encourage Networking
Wouter Born, founder and managing partner of Born Capital, a specialized investor in CFO technology, pays close attention to how CFO-centric tech handles FP&A. He believes the companies that have success have a significant common approach: no data silos.
Born noted how technology, much like FP&A, is extremely limited without data that can be both collaborative and actionable.
"Everyone is really impressed with what AI and large language models (LLMs) are doing in business today, especially when it comes to analysis; but, what's really important is that companies need a lot of data from different disciplines to best use these technologies," he said.
"Financials are relatively not so interesting for AI. But, data from operations, supply chains, sales, marketing, all this data needs to be matched up together. If you have data silos, you won't be able to understand all that you can from your data."
Born advised that, even if a company has good data and a good FP&A team, using the data to create productive growth is still essential. "Growth is one thing, but profitable growth is something else," he said.
"When I'm looking at a company, I really like when FP&A leaders and CFOs step in and say ‘hey, we need to make sure we grow in the right way and take on [the right] customers,’" Born said. "I think that's a big trend in FP&A right now — the CFO taking a bigger take in the operational parts of the business during the FP&A process."
"Data from operations, supply chains, sales, marketing, all this data needs to be matched up together. If you have data silos, you won’t be able to understand all that you can from your data.”
Wouter Born
Founder, Born Capital
Networking and communication, which is a big part of Born's role, are also important for CFOs who wish to improve their FP&A capabilities.
"I think CFOs need to continue to become great storytellers, and I do think we will always have CFOs, even if AI can do maybe 80% of the finance work. FP&A is very similar [in this regard]" said Born.
“FP&A people are probably best aligned to become a CFO one day because they are on the strategic side of finance. So outside of technology, I think things like networking, investing, and building soft skills are the way to do it. 90% of my work is networking and talking to people, it's super important to me. [So] I think for CFOs, it's also really important.”