SWTCH by Pigment
Three days of predictions, insights, and advice from leaders in finance, sales, HR, supply chain and more
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SWTCH by Pigment
Three days of predictions, insights, and advice from leaders in finance, sales, HR, supply chain and more
Register now here
By Mason Brady, Director of Finance at Homegrown Organic Farms
Let’s admit it. “FP&A” is cool now. It’s a hot topic. Its value is being seen in the more data-centric culture and environment that we exist in. This isn’t a bad thing. It’s great. Large corporations are pouring resources into developing their FP&A departments.
Can you envision an FP&A department when you close your eyes? When I imagine FP&A, I dream of a team of professionals located in the campus of a large organization. They are working together with many large computer screens. The team is filled with finance professionals that know excel very well. They have some budgeting and forecasting software they use and they even know how to code a good amount. They are strong technicians in their craft and are led by a seasoned finance professional. They partner with other departments. Yet, they still dedicate themselves to FP&A work.
But, for small businesses, this can be far from what FP&A looks like. To elaborate on why FP&A looks so different in a small business environment, allow me to share some more personal examples with you. My examples stem from my own company and our sister company that has a colleague of mine in a Director of FP&A role.
In my role, FP&A work makes up about 15% of my annual time per year. My other time involves managing accounting, supply chain operations, and our software apps. Our FP&A department is a fraction of a person in our firm. To be frank, FP&A is important in our organization, but it has to completed efficiently. Also, I don’t have a single analyst reporting to me. I have pure accountants that focus on posting transactions, rather than analyzing and forecasting. Even though we are undertaking automation projects to free up time, what I am seeking to say is that there aren’t a lot of resources available to FP&A.
My counterpart in our sister company is the Director of FP&A for her firm. She spends over 25% of her time managing accounting software fixes and upgrades. At least another 25% she spends on process implementations and the training and development of employees. In summary, FP&A in a small sized business tends to live in a single individual and serves as a just fraction of that person’s duties.
FP&A in a small sized business is different than in a large, corporate firm. While one can argue that we all face a lack of time and resources, there often is no dedicated FP&A function in a smaller enterprise. FP&A team members in a smaller firm are wearing many more hats than FP&A. Again, we don’t have too many people that report to us (if any) that are analysts.
But, FP&A is a critical function in any business. Without it, you can’t make knowledgeable pricing decisions that allow for successful margins over costs. You can’t forecast future cash flows to determine if you will meet your banker’s covenants. You can’t run a scenario analysis of different investment options. The list goes on.
So, how does FP&A be successful in a small business environment with a complete lack of time and resources? The top 3 key steps are below:
The above-mentioned ideas are tasks that need upfront time and investment from any FP&A professional. For example, delegation to a virtual assistant requires the development of a detailed SOP up front. Once you have put this work forward though, your time is freed up to focus on obtaining insights from your company’s data, rather than cleaning it. What I have mentioned applies to FP&A professionals in any size firm, but these ideas allow a small business FP&A to be extremely effective.
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