A definition of quality is “a distinctive characteristic possessed by someone.” The work of FP&A practitioners focuses on thinking and learning about how financial activities – earning revenues, incurring costs, generating cash flows – affect organizations. The thinking and learning about this relationship require a mindset that creates results.
The mindset of FP&A practitioners comes from the qualities that individuals have. From my education and experience, FP&A practitioners should have a quality that establishes a foundation for doing their work. The quality that establishes the foundation for FP&A practitioners doing their work is curiosity.
A definition of curiosity is “the strong desire to know or learn something.” The strong desire to know something is a fundamental quality of a person who practices financial planning. The strong desire to learn something is a fundamental quality of a person who practices financial analysis.
Financial planning is thinking about how organizations will earn revenues, incur expenses, and generate cash flows. In order to stimulate thinking about revenues, expenses, and cash flow, an FP&A practitioner should know the purpose of the organization. Knowing the organization’s purpose establishes a foundation for preparing a financial plan. Building on the foundation is where an FP&A practitioner’s curiosity becomes evident. The evidence is provided through questions asked.
Financial analysis is learning about how organizations earn revenues, incur expenses, and generate cash flows. Learning about how organizations earn revenues, incur expenses, and generate cash flows is an excellent opportunity for FP&A practitioners to apply their curiosity. They can ask questions about issues like transactions recorded, relationships with stakeholders, and changes to strategic plans. They also can walk through facilities like stores to observe layouts as well as customer and employee behaviour. The limit to learning through financial analysis is the number of questions to ask.
A curious FP&A practitioner can help an organization, however, being curious is only a basic quality. An FP&A practitioner needs a quality that can keep the practitioner relevant in the value-added process. The quality that keeps an FP&A practitioner relevant is a commitment to continuous improvement.
A definition of continuous improvement is “an on-going effort to improve processes.” Financial planning and financial analysis are processes. Like any process, financial planning and financial analysis are not perfect. An FP&A practitioner needs to accept this fact because failure to do so results in failure to provide value. In order to provide value, an FP&A practitioner should strive to improve one’s work.
Improving one’s work in financial planning can come from education. Education in psychology can help FP&A practitioners manage biases when preparing budgets and forecasts. Education in mathematics can help FP&A practitioners formulate revenue, expense, and cash flow projections. Education in technology can help FP&A practitioners prepare and communicate financial plans. These examples have provided guidance for me and that is due to experience. Other FP&A practitioners may have faced experiences that lead them to improvement through other paths. That is fine as long as FP&A practitioners realize that value-added financial planning is an on-going effort to improve processes.
Improving one’s work in financial analysis, like financial planning, can come from education. My education in accounting plus my interests in psychology, mathematics, and technology provide a foundation for improving my analytical processes. I also find my desire to learn as a basis for my continuous improvement initiatives. Having a desire to learn leads me to consider different perspectives when performing financial analysis. Having different perspectives allows me to see activities within organizations in ways not easily seen within financial statements. Financial analysis is learning about how organizations function. Learning is not static, it is dynamic so an on-going effort to improve processes is most appropriate for financial analysis.
People who are or wish to be FP&A practitioners can describe their capabilities through their resumes. Resumes are not enough. FP&A practitioners need distinct characteristics that allow them to not only do what is expected but also go beyond expectations.
Remember…having an FP&A career starts with having FP&A qualities.