Author: Laryssa Reifel: FP&A Expertise

Contact Me, Process

Why Process Discipline Is So Important In FP&A

Featuredby Laryssa Reifel: FP&A Expertise
Why Process Discipline Is So Important In FP&A

If you follow my writing about FP&A best practices, you will recall that I have often commented on how I see the FP&A world in terms of systems, talent, process, and institutionalized discipline.  You might also be familiar with my FP&A presentations that show this illustration:

The seamless and elegant interaction of each of these FP&A components is what creates a center of excellence inside an organization.  It becomes a “go to” department for C level and VP GM level decision making.  Moreover, each component expands into a clear understanding of the requisite personnel, key deliverables, performance measurement for effectiveness and leadership nuances that drive success in that particular component.

But there is one thing that runs through each component and is the absolute determining factor in organizational success.  That component is PROCESS.

What is Process?

I asked Perplexity AI and here is what it told me:

In a corporate FP&A (financial planning and analysis) context, a process is the repeatable, structured set of activities, inputs, and outputs that a finance team follows to produce a specific management outcome—such as a budget, forecast, variance analysis, or management report.

More concretely, in FP&A, a process typically:

  • Has a clear purpose and deliverable (for example, “build and approve the annual operating plan” or “produce monthly forecast and variance commentary”).
  • Follows defined steps with owners and timelines, such as data collection, validation, analysis, review, and sign‑off.
  • Uses standardized inputs (actuals from ERP, drivers from business units, assumptions about market conditions) and produces standardized outputs (P&L, cash flow, headcount plans, dashboards).
  • Repeats on a regular cadence—monthly, quarterly, or annually—and is governed by documented policies and calendars.
  • Is designed to support decision‑making by turning raw financial and operational data into insight and recommendations for management.

It’s not a bad definition.  The focus here on inputs and outputs along with references to ownership, accountability and cadence is accurate.

The next logical question is why is process important?  This of course means “other than because finance people tend to be organized, type A personality types who need everything lined up properly”.  Process is important because it is the lynchpin in getting the most out of your FP&A organization.  Said differently, process is what allows you to get your money’s worth out of FP&A.  These are the pieces that need to be healthy:

Data Collection and Assembly

Calendar management

Systems Installation/Maintenance

Deliverable Execution

To get what you are really paying for when it comes to FP&A you must have:

Analysis that Supports Decision Making

The only way for organizations to get what they pay for (Item number 5) is to do items 1-4 very well.  Institutionalized discipline and process separate good FP&A teams from mediocre FP&A teams and paving the way for the analytical thinking that FP&A leaders provide.

When pushed through the lens of the distribution of resources here is what it looks like:

When data collection and deliverable execution command 80% of the team’s time, it is difficult to get at the heart of what FP&A people are hired to do.  Identifying how much of the FP&A team’s time is spent on analysis that supports decision making is a first step toward making positive improvements.

How are your FP&A processes?  If you need some organizational diagnostics, FP&A Expertise is here to help.

Customer Success

Transforming Board Reporting for a Career Matching SaaS Platform

by Laryssa Reifel: FP&A Expertise
Transforming Board Reporting for a Career Matching SaaS Platform

A rapidly scaling SaaS leader in AI-driven career opportunity matching sought to elevate its financial communications with the Board of Directors. The challenge emerged as new investment rounds amplified the need for cohesive, credible, and contextualized reporting across all financial statements and cash projections.

Key Achievements

  • Unified board presentation narrative, integrating all three financial statements with contextual commentary suitable for investor discussions.
  • Enhanced cash projection tools, supporting scenario-driven planning for hiring, investment, and geographic expansion.
  • Elevated executive and board confidence through transparent insights, strategic alignment, and improved business storytelling.
  • Established repeatable templates and cross-team processes for ongoing board communications, sustaining enterprise-wide data transparency.

Driving Strategic Planning with Business Units

To overcome these obstacles, FP&A Expertise partnered with the client’s executive and finance teams. The core of the engagement was the development of board presentation materials that integrated the income statement, balance sheet, and cash flow statement into a streamlined, story-driven narrative. This holistic approach facilitated dynamic scenario modeling, robust cash flow forecasting, and performance commentary explicitly linked to operational milestones such as platform adoption, churn reduction, and revenue growth. By collaborating directly with the CFO, FP&A Expertise ensured financial projections connected with actual hiring plans, customer acquisition strategies, and expansion initiatives. The result was integrated planning that grounded future outlooks in departmental realities, not just financial projections.

Advisory Role for Senior Management

Serving as a strategic advisor, FP&A Expertise anticipated senior stakeholders’ need for actionable insights and risk assessment. Reporting packages were tailored to distill complex performance trends—spanning historical results and future projections—into engaging executive summaries and board-level decision guides. Strategic business reviews leveraged scenario-based planning and commentary on liquidity, runway, and burn rate, empowering directors to debate investments, product expansion, and strategic pivots with confidence. Regular planning sessions instilled a collaborative cadence and aligned cross-functional teams around consistent reporting standards.

Is your organization ready to leverage expert financial storytelling and cross-functional strategic partnership for next-level board engagement? FP&A Expertise delivers enterprise value—one board meeting at a time.

Need help with board prep?  Contact me.

Customer Success

Sales Commission Plan Revamp

by Laryssa Reifel: FP&A Expertise
Sales Commission Plan Revamp

FP&A Expertise empowered a leading SaaS company to revamp its sales commission plan structure through executive collaboration with sales leadership, providing a dynamic modeling approach that aligned incentives with business priorities and elevated sales performance.

Key Achievements

  • Executive Partnership: Collaborated closely with the CFO, CEO, and sales leaders to design a commission plan that motivates sales reps while reflecting the company’s strategic revenue goals.
  • Dynamic Commission Modeling: Built an Excel-based model capturing base salaries, commission rates, accelerators, quotas, and pay mixes tailored to SaaS recurring revenue dynamics.
  • Sales Behavior Alignment: Structured the plan to reward new customer acquisition, retention, and upsell, ensuring sales incentives promote overall business growth.
  • Board-Ready Insights: Delivered clear scenario analyses and waterfall visualizations quantifying commission costs and potential revenue impacts for informed, board-level decision making.

Executive Collaboration and Solution Approach

FP&A Expertise was engaged to address challenges the company’s existing compensation plan, which lacked alignment with evolving revenue models and growth targets. FP&A Expertise partnered deeply with executive leaders and sales heads to co-create a plan design that balanced simplicity, motivation, and financial rigor.

  • Driver-Based Modeling: Integrated assumptions such as average contract value (ACV), monthly recurring revenue (MRR), pipeline conversion rates, and quota attainment distribution.
  • Accelerators and Tiered Rates: Incorporated escalation structures to reward sales reps surpassing quota thresholds, incentivizing high performers.
  • Multi-Dimensional KPIs: Included metrics emphasizing net new sales, renewal rates, and upsell success to align with SaaS subscription revenue priorities.

Impact

This collaborative commission plan modeling enabled the SaaS leadership team to make confident, data-driven decisions around sales incentives, supporting sustainable growth while controlling cost of sales. The plan fostered deeper alignment between finance and sales functions, helping the company better motivate their salesforce and more predictably forecast financial outcomes.

Need help with your commission plan for next year?  Contact me.

Customer Success

Empowered a leading cryptocurrency company to transform its strategic planning process

by Laryssa Reifel: FP&A Expertise
Empowered a leading cryptocurrency company to transform its strategic planning process

FP&A Expertise empowered a leading cryptocurrency company to transform its strategic planning process, delivering actionable financial modeling and board-ready KPI frameworks that supported bold growth decisions.

Key Achievements

  • Board-Ready KPI Structure: Designed and implemented key results objectives (KROs) and KPIs tailored for cryptocurrency business models, ensuring leadership and board alignment on critical success factors.
  • Visual Performance Insights: Enabled direct visualization and scenario planning for the impact of new initiatives on company top-line and operational metrics.
  • Accelerated Decision Making: Provided a dynamic roadmap that allowed the executive team to swiftly evaluate product launches, key investments, and regulatory compliance factors.
  • De-risked Compliance & Financial Clarity: Delivered rigorous analysis that addressed the complex requirements of crypto-specific financial reporting and internal controls.

Executive Collaboration and Solution Approach

Faced with pressure to innovate and meet the demands of investors, the cryptocurrency firm’s leadership engaged FP&A Expertise for an engagement centered on upgrading its board communication toolkit. FP&A Expertise partnered directly with the CFO to build a cohesive story for the board, blending technical modeling with deep business understanding.

  • Driver-Based Modeling: Developed in Excel, the model incorporated granular forecasting for wallet activations, transaction fee structures, new coin launches, customer retention, and product churn.
  • Dynamic Scenario Planning: Enabled waterfall visualizations for net new assets, revenue recognition, and regulatory stress testing across multiple crypto products.
  • KRO and KPI Buildout: Structured board-facing reporting packages to present clear performance benchmarks, integrating metrics such as transaction velocity, wallet growth, compliance ratios, and innovative crypto-specific KPIs.

Impact

The engagement helped the company’s leadership navigate complex growth scenarios, equipping executives with a robust toolkit for product go/no-go decisions, capital allocation, and strategic risk management. By transforming financial uncertainty into clarity and confidence, FP&A Expertise became an indispensable partner for the cryptocurrency client’s next phase of expansion.

Need an extra set of hands getting ready for your next board meeting?  Contact me.

Customer Success

Modeling Perpetual Revenue to Power Strategic Growth

by Laryssa Reifel: FP&A Expertise
Modeling Perpetual Revenue to Power Strategic Growth

Key Achievements

The FP&A Expertise solution empowered the SaaS provider to:

  • Visualize and Compare Impact: Quantify perpetual revenue’s effect on the P&L and Cash, including scenario comparisons and sensitivity analysis.
  • De-risk Compliance: Address potential revenue recognition pitfalls for perpetual offerings in a mixed-model environment.
  • Accelerate Strategic Decisions: Provide the leadership team and board with an actionable roadmap, facilitating swift, data-driven go/no-go choices on new product offerings.

How FP&A Expertise enabled a SaaS leader to navigate perpetual revenue scenarios with confidence and clarity

A SaaS company’s leadership needed rigorous financial insight to evaluate adding a perpetual revenue stream. Through close partnership and technical modeling, FP&A Expertise delivered a confidential, assumption-driven roadmap that allowed the CEO, CFO, and CRO to make bold, informed decisions.

The Challenge

With rapidly evolving customer needs and mounting investor expectations, a leading SaaS provider sought to model various perpetual revenue scenarios as an extension of their existing business model. The CEO, CFO, and CRO needed a tightly controlled, highly confidential analysis to understand both the top-line and operational impact of changing revenue streams — all while working within the constraints of modern revenue recognition rules. The stakes: capital allocation, market positioning, and compliance with evolving standards.

Our Approach

FP&A Expertise partnered directly with the company’s executive team to deliver a solution that blended business understanding with technical firepower. The engagement featured:

  • Driver-Based Modeling: Developed in Excel, the model integrated granular assumptions for client conversion, ACV (annual contract value), contract structures, one time fees, onboarding cadence, and churn.
  • Dynamic Scenario Planning: Enabled real-time waterfall modeling to visualize cash inflows and deferred revenue across perpetual, hybrid, and recurring licensing scenarios.
  • Executive Collaboration: Delivered insights in partnership with the CEO, CFO, and CRO for seamless integration into board communications and strategic planning.

This collaborative, technically robust engagement underscores how FP&A Expertise transforms uncertainty into clarity — enabling SaaS innovators to make growth decisions with confidence.

Interested in how FP&A Expertise can help model your next big revenue structure decision? Contact me.

Customer Success

Transforming Headcount Management through Strategic Partnerships

by Laryssa Reifel: FP&A Expertise
Transforming Headcount Management through Strategic Partnerships

Key Achievements

  • Standardized workforce data and improved transparency for all stakeholders, including business units and operational leads.
  • Fostered true business partnership, aligning headcount decisions with company priorities and financial realities.
  • Positioned FP&A as a catalyst for strategic, confident leadership decision-making through cross-functional and business unit engagement.

A $500M high tech company turned to FP&A Expertise to tackle challenges in headcount management and compensation reporting. As the business expanded, siloed information and lack of coordinated planning across accounting, payroll, and human resources resulted in unreliable salary, bonus, and commission data—weakening executive confidence in numbers and slowing growth.

FP&A Expertise took a cross-functional approach, actively collaborating with accounting, payroll, human resources, and—critically—business unit leaders. By establishing regular planning sessions and transparent communication channels, the team enabled integrated reporting systems and a common language for all definitions and assumptions related to workforce and compensation. Streamlined processes between HR and payroll were matched with alignment on headcount definitions, position tracking, and onboarding timelines, yielding a single version of workforce truth.

Driving Strategic Planning with Business Units

A cornerstone of this engagement was partnering directly with business unit leaders to ensure that open positions were budgeted and approved based on evolving strategic and operational priorities. By embedding FP&A analysts and financial business partners into business units, FP&A Expertise provided tailored forecasting, scenario modeling, and gap analysis focused on each team’s hiring goals, cost projections, and the broader corporate strategy.

This partnership empowered business leaders to make informed, data-driven staffing decisions, prioritize resource allocation, and adjust hiring plans dynamically in response to market conditions. The result was a collaborative, enterprise-wide approach to workforce planning—with open positions and new roles strategically aligned, costed, and approved as part of the holistic budget, not in isolation.

Advisory Role for Senior Management

Serving as senior management’s strategic advisor, FP&A Expertise anticipated leadership’s needs for workforce insights, offering scenario-based planning, risk assessment, and actionable recommendations. Reporting packages and presentations distilled complex data into clear insights, enabling executives and the board to confidently evaluate trade-offs and support growth.

Is your company ready to unlock the full potential of cross-organizational and business unit planning partnerships?

Contact me.

Contact Me, Forecasting, Strategic Planning

2026 Annual Operating Plan

Featuredby Laryssa Reifel: FP&A Expertise
2026 Annual Operating Plan

Avoid These Common Pitfalls For A Successful Annual Operating Plan

It is that time of year again.  Summer is over and most FP&A departments are in full swing getting ready to close out the quarter and simultaneously prepare for the build out of the Annual Operating Plan.

In this post I offer some common pitfalls to avoid going into planning season.

  1. Bottoms Up of Tops Down – Solve the Chicken/Egg Problem First

Some of the most important participants in the Annual Operating Plan process, besides the CFO, are the leaders of a company’s business units.  These are SVPs or VPs of a business unit, line of business or the leader of a group of business segments.  The one complaint nearly all business unit leaders have is this:

WHY SHOULD I GO THROUGH THE PROCESS (AND USE UP VITAL DEPARTMENT RESOURCES) TO GO THROUGH A BOTTOMS UP BUILD OF A FINANCIAL PLAN IF IN THE END YOU ARE GOING TO GIVE ME A NUMBER AND TELL WHAT I NEED TO DELIVER IN TERMS OF TOP LINE, MARGIN AND OI FLOWTHROUGH?

My fellow FP&A professionals are chuckling right now because those of us who are seasoned have navigated this question on more than one occasion.  Most often the response is crafted around the desire for the C-Suite to make sure they understand the details and can feed scenario models for more effective decision making.  The truth is often that the leadership team wants to see, if left unchecked, what could the businesses deliver and what that looks like on a consolidated basis.  The result is never extraordinary top line growth and lower expenses.

Each organization operates within a set of boundaries such as lead analyst expectations (for publicly traded companies), 3 statement models developed by investors or a set of financial objectives laid out by the C-Suite.  Regardless of the bumpers a company has, the important part is the communication around these topics. 

Therefore, establishing “the why” during any planning season kick off is important for the whole leadership team and paves a much smoother path for any FP&A team.

2. Alignment on Initiatives/Investments

Before any work is done in terms of schedules, meetings, expense reviews and model builds, all organizations ideally have a set of strategic initiatives that are either serving or accomplishing in the coming 12 months.  When these are clearly understood by the C-Suite and business unit leaders, annual operating plan development automatically has a set of boundaries.  Having those boundaries sets an effective framework for the way forward.

Lack of clarity on strategic initiatives leaves the leadership teams and those developing plans with a blank sheet of paper.  Like an architectural build without any general scaffolding, planning efforts quickly fall into disarray without internal alignment on objectives.  As plans roll up department by department they should each sit in the context of key objectives and investments for the coming year.  This allows everyone to sing from the same song sheet and avoids large exercises in plan development that are ultimately discarded.

3. Make a plan for the plan

Making a plan for the plan is the easiest part of any planning process but is the most often overlooked.  Beginning with the end in mind, teams target a board meeting where the annual operating plan is approved.  FP&A leaders must work backward from a “pencils down” date in order to get the organization to work in harmony for the deliverable.

What on its face appears to be a simple calendaring exercise is often quite challenging.  Aside from all of the system level preparatory work that FP&A teams need to do, there is highly customized prep work that has to be done in order for FP&A to talk to departments across the organization.  This is a combination of pulling and presenting historical information along with a general understanding of the strategic objectives of the business unit.

When engaging with leadership what ultimately tends to be the wrench in the process is travel, conferences, PTO and customer meetings.  Capturing the attention of key stakeholders across the organization by getting on their calendar and having them understand the overall objective is a crucial aspect of the process.

A common mistake is not getting ahead of this calendaring and not building in enough time for missed deadlines, schedule changes, new information and system problems.  There is an amount of cushion that each organization must have in its planning process in order to land the plan om time.

4. Dependencies

Making a plan for the plan also includes understanding the internal dependencies and including the inclusion of those into the schedule.

The prime example of this is commission planning.  Any revenue model requires an understanding of how sales are going to be achieved – everything flows from this point.  This is why the FP&A partnership with sales leadership is so crucial.  Sales targets and commission plans require a great deal of time to develop especially in large organizations.  Nailing down this dependency too early (not enough information) or too late (after the vision for the top line is decided) can derail the whole annual operating plan process.

5. Understanding Headcount

Headcount is central to all operating plans.

Where organizations face challenges is keeping track of headcount.  On its face, headcount should be an easy exercise.  In all most all companies, headcount is actually quite challenging.  The reason is because the systems around headcount management are lacking in the presence of fixed position numbers and titles.  Without them and inside a fast-moving organization, people and open positions move around quickly and from department to department – think of three-way trades in the NHL (a three-way trade in the NHL involves three teams exchanging players, draft picks, or other assets in a single coordinated transaction, often designed to address salary cap, roster needs, or contract limitations).

If you are moving names around an organization or the term “open position” around an organization, whenever there are changes to the name or the location of the open position(s) you quickly lose sight of what your planned expense basis was going to be for the annual operating plan.  Position numbers with fixed titles help to keep sight of what the planned investment was even when there is turnover or a departmental transfer. 

6. What Did You Say Before?

Long range business plans typically cover a 3-5 year time span.  When done well, year two of that plan should become the starting point for the next years’ annual operating plan.

The only constant of course is change, and that starting point will be affected by the actual results in year one.  Boards of Directors understand this reality.  What is key for leadership teams presenting a new operating plan to the board is to address changes from the last time the story of the business was shared.  This usually involves an understanding of the drivers of missing an EBITDA or Net Income target through an analysis of variances to top line and operating expenses along with any unusual events.

Not having a bridging exercise completed prior to any conversation with the board can impact the C-Suites credibility.

Are you looking for leadership in your FP&A organization or an extra set of hands to achieve your plan on time and strongly built out?  Feel free to contact me

#AOP #Budgeting #AnuualOperatingPlan #Strategy #2026

Contact Me, General

What Is Your FP&A Playbook?

Featuredby Laryssa Reifel: FP&A Expertise

What Is Your FP&A Playbook?

On a recent job application, I was asked “What is your FP&A Playbook?”  As I stared at the small, limited character box, I immediately thought like an economist “All else being equal”, this is how it is done.  In fact, the answer is, it depends. 

The reason it depends is because each FP&A organization is different. 

There are a number of factors which much be examined in order to know which playbook to use.  The current state of affairs in your FP&A organization determines the strategic and tactical steps for building and leading an FP&A department.  It is only in understanding the gaps in the FP&A Team and how it is serving the company’s leadership that an effective playbook can be executed.

  1. The Quality of Your Data and Effectiveness of Systems

Companies operate FP&A organizations in the context of systems and data.  There is typically a high correlation between the maturity of the organization and the quality of its data and systems.  Earlier stage organizations struggle in this area whereas larger organizations tend to have made the requisite investments in systems that deliver a single source of the truth and minimize manual work and data manipulation.  One way to think about this is how the team is spending their time.  Less mature organizations will spend 80% of their time gathering and assembling data while more mature organizations will spend 80% of their time analyzing the data.  In fact, this is the goal of any FP&A team and is truly why FP&A professionals are compensated.  Providing recommendations for senior leadership to drive profitability in the business only comes from thorough analysis.  In a world of perpetual time constrains, data quality makes all the difference and any gaps in this regard are usually the first order of business.

  • Process Discipline

FP&A processes are driven by its customer base.  The wingspan of an FP&A team often covers of multiple needs from internal reporting to external reporting, investor relations, board of director communications as well as business unit leader support.  This is a demanding customer base which yields numerous deliverables in a short period of time.  If internal processes such as an effective accounting close, regular forecasting and agile three statement modeling are not “humming along” it becomes challenging to meet and exceed expectations.  In the most evolved FP&A functions each of these processes feeds the other (close > financial model update > rolling forecast > quarterly business review> annual operating plan > long range plans>board communications > investor relations) so that there is not an “ala carte” lift every time something is due.  Process gaps make for tremendous inefficiencies in FP&A teams.

  • FP&A Team Talent

Every FP&A team is different in terms of its skillset.  The talent on the team needs to be able to cover off a number of vital functions.  These include a solid understanding of accounting, skilled financial modeling, creative analysis design and execution, data science skills, systems skill, relationship building skills for partnering across the organizations and excellent communication skills for telling the story of the business.  In my experience, it is rare to find all of these characteristics in every single individual on an FP&A team.  More of ten than not, these teams are comprised of specialists who drive the success of the team through their natural talents.  For example, the same person who is a natural data scientist perhaps earlier in their career may not yet have the relationship and communication skills needed to tell the story of the business.  With time an experience, FP&A leaders will have all of these items in their toolkit.

  • Cross Functional Relationships

The core of FP&A analysis is in its understanding of the business, its products, the challenges business unit leaders are facing in the marketplace and familiarity with the company’s long-term strategy.  Like all departments in the company, the FP&A team has a reputation and state of affairs in terms of cross functional relationships.  If there is a gap here in terms of where the team is versus where it should be with those relationships, then there is a whole additional effort that has to be made. 

  • Long Term Vision For The FP&A Team

Having a vision for the FP&A team is a significant factor in understanding the playbook.  Recall that FP&A is a service organization and therefore, the leadership of the company likely has a vision of what they want the team to be.  In the most evolved organizations, FP&A is a center of excellence that the C Suite and business unit leaders look to for the highest quality decision making that drives growth.  Some organizations are content with repeatable processes that check the boxes of deliverables in terms of reporting without having a desire to take the team to the next level.  This is a trade-off that organizations often make when making time and investment choices.

In the end, any FP&A Playbook has to be designed through the lens of these 5 factors:

  • The Quality of Your Data and Effectiveness of Systems
  • Process Discipline
  • FP&A Team Talent
  • Cross Functional Relationships
  • Long Term Vision For The FP&A Team

If you need help with your FP&A Playbook feel free to contact me.

Contact Me, Forecasting, General

Are you ready for 2026?

Featuredby Laryssa Reifel: FP&A Expertise
Are you ready for 2026?

Mid-Year Planning and Other Forecasts

Laryssa Reifel

Jun 11, 2025

It is now June. Organizations on a calendar year are nearly done with the second quarter. At the half-way point in the year there should be a fair amount of clarity about two things:

  • Year-to-date performance against the annual operating plan
  • Quarter-to-date performance against the latest forecast

Though over simplified, there is a cascading effect of information associated with each of the bullet points mentioned above. Examples include achievement of strategic objectives and specific initiatives planned for the year as well as performance against top line growth, margin achievement and spending objectives. There are some companies that are large enough and have enough FP&A resources to do mid-year, long range plans – essentially a second annual operating plan leveraging mid-year information. In the world of FP&A processes this tends to be a luxury item and can sit inside of many other FP&A forecasting cycles making mid-year planning redundant.

However, given the state of the world both politically and economically in terms of volatility and uncertainty, redundancy in forecasting is crucial. There are two features of forecasting that need to be enhanced given the external state of affairs:

  • More frequent forecasts are necessary
  • More robust forecasts in terms of scenarios that capture various economic possibilities and detailed trigger points for decision making

Enhancing and institutionalizing this increased frequency in response to the political and economic environment we are all operating in can make a tremendous difference in the profitability of a business. Thats where I can help.

Feel free to contact me.

Contact Me, Forecasting

Q1 is nearly complete. What does this mean for your forecast(s)?

Featuredby Laryssa Reifel: FP&A Expertise
Q1 is nearly complete. What does this mean for your forecast(s)?

With Q1 nearly complete many organizations will have an opportunity to assess their progress against their goals.  This typically takes the form of monthly assessments against the annual operating plan.  Variance analysis is likely to drive conclusions about the 1st quarter performance but what about he implications for the Annual Operating Plan (AOP) and the longer term outlook such as a 3 or 5 year plan?  This post explores what organizations typically do and what they can do for a more robust understanding of their financial performance and future outlook.

Comparisons to the Current Forecast

For companies on a calendar year, Q1 comparisons to the current forecast should be the equivalent of comparing to the AOP.  The reason is mostly timing.  Organizations should not be reforecasting Q1 when they just completed an AOP a few months ago.  Variance analytics across all three statements should result in minimal departures from what was in the AOP.  If there are significant variances so early in the year, then it suggests significant changes are likely in the balance of the year.  From a mathematical and statistical perspective, the balance of year or 18 month rolling outlook should be significantly changed.  What happens in practice is that most leaders are loathe to make significant revisions to the outlook so soon after presenting the AOP information to the board.  What FP&A teams can do however is make note of the significant variances in order to prepare a different outlook.  A scenario that incorporates a new perspective based on Q1 should be in the back pocket of any FP&A team.  At some point in the process of their communications, if significant variances continue, they are likely to need this scenario for communications either internally or externally.

Comparisons to the Longer-Range Outlook

What often falls by the wayside is consideration of the long-range plan – the 3 or 5 year outlook.  Performance in Q1 may highlight some reconsideration of the long-range outlook.  This is particularly consequential in recurring revenue business models such a SaaS business.  In those businesses, Q1 misses can be particularly consequential as a revenue miss pushes in Q1 pushes the waterfall of revenue recognition not only into subsequent quarters but into the next fiscal year. For example, if a company has a sales miss in January and February in a recurring revenue business, there is not just a period-based impact but one which impacts all future months especially beyond the current fiscal year as seen below:

Two months of missed sales makes getting caught up on this revenue more and more challenging as time goes on.  While progressing through the fiscal year the window for revenue recognition closes – time is the enemy.  Companies are then not only making up for a sales miss, they have to make up for the miss and the run against the clock.  For reasons such as this example, a Q1 miss on the top line, though early in a companies AOP timeline, is consequential not only for the current AOP but for the longer-range plans as well.  FP&A teams provide value in companies by understanding the implication of Q1 performance and looking out further in time to understand the impact.

If you have a SaaS business facing these types of analytical challenges, that’s where FP&A Expertise can assist.

#financialplanningandanalysis #modeling #fpa #finance #companystages #budeting #planning #strategy #process #systems #leadership #management #annualplanning #financialconsulting #executive #recurringrevenue #forecasting

Process

Weekly Cash Forecasting versus Cash Flow Modeling: What’s the Difference

Featuredby Laryssa Reifel: FP&A Expertise

I have had a number of clients request cash flow forecasting models.  This invariably leads to a deeper conversation around what is truly needed to manage the business.  Here are FIVE key questions I typically ask and client coming to me for cash forecasting needs:

  1. Do you have an effective, repeatable and tightly controlled close process?  This question may seem obvious but no forecast can be done for a three statement model without a solid understanding of historical actuals.  Similarly, a weekly cash outlook without an understanding of historic inflows and outflows makes the projection on cash position difficult to nail down.
  2. Why is the cash forecasting needed?  It can be the case that cash is tight and has to be closely controlled as on a weekly basis.  Or, the answer might be that management wants a high-level understanding of the company’s expected cash position on a quarter by quarter basis.  Is the information needed for day to day operational decision making or is it for a longer term outlook reflecting the health of the balance sheet?
  3. Who is the target audience?  Is the target customer for this information the C-Suite (CFO’s office in particular) or is the data being developed as a part of formal three statement modeling for investor or board of director consideration?
  4. What Stage is your company in?  One of the dependencies of three statement modeling is having a business that has enough maturity to have predictability in accounts receivable, prepaid expenses and accounts payable.  To have that you need an accounting organization that closes the books regularly and has consistency of process in booking entries.  Said differently, if your top line has no predictability and your expenses are erratic, it is pretty hard to build three statement models with a cash flow output that is accurate.  Early-stage companies struggle in this area because of a lack of understanding in key cash flow model assumptions such as DSO and DPO.  Such organizations are likely better off with a more simplistic weekly cash flow modeling comprised of projected invoicing, estimated collections and expenses.
  5. How is your company capitalized?  If your organization is capitalized by a very large parent company at an advanced stage, it is likely that you need to have three statement model that is updated on a rolling forecast basis.  More formally, if you are publicly traded then it is expected by shareholders and investors that you have a good handle on all three financial statements.  If you are small and newly growing however, weekly cash forecasting may be more appropriate for your needs until you have some stability in A/R and A/P (the primary drivers for your understanding of working capital and cash flow from operations).

Using the questions above as a filter allows me to judge what the true needs of the business may be.  In the end, some CFOs (if they have the requisite resources) might want both a weekly cash forecast model and more formal three statement modeling.  Even if the company is early stage, more formal cash flow modeling is achievable with a list of key assumptions, but the results in terms of accuracy can be limited.

If your business is in need of a review of your cash forecast that’s where FP&A Expertise can assist.

#financialplanningandanalysis #modeling #fpa #finance #companystages #budeting #planning #strategy #process #systems #leadership #management #annualplanning #financialconsulting #executive

Contact Me, General, Organization, Process, Strategic Planning

LESSONS FROM A UKRAINIAN NON-PROFIT #7

Featuredby Laryssa Reifel: FP&A Expertise
LESSONS FROM A UKRAINIAN NON-PROFIT #7

WE ARE ALL MORE THAN OUR RESUMES

At a recent conference a speaker suggested that resumes typically describe work experience but fall far short of capturing a complete picture of our skills.  Executives are often engaged in much more than their paid jobs.

This has been the case for me too.  For the last several years, in addition to launching a consulting business and holding a full-time corporate position, I have been the President of the Ukrainian Culture Center of Los Angeles (UCCLA).  I am the first female President of this 80 year old organization and have seen the organization through 2 crises now – COVID-19 and the russian invasion of Ukraine.

Along the way I have learned a great deal.  Today’s post is the FINAL post of a multi-part series of posts in which I will share the key lessons I have learned, the mistakes I made and where my financial planning and analysis skillset served me in responding to russia’s invasion of a sovereign country.  In the spirit of “making my mess my message” I hope these you find these insights useful.

LESSON 7: Crisis management has an expiration date for everyone

Each crisis has a phase much like the different company stages 1-5 (See The Five Stages of Small-Business Growth (hbr.org)).  From the initial onset through the arc to a war of attrition to nearing the end, the Ukrainian Culture Center of Los Angeles will transit many phases of a unique situation.  After four years of crisis management at the Ukrainian Culture Center of Los Angeles, I am seeing that the initial phase of the war is passing.  The onset and windstorm of the russian invasion is transitioning into the management the Center in an ongoing war.  Much is out of the hands of the Center yet there is still a role to play.

As an FP&A leader I have had the privilege to be part of almost all phases of a company’s growth.  That experience gave me the confidence to launch my own FP&A Consulting Firm – FP&A Expertise – Financial Planning and Analysis (fpa-expertise.com).  From a strictly FP&A perspective (in contrast to accounting and general financial leadership), most companies are not ready for FP&A at Stage 1.  It tends to matter how the organization is capitalized.  If there are high investor demands, then the case can be made for an FP&A team as the reporting requirements can be demanding.  But typically, an early-stage company is not ready for FP&A as the organization is usually still trying to figure out how to close the books.  Once there is a cadence of accounting close processes with a high degree of integrity in the data, then and only then is an organization truly ready for FP&A.  Fast moving start ups sometimes do this in parallel – implementing systems and FP&A processes while the close process is still being ironed out.  I have found that the volume of change that is still likely in the chart of accounts and posting processes, makes for a bumpy road in setting up reporting systems and internal FP&A processes.  The re-work that often ensues may not be worth it depending on the situation.  Stage 2 and stage 3 companies are usually the prime entrance point for an FP&A team and this is where I have built many greenfield FP&A teams.  From talent selection to system implementation and cross organizational process development, I have had the joy of going from nothing to an effective team for offering the leadership team key insights into the progress of the business and where efficiencies can be tapped.  Building the bridge between strategic planning, executive decision making and organizational execution is the true sweet spot of FP&A.

Of the five stages, I had the least amount of experience at Stage 1.  Not anymore.  Leading the Ukrainian Culture Center of Los Angeles through crisis has taught me a tremendous amount about what it is like to be at Stage 1.  The volume of blocking and tackling demanded by both the COVID situation and the russian invasion made each day different, stressful and functioned as a muse for creative thinking and problem solving.  As I reflect on this experience, one of my initial regrets was that we did not first have a strategy – a lens through which all decisions would be made.

What I learned is that Stage 1 situations are not the place for strategic plans.  There is no bandwidth.  There are too many moving pieces and any formal strategic plan would be in the trash within minutes of having designed something. 

As we approach 1000 days of russian aggression in Ukraine, I can say that the Ukrainian Culture Center of Los Angeles is well past Stage 1.  Though not yet a well-oiled machine in the context of the war, we have garnered internal expertise in terms of political advocacy, media management, and operational execution for humanitarian relief and financial processes.  Much like building out an FP&A organization, you see pockets of expertise aligned with natural abilities bubble up to the top.  Then the organization naturally aligns around those experts as problems arise.

Not matter what stage you are in, if you think you need FP&A in your organization or just want to talk about it, this is where I can help.

#financialplanningandanalysis #fpa #finance #companystages #budeting #planning #strategy #process #systems #leadership #management #annualplanning #financialconsulting #executive

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LESSONS FROM A UKRAINIAN NON-PROFIT #6

Featuredby Laryssa Reifel: FP&A Expertise
LESSONS FROM A UKRAINIAN NON-PROFIT #6

WE ARE ALL MORE THAN OUR RESUMES

At a recent conference a speaker suggested that resumes typically describe work experience but fall far short of capturing a complete picture of our skills.  Executives are often engaged in much more than their paid jobs.

This has been the case for me too.  For the last several years, in addition to launching a consulting business and holding a full-time corporate position, I have been the President of the Ukrainian Culture Center of Los Angeles (UCCLA).  I am the first female President of this 80 year old organization and have seen the organization through 2 crises now – COVID-19 and the russian invasion of Ukraine.

Along the way I have learned a great deal.  Today’s post is the sixth of a multi-part series of posts in which I will share the key lessons I have learned, the mistakes I made and where my financial planning and analysis skillset served me in responding to russia’s invasion of a sovereign country.  In the spirit of “making my mess my message” I hope these you find these insights useful.

LESSON 6: CRISIS LEADS TO GROWTH

Generally speaking, leaders know that crisis leads to growth.  However, in this context the growth I am talking about is an explosion of Ukrainian non-profit organizations.  Once the war broke out there was an explosion in the number of Ukrainian non-profit organizations.  Each organization specialized in something such as medical supplies, war front connections, advocacy, political engagement, or logistics and shipments of desperately needed aid.  Ukrainians like to say “like mushrooms after the rain” Ukraine focused non-profits sprung up all across the world and especially in the United States.  As an economist, organizer and financial efficiency expert, this made me a little frustrated. 

What I learned was not to fight the tide on this megatrend but to expand with it.  In an effort to start to create economies of scale in terms of expertise and manpower, I founded a new organization called the American Coalition of Ukrainian Organizations.  Under that umbrella I brought together now more than 30 Ukrainian non-profits to bridge, connect and unite with one another to help each other help Ukraine.  It is an informal and open forum organization where we meet to discuss each organizations’ expertise and progress.  We literally end every call in the same way – “who needs help and how can this team help you”. 

The effort to unit Ukrainian organizations is similar to the partnership that FP&A teams need to build in order to effectively serve an organization.  Strong FP&A teams partner across all elements of an organization to build out strategic plans and budgets.  It is in the strength of those partnerships that FP&A is able to deliver:

  • Important considerations for company leaders in an uncertain election year and global crisis
  • Organizational alignment and buy-in regarding the company’s key initiatives
  • Willingness across the company to be held accountable against key objectives
  • Creative thinking as high levels of communication that go wide and deep into the company structure
  • Operational execution while results are constantly measured against objectives allowing a company to either to continue forward in a certain direction or adjust
  • A deep understanding of key trigger points for executive decision making to drive growth as the environment becomes more and more uncertain in these times

As budgeting season approaches for those operating on a calendar year the role of FP&A in driving company growth cannot be understated.  This is where I can help.

#financialplanningandanalysis #communication #leadership #FPAExpertise

General

LESSONS FROM A UKRAINIAN NON-PROFIT #5

Featuredby Laryssa Reifel: FP&A Expertise
LESSONS FROM A UKRAINIAN NON-PROFIT #5

WE ARE ALL MORE THAN OUR RESUMES

At a recent conference a speaker suggested that resumes typically describe work experience but fall far short of capturing a complete picture of our skills.  Executives are often engaged in much more than their paid jobs.

This has been the case for me too.  For the last several years, in addition to launching a consulting business and holding a full-time corporate position, I have been the President of the Ukrainian Culture Center of Los Angeles (UCCLA).  I am the first female President of this 80 year old organization and have seen the organization through 2 crises now – COVID-19 and the russian invasion of Ukraine.

Along the way I have learned a great deal.  Today’s post is the fifth of a multi-part series of posts in which I will share the key lessons I have learned, the mistakes I made and where my financial planning and analysis skillset served me in responding to russia’s invasion of a sovereign country.  In the spirit of “making my mess my message” I hope these you find these insights useful.

LESSON 5: GET MEDIA TRAINING BEFORE YOU NEED IT

Within the 1st three weeks of the war the Vice President of the Ukrainian Culture Center of Los Angeles and myself conducted more than 75 interviews.  This included radio, television, on-line journalists and print journalists.  One of the key features of working with the media is the urgency of their demands.  I found working with media personnel difficult as planning anything and reacting to everything seems to be their modus operandi.  For those of us who are more planning oriented this can be anathema.  At the same time and even without any media experience, we were highly cognizant of needing to respond to every opportunity to be interviewed.  It was about keeping Ukraine at the forefront of the conversation.  It was about raising money and support for the war.  In the end, it was about keeping people alive.

So, it was with this backdrop of “baptism by fire” that we executed numerous interviews.  In general, I think that the conversations went well.  If I had a choice, I would have been prepared with the following:

  • A list of talking points that were curated and approved the either the Office of the President of Ukraine or some other Ukrainian Organization that operates on a national or international level.
  • A selection of sound bites that might be proposed by someone with television interview expertise.  Having an understanding of how to construct and then utilize these sound bites in an interview during a crisis would have been helpful.
  • Coaching around how to engage with television in general and then specifically about what information should be shared when you are on screen.  Examples include: placing your organization’s phone number or website on the banner at the bottoms, recommendations on how to route people to websites (how many times to mention, how to work it in), and how to construct a pre-meeting with your interviewing to achieve alignment on what the questions might be and how long you have to respond.
  • Training on the differences between engaging with print, radio, television and social media.  Each medium has unique demands in terms of communication style.

As I stepped up to give my 1st speech at the Center just after the invasion, there we so many people at the Ukrainian Culture Center of Los Angeles that we exceeded capacity and there were people out the door and lining the sidewalk.  The entire left side of the great hall was lined with television cameras.  As I approached the podium, I was unexpectedly greeted by 7 different news outlet microphones.  Each had their logo and a number for their channel– ABC, NBC, CNN, CBS, NPR, etc. There was no place for my speech notes.  What I learned was that “in the moment” is NOT the time to learn how to give speeches and engage with the media.  If you are the leader of any organization whether it is for profit or not for profit, communication skills are not enough.  Knowing how to be eloquent, share a consistent message, be inspiring and answer questions from the media on the spot is a next level skill set.  Having the training before the situation hits you is very beneficial.

The concept of talking points and messaging is not unlike preparing for investor communications, board of director communications or earnings call communications.  In financial planning and analysis, we tell the story of the business through the numbers.  That’s where I can help.

#financialplanningandanalysis #communication #leadership #FPAExpertise

Contact Me, General

LESSONS FROM A UKRAINIAN NON-PROFIT #4

Featuredby Laryssa Reifel: FP&A Expertise
LESSONS FROM A UKRAINIAN NON-PROFIT #4

WE ARE ALL MORE THAN OUR RESUMES

At a recent conference a speaker suggested that resumes typically describe work experience but fall far short of capturing a complete picture of our skills.  Executives are often engaged in much more than their paid jobs.

This has been the case for me too.  For the last several years, in addition to launching a consulting business and holding a full-time corporate position, I have been the President of the Ukrainian Culture Center of Los Angeles (UCCLA).  I am the first female President of this 80 year old organization and have seen the organization through 2 crises now – COVID-19 and the russian invasion of Ukraine.

Along the way I have learned a great deal.  Today’s post is the fourth of a multi-part series of posts in which I will share the key lessons I have learned, the mistakes I made and where my financial planning and analysis skillset served me in responding to russia’s invasion of a sovereign country.  In the spirit of “making my mess my message” I hope these you find these insights useful.

LESSON 4: GATEKEEPERS AND EXPERTS ARE EVERYTHING

In order to fully take advantage of Lesson 3, ”Never Say No to Anyone (Almost)”, I found that having solid gatekeepers and experts has been indispensable.   

One of the key features of a crisis is the volume of issues presented to you.  The volume is not just characterized by quantity but also by variety.  Fielding the volume of issues coming at you is one thing but when the issues span a broad spectrum you quickly find yourself treading water in areas where you may not personally have experience.  Here is a sample list of the range of issues that came before us:

  • Official meeting requests from political representatives both local, national and international
  • Speaking engagement requests from various organizations
  • Interview requests from television, print and radio media outlets
  • Emergency projects for the build out of medical kits
  • Management of a mass influx of donations
  • Operational needs in terms of international shipping and chartering of airplanes
  • Requests for assistance joining Ukraine’s foreign legion
  • Offers of significant donations for support of the war
  • Requests for refugee assistance and offers of significant funds for refugee housing
  • Information requests and needs for policy expertise around new government programs assisting Ukrainian refugees
  • Needs for purchasing expertise – drones, generators, medical supplies such as tourniquets
  • Border and front line expertise for deliveries in Ukraine
  • Legal expertise in terms of the limitations of what a 501c3/4 can do
  • Changes to how security is handled at the Ukrainian Culture Center

As executives we are taught early about the importance of teamwork and the humility needed to surround yourself with people who know more than you, are better than you in certain areas and who can guide you much more successfully than you can yourself.  For profit organizational leaders have the luxury of selecting experts.  When you have an organization that is staffed entirely with volunteers, the situation is a little bit different.

At the Ukrainian Culture Center of Los Angeles we turned out to be very lucky.  The talent of our board spanned the majority of the issues listed above.  One of the greatest gifts I was given to navigate the role at UCCLA after the invasion was a set of individuals who each brought a certain expertise to the table.  From legal counsel to financial expertise to media talent to operational execution, I had in the team my own army for surviving this crisis.  In particular, they excelled at the blocking and tackling that I needed in order to stay focused on the top priorities.  What these individuals also had was an amazing Ukrainian network.  The ability to leverage that network all around the world created opportunities for us to execute on projects that may not have been as successful otherwise.  One example of that was the ability to fund and locate much needed 4WD trucks for the defense of Bakhmut.  Through our board members and the associated local and international Ukrainian network, we were able to efficiently handle such a delivery. 

Successful for-profit leadership teams who have a high level of trust in one another are truly unstoppable.  To experience this in a non-profit setting was especially gratifying.  The trust itself becomes a self-motivating factor in propelling everyone forward.  Most people talk about executive staff needing to row in the same direction but what is not discussed as often is how the machine becomes self-rowing when every colleague believes in and trusts the other while simultaneously being aligned with the mission. 

In Financial Planning and Analysis, this is the type of trust that is built with the executive team and its business leaders/general managers.  Building effective partnerships for developing your strategy and managing your financial models is where I can help.  Please feel free to contact me.

Contact Me, General, Process

Lessons from a Ukrainian Non-Profit #3

Featuredby Laryssa Reifel: FP&A Expertise1 Comment on Lessons from a Ukrainian Non-Profit #3

WE ARE ALL MORE THAN OUR RESUMES

At a recent conference a speaker suggested that resumes typically describe work experience but fall far short of capturing a complete picture of our skills.  Executives are often engaged in much more than their paid jobs.

This has been the case for me too.  For the last several years, in addition to launching a consulting business and holding a full-time corporate position, I have been the President of the Ukrainian Culture Center of Los Angeles (UCCLA).  I am the first female President of this 80 year old organization and have seen the organization through 2 crises now – COVID-19 and the russian invasion of Ukraine.

Along the way I have learned a great deal.  Today’s post is the third of a multi-part series of posts in which I will share the key lessons I have learned, the mistakes I made and where my financial planning and analysis skillset served me in responding to russia’s invasion of a sovereign country.  In the spirit of “making my mess my message” I hope these you find these insights useful.

LESSON 3: NEVER SAY NO TO ANYONE (ALMOST)

While leveraging Lesson 2, Listening for Intent, I tried to answer every call, answer every email and take every meeting.  In the first weeks after the outbreak there were more phone calls than our volunteer team could handle.  When you add to that the volume of messages coming in over email and our social media accounts, the situation quickly became overwhelming.

The solution of course was to design a process for handling all of the messaging.  The process required soliciting more volunteers and breaking down each phone call, email or social media message into categories.  Some sample categories included:

  • Requests for assistance filling out paperwork to volunteer for the foreign legion
  • Requests for refugee assistance
  • Offers to make financial contributions to the center
  • Offers of medical supplies, medications and military equipment such as drones
  • Interview requests from print, radio and television

Once categorized, we were able to rack and stack who to respond to and in what order.  Every response had to be curated in such a way that we could understand what additional work we would be taking on once the connection was made.  Carefully understanding what we could and more importantly what we could not do, saved a lot of disappointment on both sides of the opportunity.  To be sure, we had to walk away from certain things.  Ultimately, we pushed all items through a single lens – how does responding to this opportunity align with helping Ukraine win the war?

Unfortunately, anything that did not pass through that filter had to be left behind.  This led to some very difficult conversations especially when it came to refugee assistance.  The mission of the Ukrainian Culture Center had never been about war and we knew were not a relief agency.  As such, we thought we could pivot to a war footing but we knew we were not able to focus on refugees.  Moreover, we had to take the perspective that people that made it here were safe.  Certainly, they were not in an ideal situation, but forced to choose between our new mission and helping refugees in need, we chose the former. But there was ultimately a silver lining….

In the spirit of not saying no to anyone (almost), I accepted an invitation to give a speech about the invasion by the mayor of a small town.  I did not really see the point given the small size of the audience and its likely limited reach.  As a result of that speech, I met a Congressman who was in attendance.  The speech was also televised and seen by some wealthy individuals in southern California who wanted to help.  The Congressman called me and introduced me to individuals who wanted to assist refugees specifically and had significant financial backing.  So, in a sense, by focusing on our new mission, I was able to solve for other problems that we thought we had to walk away from.  Had I not gone and given that speech, I would have not only lost the opportunity to share information outside the Ukrainian community about the russian invasion but I would have also lost the chance to help some families get settled.

Opportunities can come from just about anywhere.  Almost never saying no while staying aligned with our mission to help Ukraine win the war was a philosophy that served me well time and time again and continues to open doors to this day. 

When it comes to FP&A, being attuned to a company’s mission and aligning financial strategies to achieve corporate objectives is the bread and butter of financial planning and analysis.  I have seen this put into practice with positive results in multiple organizations be they large or small, public or private.  If the implementation of this type of alignment is what you need That’s where I can help.

#fpaexpertise #financialplanningandanalysis #process #opportunties #mission #financialoutcomes

General

Lessons From A Ukrainian Non-Profit #2

Featuredby Laryssa Reifel: FP&A Expertise1 Comment on Lessons From A Ukrainian Non-Profit #2

WE ARE ALL MORE THAN OUR RESUMES

At a recent conference a speaker suggested that resumes typically describe work experience but fall far short of capturing a complete picture of our skills.  Executives are often engaged in much more than their paid jobs.

This has been the case for me too.  For the last several years, in addition to launching a consulting business and holding a full-time corporate position, I have been the President of the Ukrainian Culture Center of Los Angeles (UCCLA).  I am the first female President of this 80 year old organization and have seen the organization through 2 crises now – COVID-19 and the russian invasion of Ukraine.

Along the way I have learned a great deal.  Today’s post is the second of a multi-part series of posts in which I will share the key lessons I have learned, the mistakes I made and where my financial planning and analysis skillset served me in responding to russia’s invasion of a sovereign country.  In the spirit of “making my mess my message” I hope these you find these insights useful.

LESSON 2: HOW TO LISTEN

Most executives who have had leadership coaching are attuned to the idea that listening is often more important than speaking.  When russia invaded Ukraine, I had to take my listening skills to a new level.  This means that I had to not only listen but start listening for INTENT.

Once a crisis breaks people (mostly strangers) start coming at you from all directions.  In this particular crisis I was talking to hundreds of new people in a matter of about 10 days.  These individuals spanned the spectrum from government leadership to the press to distraught families desperately trying to reach loved ones.  There was also a group of people who fall into the general category of “wanting to help Ukraine”.  Pushing the strangers I met through the filter of intent (which invariably means building a lot of skepticism into your thought process) allowed me to make better choices about who to engage with and more importantly, who not to. 

Here are some examples:

  1. Offers to Deliver Arms to Ukraine: I personally received several phone calls from people I did not know who passionately expressed their desire to support Ukraine.  One person in particular was offering to deliver ammunition to Ukrainian soldiers.  The concept was that the ammunition would be accessed through key Israeli military contacts who were positioned to get these desperately needed munitions to the front.  The Intent: Clearly this was an offer to engage in illegal arms sales.  Though the opportunity to help Ukraine in this way had some merit, clearly the intention here was not in a sphere that the Ukrainian Culture Center or I should be operating in.
  2. Marketing of Generator Sales: As the bombing of Ukraine increased, russia began targeting key elements of Ukraine’s infrastructure including power generation.  UCCLA received many phone calls offering generator sales and shipment to Ukraine.  Again, this was under the guise of “wanting to help”.  The Intent: After thorough questioning and analysis I was able to determine that this was an inventory problem that the company was trying to correct.  Helping Ukraine was not the primary driver.
  3. Donations of Personal Goods:  There were a lot of well-meaning people who wanted to do something, anything to help Ukraine.  UCCLA often had offers from individuals to donate clothing.  The challenge we had was to distinguish between people who were cleaning out their closets versus those who were genuinely targeting the needs of the front-line military personnel.  Ukraine is a developed country and for the most part the people there are not in need of used clothing.  Moreover, the shipping costs from the United States made it unreasonable to send the items.  When you add to that, that there is nothing we have here which cannot be accessed in Europe, we had to turn a lot of these gifts away.  The Intent: Thoroughly listening for the intention of the donation (cleaning house versus buying/bringing need appropriate items) allowed us to make sure the front was truly getting items they needed – insoles for their boots, water resistant socks, and warm outer and inner clothing for the winter defense.
  4. “Fundraisers”: The invasion of Ukraine let to an explosion of non-profits around the world.  Almost none of them had any infrastructure like that of the Ukrainian Culture Center of Los Angeles.  Because of that, we had an extraordinarily high volume of requests for use of the center for fundraising.  This led to the development of a very strict vetting process of who these organizations were and most importantly whether they were truly aligned with the war effort or whether it was a means to an end for the non-profit’s existence.  The Intent: By designing a careful questioning process and leveraging the Ukrainian network (which was LinkedIn before there was a LinkedIn), we were able to identify people who were actually russian as well as people who were trying to make a career out of the war.

These are but a few examples of how not only listening but listening for intent made a tremendous difference in UCCLA’s decision making.  I am not saying we didn’t make mistakes sometimes, but this orientation led to better outcomes.

When it comes to FP&A, listening and listening for intent is probably as important a skill as navigating your way around the financial statements.  It comes into play especially when listening to your leaders discuss how they want to tell the story of their business on a road show for investors on Wall Street or the board of directors.  With this type of attuned listening skill, FP&A professionals can really align with how the leadership team wants to grow.  That’s where I can help.

#FP&A #financialplanningandanalysis #executivepartner #listening #Ukraine

Contact Me, Organization

Lessons From A Ukrainian Non-Profit

Featuredby Laryssa Reifel: FP&A Expertise

WE ARE ALL MORE THAN OUR RESUMES

At a recent conference a speaker suggested that resumes typically describe work experience but fall far short of capturing a complete picture of our skills.  Executives are often engaged in much more than their paid jobs.

This has been the case for me too.  For the last several years, in addition to launching a consulting business and holding a full-time corporate position, I have been the President of the Ukrainian Culture Center of Los Angeles (UCCLA).  I am the first female President of this 80 year old organization and have seen the organization through 2 crises now – COVID-19 and the russian invasion of Ukraine.

Along the way I have learned a great deal.  Today’s post is the first of a multi-part series of posts in which I will share the key lessons I have learned, the mistakes I made and where my financial planning and analysis skillset served me in responding to russia’s invasion of a sovereign country.  In the spirit of “making my mess my message” I hope these you find these insights useful.

LESSON 1: SCENARIO ANALYSIS WITH TRIGGER POINTS MATTERS.

For three weeks I watched the russian army build up its forces and drive toward the Ukrainian border.  It was all over the news.  The Sunday morning journalists talked about it in depth.  The Ukrainian diaspora was also talking about it – amongst ourselves and with family and friends in Ukraine.  The prevailing thought was “Putin wouldn’t dare”.  Well, he did and I lost an opportunity to prepare for it. 

For UCCLA, there should have been multiple scenarios run including but not limited to:

How will the role of UCCLA change in the event of a full scale invasion?

How will the role of UCCLA change in the event of a partial invasion?

How will the role of UCCLA change in the event of a persistent border threat from russia?

And even now, how will the role of UCCLA change in the event of a stalemate?

In each scenario, there are a several of items to consider:

1. Does the scenario in any way imply a fundamental shift in core values or mission?

2. What skillsets will we need to adapt?

3. How will the needs of our customer base change?

4. What new stakeholders will be created as a result of the scenario?  Which ones will fall away?

5. How does the financial structure change in each situation? Has each scenario been modeled across your financial statements?

The trigger points were there – one only need reference the invasion of 2014, President Zelenskyy’s election, putin’s failure to contain Ukrainian democracy, tanks rolling up to the border, etc. Any of these should have led to analysis across the scenarios listed above.

As we look out into the near future there are a number of macro trigger points that will likely impact your business. Among them are the continued evolution of the use of AI, macroeconomic conditions such as interest rates, the growth of foreign conflict and the upcoming Presidential election.

Not going through scenario analysis for your organization results in a significant loss of opportunity to be prepared.  That’s where I can help.

#fp&a #financialplanningandanalysis #scenarioanalysis #fp&aexpertise #ukraine #russianinvasion #financialmodeling

General, Systems

FP&A and Artificial Intelligence

Featuredby Laryssa Reifel: FP&A Expertise
FP&A and Artificial Intelligence

The Future of AI in FP&A

One of the mega trends of our time is the advent of Artificial Intelligence as a mainstream tool.  Though AI has been around in various forms for decades, it is only in recent years that it has become a topic of conversation as a usable, transformative tool.

I have done some reading on AI (see A Brief History of Artificial Intelligence: What It Is, Where We Are, and Where We Are Going: Wooldridge, Michael: 9781250770745: Amazon.com: Books) and have attended a few conferences sponsored by Finance Alliance | World Finance Forum.  The purpose of this post is to summarize where I think we are with AI as it relates to FP&A.  The most burning question on peoples’ minds tends to be whether AI will replace FP&A Professionals in the workplace.

In its current state, AI’s ability to run 3 statement models, forecast a business, develop a 5 year plan and prepare a deck for the board and investors is pretty limited.  Remember at this stage it is a language model.  So, if you try to use AI for these types of analytics you ultimately get a “how to” list for forecasting.  Even the ChatGPT add in for excel is pretty limited to functions that produce words, not numbers.

For the future, my initial answer is well, it depends. 

Here is a list of 6 practical considerations for assessing the potential impact of AI (using Gemini or ChatGPT for example) in FP&A:

  1. Company Stage and How You Connect Decision Making with Your Data

The promise of AI is in its ability to one day process large volumes of data in order to draw important conclusions about the dynamics of a business.   The challenge is that large volumes of sales data, customer data, product usage etc is typically reserved for later stage organizations.  Companies in their infancy will not have developed this volume of information and more likely than not have not yet made the necessary ERP investments to get there (very few start ups have FP&A as native to the organization).  Therefore, the opportunity to connect data and decision making is limited to Stage 4/5 organizations.

2. The Type of FP&A Work That You Are Doing

FP&A work tends to span a rather broad spectrum that connects the dots from financial results post financial close to telling the story of those results to communicating that information to a wide variety of customers (boards, investors, bankers) and ultimately making recommendations around long term planning.  Those activities go way beyond data science and scenario analysis that could be offered by generative AI.  The art of FP&A is in the contextualization of information and more importantly “reading the room”.  Even with the ability to program in preferences, AI will not be able to operate in a way that leverages the five human senses.  Experienced FP&A professionals and especially those with M&A experience can tell you that there is so much nuance in bringing companies together (or breaking them apart) that more often than not, the decision is made despite what the financials say.

3. The Promise of Automation and Systems

Harnessing data and achieving maximum utility in its use has been the promise of every system tool since the first instances of Essbase and SAP BI.  I have discussed this topic previously in my blog.  No matter how sophisticated the system, the challenge always lies in how a business leader wants to tell the story of the business.  Sometimes it is supported by the data but more often it is not.  Telling the story of the business using historical information can sometimes support stories of performance but the information may not be aligned with strategic objectives and investment plans.  Unless all preferences and unexpected outcomes are programmed into the learning model you are using, it is a tall order to replace and FP&A person with AI.

4. What Are Your Resources Like?

Companies who are at a stage with a large dataset may very well be among the earliest adopters of AI in FP&A.  The challenge is that in the initial adoption it is highly likely that FP&A teams will need data scientists to partner with in the development of the tool.   There are several thought leaders who discuss the merger of data science and FP&A.  Smaller teams with resource constraints may have difficulty with this.  More importantly, a data scientist is not an FP&A person and vice versa.  FP&A leaders going down this path will need to be able to synthesize disparate skillsets to bring a full picture with effective business recommendations to the C Suite.

5. Can Your Organization Absorb the Opportunity Cost

There is an opportunity cost associated with database automation – whether it is a data warehouse (like in the old days) or ultimately a sophisticated AI system that tells you everything you need to know about your business.  That opportunity cost is institutional knowledge.  No data set in business is perfectly clean.  Experienced FP&A professionals know that spending time scrolling through tens of thousands of lines of data allows you to see the anomalies.  You can think of these as “one-time events” that can dirty your data.  For example, in any given quarter you may have a blue bird customer fall from the sky that distorts the trend line in your business.  Unless you program all of the potential one-time events into an AI model, you will get distorted view of what is happening.

6. Risk Management and AI

The fact that AI is coming to FP&A in some form and even with limitations is unavoidable.  The most important thing that organizations can do is to protect themselves now by instituting AI policies ASAP.  Understanding the exposure is a first step and especially so with a remote workforce.  AI’s use in creating work product in the absence of company policies for its use can lead to less than desirable outcomes.  Companies need to be clear about what employees share with the learning models and more importantly what they should not share.  Moreover, AI and any of its use in creating work product has to be treated like an employee.  Work still needs to be reviewed and contextualized.  Think of it as one of those situations where you literally get what you ask from generative AI but it may not be what you really wanted.  That’s where FP&A leadership comes in.

General, Organization

How FP&A Provides Business Decision Support

by Laryssa Reifel: FP&A Expertise

To provide the best support to the business leaders, FP&A needs to quickly leverage the accounting information at hand. Especially during hard times, business is hungry for insights from financial results and the pressure on FP&A increases tremendously.

This article covers three critical aspects of telling the business story behind the numbers:

  1. What is the context behind numbers?
  2. Is there a strong collaboration between accounting and finance?
  3. What is the main purpose of the story?

Context is King

Financial results without context not only leave room to interpretation but can also result in poor business decisions. Before providing any recommendations, FP&A leaders are expected to do their homework by analyzing the current business situation i.e. comparing plans and forecasts with the previous year, assessing changes in the accounting regulations, competitive positioning of the organization and etc.

For example, when a product line has poor top line performance but promising margins there can be multiple explanations such as:

  • a deliberate strategy to pull back on a particular product
  • a new allocation methodology
  • revised capitalization strategies
  • the impact of foreign exchange rates on that particular line
  • the salesforce falling short of its objectives
  • the system failure

It is also possible to have a combination of several reasons listed above.

The context can be very different and if it is not taken into account, the financial results alone will not be very helpful to the business.

Collaboration with Accounting

Accounting and finance are often described as two different activities. One is backward looking while another one is forward looking. The contextualization of the results is possible only if there is a strong partnership between these two functions. 

To become successful business partners, FP&A needs to foster mutual respect and a high level of communication. Some useful methods for enhancing the partnership include:

  • Be an active rather than a passive participant in the meeting. Come prepared by having already reviewed the results and done research into key variances.
  • Design and follow highly integrated processes around reporting by making sure both accounting and FP&A team members are developing narratives that support both accounting and FP&A activities.  For example, management discussion and analysis (MD&A) and management reporting.
  • Communicate clearly around swim lanes between accounting and FP&A. This is important even in a collaborative environment. Clear definitions for accounting vs FP&A roles and responsibilities are indispensable when it comes to conflict management.

Communicating Insights

Organizations should strive to not only develop annual operating and long-range plans but also to attempt to operate in alignment with those plans. 

With the advent of COVID-19 most 2020 annual operating plans went in the circular file and we all witnessed (i.e. learned) in real time how to adjust and make new plans quickly. 

Here are some ways FP&A communicates important insights in a quickly shifting environment:

  • Model the worst-case scenario which can include an immediate re-structuring and lay offs. It is crucial for FP&A to offer this type of scenario in conjunction with context around the implications for a return to normal and/or growth.
  • Design a decision-making methodology by choosing trigger points for operating decisions.  Typically, trigger points are sales metrics such as market expansion/contraction, pipeline expansion/contraction, and new sales performance that indicate the direction that things are going. 
  • Contextualize the results. When those metrics fall short it is the responsibility of FP&A to contextualize the results in partnership with accounting and through the framework of management reporting.  The richer and more colorful the communication is the better it is. 

The above mentioned three steps become a cycle that repeats itself while the economic environment is uncertain.

In summary

FP&A can achieve better results by providing context, collaborating with accounting and creating different scenarios with rich insights.

The COVID-19 crisis has taught us all about the unexpectedness and how to react to unplanned events. We have very quickly moved from theoretically modeling three-year plans based on assumed growth rates and potential investments to completely shifting the paradigm and structure of a given business outlook in the next 18 months.

As FP&A professionals we are executive thought partners and that partnership has never been more critical than it is now. 

General, Organization

Synthesis

by Laryssa Reifel: FP&A Expertise

CFOs and VP&A leaders alike search for particular characteristics in the candidates they choose for their teams. The key traits they search for can vary from situation to situation depending on the state of the organizations’ development. For example, a new and quickly growing organization needs people who are virtually athletic in nature, are comfortable with high risk situations and a high likelihood of failure. More mature organizations need the steady hand of process and managerial thinking. But one characteristic is indispensable for all great FP&A team members and that is the unique ability of synthesis. Some people are detail oriented while others are more big picture are strategically oriented. FP&A professionals, in order to truly master their craft have to be both and then add in an element of synthesis.

Here is a partial list of the items and good FP&A person understands in detail:

  • Accounting entries and detailed support
  • The geography and rationale of various capitalization strategies
  • Detailed vendor spending and the objectives of day to day and long term spending
  • Project specific spending and how those projects align with corporate strategy
  • Long range business plans and how the business is aligned to achieve those plans
  • Internal stakeholders and business leaders’ specific areas of financial concern
  • External stakeholders and the company’s responsibilities from both a performance and reporting perspective
  • Financial systems across the organization – their structure, capabilities and evolution

Across any organization there are people operating in each of the above mentioned areas. It is the FP&A person who synthesizes all of the above in order to see the complete picture of the company. Turning that synthesis into a story that communicates a company’s position in the marketplace and where it is going is what distinguishes FP&A leaders from those who have expertise in a single area.

The ability to communicate that story is yet another skill – one for a future blog post.

Strategic Planning

Steps to Successful Strategic Planning

by Laryssa Reifel: FP&A Expertise

Throughout my career I have been part of both highly organized and highly disorganized strategic planning processes.  Whether you are building an Annual Operating Plan (AOP) or a Long Range Business Plan (LRBP) making sure that you have organizational alignment around key initiatives and inter-dependencies is crucial for success.  Even more crucial is measuring your performance and comparing how you did compared to what you said you were going to do across all aspects of the plan from key customer engagement, to operating metrics, to initiative performance and financial objectives.  This article does a great job of summarizing an approach:  Strategic Planning

 

General, Process, Systems

FP&A Establishment vs. FP&A Greenfield

by Laryssa Reifel: FP&A Expertise

One of the most extreme comparisons of FP&A roles is whether it exists in a established versus a greenfield environment.

Interestingly, once organizations have an established function it really doesn’t change much.  The people may change, the positions might shift slightly but it is a company function that once ingrained is very difficult to shift.  About the only catalyst that can drive changes in FP&A processes and analytics is a new system implementation or a major acquisition.  On occasion better systems yield more information which  might call for a new analytical process but it is not likely.  Moving the needle on analysis that comes after the books are closed or shifting the type and cadence for forecasting/planning is difficult to do in large organizations and particularly those which are publicly traded.  In fact, those company’s FP&A functions tend to be tied by not only their own internal process but those internal process are driven by a higher power – Wall Street.  Expected performance appearing in the form of earnings expectations really sets the tone for what a forecast will look like.  The opportunity to drive major change is extremely limited.

Greenfield opportunities on the other hand offer the seasoned FP&A professional a blank canvas for setting up the function, analytical tools, cadence, process and deliverables for senior management.  The sheer vastness of decisions stems from literally not knowing what a business needs because it is growing quickly.  The situation often calls for running parallel processes down multiple decision trees – systems implementations, building out excel tools to use in the meantime, hiring the right staff, creating board communications when there is little information, partnering with business area experts to understand the right levers to measure and then use as a basis for forecasting.  All of these things have to happen at the same time.  The environment often gets more challenging before it gets better.  This is typically a 2-3 year process and then before you know it, you have an established FP&A function that is hard to change.

 

Contact Me, General, Organization, Systems

“I need an FP&A Person!”

by Laryssa Reifel: FP&A Expertise

On more than one occasion I have heard leaders express in an exasperated tone the fact that they suddenly (as opposed to strategically) in need of an FP&A person (which then evolves into a team and then systems, etc. see blog post on systems here).

The timing of this typically happens at the following business junctures: the business is still figuring out how to close the books, the business knows how to close the books and is ready to mature into formal process, you are getting the numbers but still cannot tell how you are doing or the business takes a dive.  In all cases, having FP&A as a function in your organization is crucial for effective decision making but it does not necessarily mean you need a whole department and the inevitable systems.

Most often the assessment of whether you need FP&A is a function of multiple things:

  • your growth strategy
  • your exit strategy
  • your existing talent
  • your existing processes

Notice that systems are not on the list.  Given that most FP&A worth its salt lives in Excel, a systems evaluation and investment would be last on the list.  If you have strong people and process, you can make do without systems (for a while anyway).

Often, it is worthwhile to look at those elements first before proclaiming that you need an FP&A person/team.  Sometimes, it is worth the money to have an initial assessment completed first and then based on those findings proceed forward.

For small to medium sized businesses such an assessment can take from a few weeks to a quarter.  For large, highly complex organizations, it is likely a much longer research project.

Nevertheless, it is something to consider.  If you are interested in exploring this type of assessment I can be reached via my blog contact information.

 

 

 

 

 

 

 

 

 

 

 

General

Ethical Responsibilities of an FP&A Leader

by Laryssa Reifel: FP&A Expertise

As a graduate student in International Economics at the University of Denver Graduate School of International Studies, I had a particular professor of Economics who was very well regarded by academia and was beloved by his students.  I recall one lecture where he read a poem.  I recall that moment because I thought at the time, “What on earth is going on here?  This is international economics.  We are a capitalist society.  Why is my professor reading me poetry about the ethical aspects of finance and economics?”

Back then, the discussion was likely around the distribution of wealth and the lively debate that that tends to generate – particularly among graduate students.  Little did I know that as I pursued a career in the private sector, I would confront ethical responsibilities time and time again.  My professor’s poetry reading instead of being irrelevant turned out to be prophetic.

The primary responsibility of an FP&A person, at any level, is to provide clarity of financial information not just for telling a story to Wall Street or the Board of Directors, but to assist leaders in making great decisions about driving the profitability of the business.  These decisions span the spectrum of operational efficiency to investment choices to unfortunately, shrinking business operations in difficult economic times or as a competitive measure.

It is precisely at this juncture that an FP&A person’s job stares ethical constructs straight in the eye.  In my career I have not only compiled and modeled data for problems that needed to be addressed but have been in a position to make recommendations on the best course of action.  Each and every single time I have done so I have done so with the deepest orientation to the impact that the worst case scenarios have on peoples’ lives.

These moments are not about avoiding the inevitable rather they are about making the inevitable as painless as possible for those effected and as efficient as possible for the business.  But the most important aspect is the shoring up and the protection of human dignity.

I’ve been a part of and subject to these business decisions and they have spanned the spectrum from difficult, yet highly dignified events to extremely painful and humiliating experiences.

So, every time I walk into a meeting where a menu of choices are presented around some difficult choices, I remember that international economics class and that professor.  I choose my words carefully.  I try to maximize the outcome for all involved.

This is where the FP&A person leaves excel and power point and is required to become a human being.

Systems

Systems and Tools

by Laryssa Reifel: FP&A Expertise2 Comments on Systems and Tools

WHAT:

The last two decades has brought a tremendous amount of change in terms of data.  We have moved from fairly archaic tools that allowed one to access information through an excel interface hooked up to a DataMart to highly sophisticated tools that can integrate your manufacturing, accounting, planning and analysis all in one place.   We have also gone from not having enough information to run a business to in some cases having too much information.  There is a domino effect as well where volume drives complexity which then demands more sophisticated tools requiring heavy lifting in terms of implementation.  Many CFOs are plagued with the challenge of harnessing the data they have in a timely manner so as to make the best possible decisions for driving profitability in their business.  I have had experience with a number of systems and they all have their pluses and minuses – some are better at charts and graphs, others are better on the planning side and most are pretty equal on the accounting side but none of them are excel.  In fact, the first feature any FP&A person will ask for in a system is how well it exports data to excel.  The reason for this is that FP&A is the artistic side of the finance world and it is the only place where a finance person can be truly creative in framing an issue and then dissecting it in order to tell a story or offer a CFO some options.

SO WHAT:

The nasty little secret of any system implementation is that you end up in excel anyway.  Every executive is a customer with unique set of requirements.

General

Typology of FP&A

by Laryssa Reifel: FP&A Expertise

Organizational readiness for FP&A is critical to the success of the function.  The ideal conditions for a successful FP&A function are driven by numerous factors including (but not limited to) company size, cultural appetite, systems maturity, process maturity and growth plans.  I offer the typology below as one way to think about your organization’s needs for a true FP&A function.  If you think you might be ready to move beyond just closing the books, the table below might give you a sense of how you might answer the question.  Most importantly, as your company stands on the precipice of transition from one level to the next in any category, it is easier to install FP&A discipline in advance of critical stages such as becoming a very large company with the opportunity for rocket ship growth.  The main reason for that is cultural appetite.  It is much harder to institutionalize an FP&A function in a large, undisciplined organization for the simple reason that there can be a commonly shared belief that the organization met with success without FP&A and it is therefore not needed.  In reality, that’s simply great fortune.

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General

Why I Love FP&A

by Laryssa Reifel: FP&A Expertise

I think we all come to our roles in business through varying paths and leveraging different types of qualifications.  I came to FP&A (Financial Planning and Analysis) mainly through semiconductor manufacturing operations and later corporate strategy.  FP&A seemed to fall somewhere in the middle between baptism by fire and very long term projects totally lacking in instant gratification but offering long term satisfaction.  I see FP&A as one of the most critical roles an executive team has to fill.  The person leading the FP&A function at a company serves as a C level executive’s “True North”.  And that is why I love what I do.  I cherish the responsibility and privilege of showing people their options and possibilities for growing their business.  When they actually take my advice, I cherish it even more.  In this blog I aspire to share my experiences in FP&A and offer some candid insights into what it is really like in the decision maker’s office, what works and what doesn’t and why what FP&A people do for a living really matters.