Category: Organization

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

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, 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.

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.