Process – FP&A Expertise

Why Process Discipline Is So Important In FP&A

Featuredby Laryssa Reifel: FP&A Expertise

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.

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:

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.
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?
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?
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.
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

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, General, Process

Lessons from a Ukrainian Non-Profit #3

Featuredby Laryssa Reifel: FP&A Expertise1 Comment

WE ARE ALL MORE THAN OUR RESUMES

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, Process, Systems

FP&A Establishment vs. FP&A Greenfield

June 4, 2019February 18, 2021by 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.