Building your internal FP&A team

High growth companies often underinvest in the financial planning & analysis (FP&A) function, viewing it as a back-office function. However, an effective FP&A team assembly can drive strategic value for the business. FP&A teams must focus on efficiency and elevate their status from back-office scorekeepers to strategic business partners.

Expectations for FP&A teams have changed significantly in the last five or ten years. While the responsibilities are largely the same, you’re now expected to run planning cycles and execute analyses faster and more proactively than ever before — without just adding more headcount.

That’s easier said than done when so many responsibilities fall on an finance team’s shoulders. Day to day and month to month, you could be working on anything from building and maintaining the operating model to preparing board materials, guiding planning and budgeting processes, running ad hoc analysis for strategic initiatives, mapping out growth scenarios, and more.

FP&A Roles and Skills

Despite the numerous specific workflows and processes that must be managed, the overall structure of an FP&A team is rather simple. In the early stages, you’ll most likely have a Head/Director/VP who is in charge of finance and accounting. However, as the team grows, the distinction between accounting and FP&A becomes obvious.

Specific titles and hierarchies in FP&A are likely to vary by company. However, an FP&A team typically consists of three core job titles: analyst, manager, and director/VP.

The Director of FP&A

Director of FP&A is a responsibility that is often found in more mature businesses, whether they are a high-growth company preparing for an IPO or one that is already publicly traded.

This person reports directly to the CFO and oversees coordinating the FP&A team’s resources to carry out the forward-thinking aspect of the finance function. This senior management or executive post has several primary tasks, including:

  • Implementing standard financial reporting and modeling techniques to ensure compliance and provide investor guidance.
  • Developed internal processes for short- and long-term budgeting, financial forecasting, and strategic planning.
  • Recommend critical insights and takeaways from financial reports to corporate leaders and executives.
  • Organise team and cross-functional resources to complete initiatives such as foreign expansion analysis and pricing model improvements.
  • Led business partnerships between FP&A and other divisions to streamline analysis and budgeting conversations.
  • Evaluating finance automation initiatives for ROI, communicating value to executives, and collaborating with stakeholders to adopt new technologies.

While financial modeling and analysis skills are essential, it is frequently the soft qualities that distinguish a Director from the competition. The relationships this person develops with partners throughout the organisation make all the difference in terms of creating strategic value from the company’s financial side.

The FP&A Manager

The FP&A manager, another position commonly seen in larger corporate organisations, may carry out many of the business partnership activities of the Director of FP&A, but with a more granular, department-specific focus. Many of these roles are specialised for distinct business units. Some of their primary roles include:

  • Assisting the FP&A head and CFO with planning cycles.
  • Analysing financial and operational data to provide valuable insights to senior leaders.
  • Developing FP&A models to assess the impact of strategic decisions and proposed projects.
  • Analysing financial data to inform strategic decisions for department executives.
  • Analysing performance to plan and budget variances to ensure accurate financial reporting.

The Financial Analyst

Consider developing your FP&A team in four stages, beginning with the company’s first financial hiring and ending with its IPO.

Whatever stage you’re in, you’ll need to work with a small team. However, with the correct approach, you can build a team that grows beyond its size and strengthens finance’s strategic position in the firm.

Stage 1: The First Finance Hire

When hiring its first financial professional, a company will often take one of two ways. They may engage a former Big 4 accountant or a controller to bring bookkeeping in-house and secure the accounting side of the finance department. In this instance, they may need to rely on a fractional CFO (as provided by Fullstack) to fill FP&A gaps while the initial hiring is getting up to speed.

Alternatively, they may engage a former investment banker or an experienced finance leader to expand the function. These are the company’s first FP&A recruits, and their initial focus will be on developing the first operational model.

At this level, the first finance recruit is in charge of all aspects of FP&A, which is why developing an operational model is so important as a first step.

If the first finance leader does not have an accounting experience, the first new recruit is typically a controller who can get the books in order. However, the most frequent next step is to hire an FP&A analyst, who can dive into the weeds of research, planning, and modelling while still providing the senior finance executive with a global perspective of the firm.

Stage 2: The Generalist Phase

As a firm scales, finance typically accounts for 2 to 3% of total employment, thus it may take till the team reaches 250+ employees to staff multiple FP&A positions. However, once you’ve decided to build out your FP&A staff, you must assess your approach.

Building your FP&A team with generalists first allows you to rely on them to handle tasks ranging from difficult ad hoc research for board meetings to real estate transactions, SaaS pricing strategy modifications, and worldwide expansion. It is not until later that you will wish to hire dedicated FP&A jobs.

Stage 3: The Specialist Phase

As your firm becomes more complicated, you may outgrow the generalist approach to FP&A team building. Perhaps you’re starting to diversify your product offerings and shifting from one revenue source to several. Or perhaps you moved from a single central office to offices in several countries around the world. These are some of the scenarios in which hiring specialised FP&A roles may make sense.

In terms of the three levels of FP&A jobs we discussed previously, this may be the point where you begin hiring FP&A managers. You may hire FP&A managers that specialise in different business units, giving each functional area of the company its dedicated resource for ad hoc analysis and strategic planning.

Stage 4: The IPO and Beyond Phase

The final stage of developing an FP&A team occurs when you are ready to convert from a private to a public company. The IPO process may be challenging for any company if it is not guided by experts who have done it before, which is why you should consider hiring a Head of Finance and Accounting.

We can help you scale your internal finance team and grow your team. Feel free to contact our VCFO experts today.

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Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech & online companies.

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