What Does Your CEO Need From the FP&A Team?

Great synergy between CEOs and finance teams is a rare but powerful combination. With experience in both roles in my career, it’s clear to me that CEOs need their finance teams to be their biggest supporter and secret weapon.

To become that dynamic and effective team the CEO needs, FP&A has to rediscover their main purpose in the business. Then they can deliver value in four important ways:

• Run a smooth & coordinated annual planning process.
• Answer ‘what if’ questions through scenario planning.
• Deliver timely, automated financial reports & forecasts.
• Meet the CEO where they are as a strategic finance business partner.

FP&A Basics: trust & innovation

Financial planning and analysis has to start with accurate data. And it should yield clear advice for CEOs on options and opportunities to act based on trends and performance.

The numbers from the finance team need to be trustworthy. Without accessible, accurate, and synchronized financial and operational data, no one will have the necessary full picture to make strategic decisions.

Typically, the CEO can’t get in the weeds with every business unit. They’re relying on accurate reports and snapshots to know how each team is doing. That’s why FP&A has to stand at the intersection of finance and operations. From that position, finance can understand the performance drivers and challenges for each business unit.

More than that, they can see the downstream requirements and implications of one department’s performance on another’s. With this insight, they can make informed and innovative recommendations to the CEO to drive operational efficiency and better business performance.

There are 4 specific ways FP&A can build trust and deliver innovation for business success:

1) Run a smooth, coordinated annual budgeting process.

CEOs really lean on FP&A during the annual budgeting process. In my experience, CEOs may request a few different versions of the budget (like an aggressive, baseline, and downside case) and it’s up to FP&A to get going to create those plans.

To do this strategic budgeting and planning well, FP&A needs historical data and analysis on business performance, plus all the data to inform plan assumptions on a go-forward basis. And they need to do that for each scenario they’ll be modeling. It takes organization and some real proactivity.

And analysts should be engaging deeply in conversations with each P&L owner to say, “Hey Head of Rev Ops, based on this aggressive scenario the CEO wants, what does your business unit need to deliver so we can achieve the outcomes here?”

Great annual plans have to be informed by stakeholders themselves. The CEO needs this process to be driven confidently by FP&A, and trust that all budget owners have contributed to make the plans accurate and stronger.

2) Answer ‘what if’ questions through scenario planning.

Leadership often requests different forecast scenarios as part of the planning process (or before a big opportunity) to assess ripple effects across the business. FP&A teams can produce those scenarios and understand and illuminate possible impacts.

Unfortunately, scenario planning takes a tremendous amount of time for most FP&A teams. This is because they usually have several disconnected models that must be updated in order to produce the new scenario, instead of an efficient scenario planning tool.  

For example, if the CEO is contemplating a 10% workforce cut and needs a new scenario, you need to adjust that in the headcount plan. Then you’ve got to go into your expense plan and make similar adjustments in the absence of an integrated model that connects these things together.

Finance teams need to be working from an integrated plan (not disconnected spreadsheets) to save valuable time and deliver insights quickly to the leadership team.

3) Deliver timely, automated financial reports & forecasts

In addition to scenario planning, FP&A teams need to quickly report on the actuals from the month, compare that to the annual plan, and forecast accordingly. These reports and forecasts inform the CEO on where the business stands so they can make better decisions.

‍Reporting and forecasting is typically a monthly task, but current FP&A systems take a gargantuan effort to produce even these basic month-end reporting packages! Legacy FP&A tools can’t support the expanded role that finance needs to play in innovation and problem-solving if they can’t speed up FP&A reporting. These reports are critical for financial transparency and investor/board relations. The CEO is counting on you to deliver them on time, interpret the results, and provide recommendations on how to act next.

4) Meet the CEO where they are as a strategic finance business partner.

Some leaders are more hands-off. They may not want to learn another tool and log directly into a dashboard to look at actuals and forecasts. But another CEO may be interested to access that data, jump in, and be more involved. Having a collaboration-first FP&A tool will make it possible to give your CEO the level of detail and access that they would like.

And no matter their preference, using FP&A software prepares you with data accuracy and automations to produce the models, reports, and forecasts that a hands-on or hands-off CEO will benefit from equally.

Elevating the CEO-FP&A relationship

It’s so true that “there are not many people a CEO can turn to for sharing questions or doubts, or to get frank answers to tough questions” (Deloitte). That’s why I’m the biggest proponent of getting finance at the heart of the business. Finance leaders – and their FP&A team – have the rare opportunity to share the most important performance trends or strategic suggestions with their CEO to give clarity in the midst of a very noisy and lonely job.