“I must admit, when I was doing accounting, I never liked my FP&A colleagues. In fact, as a matter of at times, I hated them. I thought they didn’t understand accounting. They always push to reduce the number of days it takes to close the books when they have very little clue what’s going on.”
-Abdul Khaliq, Group Financial Controller, at Abu Dhabi National Hotels
In our 50th episode of FP&A Today, we bring together an all-star guest list who have all had experience working as both accountants and in FP&A. Drawing on their experience they look at the frequent clashes between FP&A and their accounting colleagues (be warned no one pulls any punches!). Plus, the secrets to a more harmonious relationship between FP&A and accounting.
Get ready for The Dual of Accruals, the Toe-to-Toe on Cash Flow….with all of your questions answered about the day-to-day realities of FP&A vs Accounting.
The panel:
Lyndi Porter
is accounting controller at Solera, a  global leader in vehicle lifecycle management. She  has more than 16 years accounting experience and has managed FP&A teams
Abdul Khaliq:
Group Financial Controller, at Abu Dhabi National Hotels. 20+ years of progressive experience in accounting for Real Estate Development and Hospitality industries.
Josh Aharonoff:
(aka Your CFO Guy), CEO and Founder, Mighty Digits. He shares Finance & Accounting Best Practices & Advice everyday to his nearly 85,000 LinkedIn followers
Terrell Turner:
Co-founder and fractional CFO at TLTurner Group (NY Times featured CFO | 40 Under 40 CPA). He also provide bookkeeping services to law firms to make accounting and finance less complicated.
What is covered in this episode:
- The crucial differences between accounting and FP&A?
- The 4 main reasons FP&A practitioners and their accounting colleagues clash.
- The business fallout when FP&A and accounting fail to co-exist
- Best practices that have worked in your career to bridge the gaps.
- Potential impact of AI in the FP&A-accounting relationship
- The crucial role of a Tech stack
- The importance of the chart of accounts in this relationship
- Getting the 10Qs and 10Ks out and the impact on FP&A requests
- The fastest way to get from accounting and FP&A and the qualifications
- Favorite Excel functions for accounting and FP&A pros
Paul Barnhurst:
Welcome to FP&A Today, I am your host, Paul Barnhurst, aka the FP&A Guy, and super excited to have you all here on LinkedIn with me today for this live episode. Feel free if you’re out there to put your name in the comments or say hello. We’re going to start here by just introducing the guests we have on the show today. So I have here with me Abdul, Lindy, Terrell, and Josh, and we’re going to give each of them an opportunity to introduce themselves and tell us a little bit about themselves. Why don’t we start with you, Lindy, if you could introduce yourself for the audience.
Lyndi Porter:
Sure. I’m Lindy Porter. I’m an accounting manager. I’ve been in the accounting field for about 16 years with a couple of years in FP&A. I’ve managed teams that work with FP&A, and then I’ve also been on the side where I’m working directly with the FP&A partner.
Paul Barnhurst:
Thanks, Lindy. Why don’t we go to Josh next.
Josh Aharonoff:
Cool. Hey everyone, some of you may know me under my alter ego, ‘Your CFO Guy’. I post every day finance and accounting tips on LinkedIn to help finance and accounting professionals grow in their career. I also just launched an exciting course on an intro to building a three state end model. I’m also the CEO and founder of an exciting company called Mighty Digits. We are an outsource finance and accounting solution for startups and venture capital firms with their portfolio companies.
Paul Barnhurst:
Great. Thank you. Josh Terrell?
Terrell Turner:
Yeah. Hi, I’m Terrell Turner. My background started off in accounting. It eventually moved into more corporate finance, FP&A and now I run an accounting firm where we focus on bookkeeping and CFO services mainly for law firms. And then outside of that, I host a podcast and I do a lot of ghost writing for other accounting influencers or other accounting content so deeply in with the accounting and finance community.
Paul Barnhurst:
Great. So I can get some tips from Terrell on how I did today. Well, going next to Abdul.
Abdul Khaliq:
So hi everyone. Thank you, Paul for having me, and it’s all absolutely my pleasure to be among all the accounting and FP&A experts here. My experience in accounting and finance and FP&A spans over 20 years, mostly with large corporates. Most part of it was spent on the accounting side of things, but I did good six years in FP&A as well, and that has helped me to connect accounting with FP&A and vice versa. Most importantly, it helped me to identify gaps and bridge those gaps being on the both sides of the accounting and FP&A. That was, I think, the biggest takeaway. But I always say this, that the essence of my career has been where I got to mentor and develop junior accountants and my team members. That really, really made me happy. So that’s the crux of my experience of 20 years in accounting and finance.
Paul Barnhurst:
And as everybody knows in this episode, we’re going to talk about accounting and FP&A. And I think we’ve probably all been, all of us here have been on both sides of it. We’ve seen the frustration sometimes from the accounting side, the frustration from FP&A. I think I’m the only one in the group that was never an accountant. I’ve done journal entries, but came from the finance background. So yeah, we’re seeing some comments roll in. We had one person that said hi to Lyndi and I that we used to work with on here. Hi. And some others. A lot of people excited. And so we’re going to go ahead and get started with the first question here, and we’re going to start with you, Terrell on this. Can you maybe talk to the audience what the key differences are between FP&A and accounting as you see it?
Terrell Turner:
Yeah. I mean, the way I look at accounting or my experience was it was a lot more time spent on compliance, the rules around how things had to be presented, and how we had to follow some technical rules around some accounting practices. And I think that that is very useful because it created a consistent flow of information. So when people looked at the financial statements, they weren’t having to guess about what assumptions or what approaches were taken as it made it more uniform. And then when I moved into FP&A, it was more about trying to take the business strategy, which was like playing game theory or game strategy where you’re trying to figure out what could happen and then what are the numbers and how will the numbers align with that? And then also how do you tell the story and there’s no one way to tell the story. And so I do think probably the simplest way to say it is accounting had a lot more structure and compliance, whereas FP&A was a lot more of an art form and strategy and storytelling with numbers.
Paul Barnhurst:
Great point. I’ll tell one quick story here. I remember there’s an accountant I worked with guy by the name of Mike, and I’d asked him if he had an FP&A role open if he’d be interested. He’s like, no, I did FP&A once. That’s just a bunch of guessing. I like to know what the numbers are. He’s, I feel like I’m just making stuff up for FP&A. And so you’ll kind of laugh when you said the structure. I mean, that’s not exactly what we’re doing in FP&A, but I got his point. He liked the structure, he liked able to tie out the numbers, the process. I’m like, all right, you’re in the right spot, then you stay there because you do a good job with that. So that was one that kind of made me laugh. How about you, Abdul? What could you add to that about the key differences as you see of between FP&A and accounting?
Abdul Khaliq:
So in terms of if you keep it very simple, accounting is always very transactional. And FP&A is about tracking and reporting those transactions against budget forecast and even a strategic plan. And as Terrell mentioned, accounting is more structured because it’s governed by the accounting standards, IFRS or GAAP, whereas FP&A is more of management’s directive and requirements what they want to see , how they want to see it. And that can keep on changing. And that’s very challenging for FP&A to adjust to the requirements of management. And when it comes to reporting now, the difference between, because accounting is more structured, so it is because it is for the external stakeholders primarily, and FP&A is to cater to the needs of internal stakeholders. So these are, I think the key differences where you feel that sometime you find a disconnect. So when is what management is needing and what really accounting is providing. So I think those are the key differences between the two.
Paul Barnhurst:
And so we say a lot of comments coming in similar to things that were said there. Accounting is backward looking, finance is forward looking. I like to joke that the difference is, and I usually get myself in trouble with accountants when I say this, but when an accountant gets creative, they go to jail. When an FP&A professional gets creative, they get promoted. That there to me is the difference of the two. So Lindi, I’m going to go to you next. Can you maybe talk to the audience a little bit? Yeah. I know you spent most of your career in accounting, you did a few years in FP&A, but maybe what are some of your frustrations when you’re working with FP&A? I know there’s times I’ve seen you, I’ve had the conversations with you having worked with you around some of that frustration. But can you share maybe some of those things that most frustrates you when you’re working with FP&A to make your job harder?
Lyndi Porter:
I would say the biggest struggle initially is always communication. How often to have that communication, what needs to be shared with both partners? One of the areas where I’ve struggled a lot is sometimes educating my FP&A partner about the accrual process or that expenses can’t be put in the period they’re budgeted. They have to be put in the period where they’re actually the service is completed or the product is delivered. So it’s usually just kind of understanding both sides of it, understanding what they need from me, and then just keeping them on standards. We’re following the rules and they’re trying to create a picture. So it’s just a lot of communication.
Paul Barnhurst:
So I heard a couple things there. It sounds like communication first and foremost. Second, there’s some education. Sometimes finance people don’t understand accruals or standards. They may ask to do things that are against the rules sometimes without even having any idea that they are, and sometimes trying to make sure they hit their budget. Can you put it in this period? Or whatever it may be. And that creates challenges because you have very strict guidance and rules you have to follow in accounting. And I throw this out to the audience, anyone who’s their thoughts of maybe challenges they’ve seen from being on the accounting or FP&A side, feel free to comment on that. This next question, I’m going to go to Terrell here. I know you started in accounting, then you did some more corporate finance and FP&A. So were, when you worked in accounting, how did you view FP&A and maybe how did that change when you switched from accounting to FP&A?
Terrell Turner:
Yeah, so when I started off in accounting, I was in public accounting doing audit. And so I was, my perspective, I would say my uninformed perspective was those are the people that would get us sent to jail. And that’s all I knew was to follow the compliance rules. And it wasn’t until I actually worked for corporation and I moved in into FP&A where I’m like, oh, we aren’t really doing anything illegal. It’s, it’s part of the strategy and that art form. So I, I would say my perspective of them was really the accountants are the ones that are right, because we have the rules and we’re following the this, we can prove that we are right on what we are doing. But I think as my eyes open to more than just technical accounting, that’s why I’m starting to have a much healthier appreciation for what FP&A brings to the table.
Paul Barnhurst:
I like that term a healthier appreciation that that’s good. But yeah, I can imagine starting audit, it’s a very different view. So thank you for sharing that. How about you Abdul? Can you maybe share when you were working in accounting, how was your perspective of FP&A and then how did it change when you moved into FP&A?
Abdul Khaliq:
I must admit, when I was doing accounting, I never liked my FP&A colleagues. In fact, as a matter of at times, I hated them. And because that’s what I thought I said, they don’t understand accounting. They always push to reduce the number of days it takes to close the books when they had a very little clue what’s going on and what it takes to close the books. And then they always had those last moment ad hoc request data request, and they kept on changing the formats, the templates, the formats kept on changing and then making it difficult for accounting to provide them with the data. But when I moved to at FP&A, I realized it’s totally a different ballgame. And the biggest realization was the pressure from the top. Pressure to produce numbers on time pressure to have accurate numbers, pressure to have always know why behind each number. And that’s, that accumulates all, and that’s, that’s really a healthy appreciation for your FP&A team. So now you realize why FP&A pushes too much on accounting, why they want to close to milk them, close the books on time so that they have time to consolidate and drive meaningful insight.
So it’s always like when you work on both sides, then you realize the weaknesses and strengths of each side, and then that’s how you bridge the gap. That was my biggest takeaway when I moved from accounting to FP&A.
Paul Barnhurst:
Thank you. I know, I think that’s a great point. I just want to share one comment here we got from somebody, I like this from Dan. He says, as an FP&A professional with early stage companies, one of the challenges is aligning of financial close calendar, which triggers internal external reporting, deliverables and forecasting process timely and accuracy of financials. So totally agree. That’s big challenge as see trail shaking his head. I think he can relate to that, Josh, that the big challenge for FP&A and often why they’ve pushed so hard on accounting to get the books closed is they’re getting pushed from above.
They have all these deadlines that are dependent on the close. And so that’s why I think what Lyndi said is so critical. Open communication when you know about something, don’t wait till the day you want it booked and then call your account, oh yeah, I got this 2 million entry that you haven’t seen. Can you book it? I don’t even know that you have supports for it. Let you know, let’s talk. And they’re trying to close the books and so it just builds frustration. So the biggest thing I would say on my end is communication. And we’ll talk more about that as we get going. But Josh, I have a question for you from your perspective. I know you’ve run an accounting firm and you’ve also done a lot of finance work with a lot of startups. Why do you think we see some friction between FP&A and accounting?
Josh Aharonoff:
That’s a great question. I remember my manager once told me that she has always seen FP&A and accounting butt heads. And when she explained that I had this aha moment of like, you’re right, I always have butted heads when I was on the accountant side and vice versa. I think it really comes down to four reasons for why I see them clash. All these are things that we’ve already spoken about, but the biggest to me is really deadlines. And it’s not just accounting and FP&A, I find that tensions are so high whenever there’s a really short amount of time to do something because you don’t have enough time to review the information, you don’t have enough time to understand the information. It’s just we got to get this out the door. And very commonly, whenever there’s a board meeting that is the biggest deadline.
So having just like that understanding of when in the calendar things need to be done by a certain time and when the ultimate deliverable is invested, the big piece that could ultimately remove friction. On top of that FP&A depends on information from accounting. And this is another huge area that I see the two sides really have friction Because FP&A depends on accounting to get this information FP&A is constantly following up with accounting, Hey, is the information ready? Hey, I have a question about this. And it’s easy for accounting to start painting the story of, well, who am I reporting to? Are you my boss? I now need to get you the information when that relationship doesn’t really exist where you’re friends, you have a relationship outside of just, Hey, there’s a reporting deadline that I need to meet over here. That could also cause a lot of friction. Similarly, both sides usually have full access to payroll information. They see how much money everyone is making, and oftentimes FP&A, the same level role at a junior or a senior FP&A analyst compared to a junior or a senior accountant,
Paul Barnhurst:
Don’t Let the secret out no keep going Josh.
Josh Aharonoff:
And that creates a lot of frustration. It’s like, Hey, well your job is more important than me. You don’t even understand what a basic journal entry is. Why aren’t you getting paid more? So I’ve seen that happen a lot of times in organizations as well. And then lastly, the fourth reason is accountability. Whenever something goes wrong, whenever something doesn’t make sense, people don’t understand things. Organizations that point the finger at each other and say, well, this isn’t my fault accounting over here, booked this entry wrong, or I don’t really understand what they did. Or accounting on the other side saying, you didn’t really consult with me when you put together these projections, so it’s actually not my fault, it’s yours. That’s where we get into trouble as well.
Paul Barnhurst:
Lot of great information there. I really appreciate that. And I would agree with all four of those as much as I joked about the one there. But I think they do create some. And something I found that works really well that I’ve seen at prior companies is as you’re going through close and getting on the same page is always making sure you have a meeting with whoever kind of the accountant is over that area of the business is booking the entry resistance charge, whether it’s an individual legal entity or whatever. So you can go through everything and say, Hey, that looks different than what I expected. And you work together to understand it. Another thing that really helps reduce friction, and this is on finance, is finance needs to understand basic accounting. I’ve worked with some FP&A professionals that have no clue how a journal entry works. And that makes it really hard for accounting because they just want everything to match budget. Well, that’s not how accounting works. So I think there’s a level of understanding. I don’t have an accounting degree, but I made a real effort to make sure I understood enough accounting that I could have an intelligent conversation with the accountant. There’s times I might ask them to explain something to me, which is fine, but don’t just expect them to do things the way you want.
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Paul Barnhurst:
Have a couple other questions here, but first I just want to share one comment we got from somebody that I really liked that was in the comments. Saying there’s definitely more pressure on finance to have the right amount of data details. Not too much, not too little. Accounting is thinking in GLs, finance is thinking in business processes. And I think that’s often a little bit of a disconnect, right? Finance has to translate what accounting does and present it in a way the business will understand. And often the business doesn’t care how much was booked to this little account. They care how much payroll was overall and what does that mean? So I think there’s definitely something good in that one there from Vera. So thank you. So next question here, and I’ll ask this question to Lyndi. As we’ve talked a little bit about the friction, have you seen that impact the quality of work being done? Have you seen that have an impact on the books getting closed and the work that’s being done?
Lyndi Porter:
Yeah, as Josh mentioned, there’s a lot of finger pointing that happens because of the pressure during close. So I have seen that happen and when you’re pointing fingers, nobody’s working out a solution, nobody’s working out a way to make it go better the next month or the next quarter. I think one of the things that can help too, depending on the size of the company, is management determination of whose role each of the pieces are. Because I feel like there is some overlap with looking at expenses and things like that. Sometimes FP&A needs to be looking at that to make sure that that they’re seeing the budgeted amounts come through, but accountants need to be getting the actual expense in. So I think that can be a little bit wishy-washy depending on what management wants to see. That’s probably the main thing, but definitely nothing is getting done when people are pointing fingers at each other.
Paul Barnhurst:
For sure. When it comes to that point we know we have a problem. I thought this was interesting. I’m going to share this real quick. We’ll throw the question over to you, Abdul, this came in from Raphael and I just thought this was interesting. He said that’s why it’s better to outsource one of the two roles, reduces at least two of Josh’s points. There are some pros and cons. I think there’s some cons that come with that as well, but there can be some benefits sometimes to outsourcing some of it. So I thought that was an interesting one. We’ll share here. Abdul, what’s kind of your perspective? What have you seen as far as friction and maybe kind of fighting and how it’s impacted the production of work? Quality of work?
Abdul Khaliq:
It’s natural to have friction. Whenever there are two or more teams involved, naturally there will be some friction. And that’s given the question is how do you address that friction? Do you just leave it or do you as collaboratively as one team, you find a solution to what’s causing that friction. For example, if the accounting team doesn’t provide data on time and in the right format, FP&A will always struggle to provide to produce those reports and meaningful insight, which is the key function of FP&A. If they do not have enough time to provide that ‘why’, then there is no point of issuing that monthly management report, right? That’s like putting just numbers on a presentation or a slide. And similarly, if FP&A keeps on changing the data formats or data requirements, accounting will struggle to provide them on time and that will certainly create friction. And if that friction is not addressed, then it’ll lead to impacting the quality of work. And quality of work in this sense means like quality of decision, quality of management decision. If they do not get proper meaningful insight, they won’t be able to make proper decisions. So this is how it takes, and then it all boils down to both the teams sitting together finding the solution to that friction instead of keep that friction keep on building forever.
Paul Barnhurst:
Yeah, I can remember in one role where we had just put a new shared service center in and almost all our CapEx entries were getting booked as opex. And I remember some of the FP&A people just started pointing fingers at the accountants and getting upset. I went through and found them and sat down with them and said, okay, what’s what’s broken in the process? Because it wasn’t, they were automatically coming through, they weren’t being coded correctly in the system. And so it was creating a lot of friction and instead of pointing fingers like you pointed out, try to sit down and work with them and figure out, okay, how do we solve this, right? Because at the end of the day, friction’s going to happen. It’s what we do after the fact I think that really matters. How do we communicate and work through that? So these next question, we’ll throw this to you Josh, what do you think the kind of the key is for FP&A and accounting to work together? I mean maybe the key and why is it so important? Why do we need to be on the same page?
Josh Aharonoff:
Great question. I say it ultimately comes down to three things. First, recognize that you’re part of the same function. You work for a company, there’s a finance and accounting function that’s could be divided between FP&A and accounting or the two sides can really work together. And when the two sides work together, you add incredible value to the organization as well as to each of your individual careers as well. So the saying there’s no i n team that is extra relevant over here with FP&A and accounting . On top of that, invest in a relationship. And it goes to the idea of people don’t leave bad companies, they leave bad managers and one side isn’t necessarily managing the other, but it goes similarly to the relationships that you have with other people. If the only time that you’re meeting is whenever you need something, whenever something goes wrong, whenever you have a question, whenever you’re getting blamed about something, well you’re going to associate that person with, okay, what did I do now?
And let me defend myself. If you’re meeting regularly, if you’re getting to know the person, getting to know their family, if you’re building a relationship outside of just whenever things go wrong, things are infinitely easier than when things do go wrong. You’re not defensive, you’re not pointing the finger. You have this entire other relationship, a foundation to build upon. And then lastly, learn from one another. And this is the biggest piece over here. I see so many accounting professionals stay siloed and just do accounting things. I see so many FP&A professionals stay siloed and just handle FP&A items. But when you learn both sides, aside from what I mentioned before, how the organization gets so much more value, each of your careers individually, like exponentially grow A CFO ultimately, which is the highest person in a finance and accounting function, needs to know both sides. And when accountants understand a little bit more about creating a narrative, creating a story, predicting the future, explaining to someone without a finance and accounting background, what is happening like FP&A typically does when FP&A learns, okay, how is this information being prepared on the accrual basis? Yes, we charge the customer at $12,000, but we only recorded a thousand dollars in revenue. Why is that? Oh, okay. That’s how journal entries work. When both sides learn the other side, there’s just tremendous value to each of their careers.
Paul Barnhurst:
I agree with that one. They both understand and take the time to at least understand the basics of each side. I mean, if you want to be an accountant, you don’t want to learn FP&A, you don’t need to, but you need to at least learn enough to have that communication, have that relationship, put the pieces together, and vice versa is true. FP&A doesn’t need to be a technical accountant, but you need to know the basics of a journal entry. Otherwise it’s going to be really painful. And I’m going to go here. There’s a question we have from someone, and I’m going to throw this to you Terrell, so I’m going to throw a curve ball at you. So someone asked, Dan Gonzalez asked, what is the biggest area of uncertainty slash gray line in the sand in FP&A versus accounting? What’s your thoughts on that question?
Terrell Turner:
Yeah, I mean I would say if I have to think about that, I mean it is probably going to be on my experience probably in investor relations probably showed me that the projection of a revenue is probably the biggest gray area from a standpoint in accounting. The company that I was in investor relations for at the time, we were going through back when we were going through rev recognition changes and how we were trying to project the future revenues of our contracts, where from the accounting side it was very, here are the rules, here’s the criteria, here are all the factors that we knew. On the FP&A side. It was a gray area because it’s like, well what if this contract changes or what if this factor changes? Then it completely changed the projection. So my role in investor relations was sitting down talking to both the accounting team and talking to the FP&A team and it’s like, Hey, both of you have two completely different revenue projections.
Neither one of you is right or wrong, but we got to figure out what message are we going to share with our institutional investors? Because I’m like, I need to get on the phone and explain this to a Wall Street analyst in two hours, so we got to figure this out. And so I think that opened up my eyes to, there’s some really big gray areas when it comes down to projecting revenue because that’s going to cascade through the rest of your P&L and also impact your cash flow statement and ultimately your balance sheet as well. So I would say the revenue projections.
Paul Barnhurst:
Thank you for sharing that. And I think revenue is a big gray area, and it’s one that FP&A is always digging into the most because we have assumptions around certain contracts, certain accruals, and for various reasons, almost always the actuals are different. And sometimes they’re close to what we expect. And other times you’re like, Hey, it’s $5 million different. You’re like, what just happened? They can’t explain this to management. So then you got to dig through and reconcile. I’ve spent many hours with that. I’ve had businesses where we had to do the entire books for the month on an accrual. Cause we build everything after the month. We didn’t have great data and it took months to work through the process with accounting. We spent hours kind of coming up with a very good way to make sure we are comfortable with what we were accruing. And so it is really important and it can be a real challenge. I agree with you there. So Lindi, I have a question for you. How does it make your job easier when you have a good FP&A a business partner? And then the second part to that is what makes a good FP&A business partner for you?
Lyndi Porter:
I would say it makes it a lot easier because FP&A is usually closer to the business. And so they can be that one source of information when I have something that’s hitting expense that is new to me, it’s a new vendor or it’s a new amount or something like that when my totals look way different than I expected. And so that is for me, the best. I can go to one person instead of reaching out to several cost center owners in that very tight timeframe at the end of the month, a good FP&A partner knows the business and also has those regular communications with the business, but instead of just holding that information, they’re sharing it with me. So, hey, this is coming up, you might see this. Or this is a new vendor that’s coming through, this is what they’re doing for us that can help me find fixed assets that I didn’t know were coming or things like that. So it’s just knowing the business and then sharing upfront with me so that I can expect it during my close process.
Paul Barnhurst:
The great advice there, especially sharing it upfront, right? Preparing you for close so there’s not surprises because I think it was, we all know we’ve all been there. Those big surprises are never fun during close when you have to scramble to figure out what happened. Josh, we got a question here and I’m going to let you give your thoughts on this one. So your previous comment made Vera wonder if you would see the FP&A and accounting functions maybe one day merge under a new AI solution. So what’s your thoughts? Do you see that happening someday?
Josh Aharonoff:
I don’t know. It’d be cool if they made a Black Mirror episode or something on the topic. I certainly see AI totally transforming just all areas of our life, including finance and accounting. Do I see the two functions ever emerging as one functions because of AI? It’s a little bit difficult for me to imagine that. I imagine there’s always going to be an area of the business that focuses a lot more on what’s happening and what happened in the past and another area of the business that creates the narrative as to what is going to happen and analyzes deep metrics on that as well. SoIt may become a lot more blurred, but I still think we’re going to have this divide.
Paul Barnhurst:
Thanks. And I tend to agree with you. I think that’s probably the case, but who knows the way technology keeps changing, it’ll be interesting to watch. I never say no to anything these days, but I would tend to agree with you. So Terrell, from your perspective, how can accounting and FP&A teams leverage each other’s strengths to improve overall performance? How do they make sure they’re leveraging the strengths of each other?
Terrell Turner:
Yeah, I mean, I would say my experience with FP&A me that there are a lot of people who go the FP&A route that didn’t go the first go the route of technical accounting. So sometimes they don’t always understand the accounting implications for the things that they’re proposing. And so I think from the FP&A side to what Lyndi mentioned about that open communication to where FP&A may be in a conversation with the business leaders or let’s say the sales team or the marketing team and they’re talking about how they’re going to structure a contract, is the FP&A team then bringing the accounting team into the conversation of if we structure the contract this way, what does that do to revenue recognition? Because where I’ve seen the worst situations happen is the sales team structures a contract a certain way, they had no concept of revenue recognition.
And then when it got to the accounting team, the business didn’t hit their revenue target number. And people are blaming and pointing fingers at the accounting team and the accounting team is like, no, that’s not how revenue recognition works. Whereas if they had that conversation upfront, I think they probably, we would have re-approached their strategy for how they execute on the contracts and the sales deals that they were negotiating. And I think the other way around from the accounting team is as the accounting team is going through their processes, I think being proactive of going to the FP&A team like, Hey, what are the critical deadlines that you have? Because the deadlines aren’t going to be the same every single quarter, every single year. There are different things that pop up, but I think the accounting team can take a little bit more responsibility to go to the FP&A team and say, Hey, what are your important deadlines?
Or Hey, what KPIs are you really watching this quarter, this year or this month or whatever? And making sure that they can, hey, adjust the deadlines within the accounting close process to make sure they can kind of support that. Or at least just being upfront and say, Hey, you need to report out on the fifth day of the month. There is no way we’re going to get that. We can do the seventh, but we cannot do the fifth. And I think the more proactive they are about that, the better I think the relationship can be.
Paul Barnhurst:
I think a great point there and sounds like I heard kind of the bidirectional communication. Both teams going to each other, but accounting, making sure they understand FP and a’s deadlines, and then having that open discussion of, yep, this is achievable without a new system, this isn’t happening or without an act of whatever you want to call it, congress, it’s not happening. There are times when you could do it and there’s times when it’s like that. That’s nice, you want it on that date, but here’s why it’s not realistic and it’s being selective, trying to be accommodating, but also being clear when you can’t do something and explaining why and then also saying, Hey, we can work toward it. Here’s what we need to be able to do that. Because sometimes if you just say, no, we can’t do that, it just comes across as you’re just saying no. Right? You’re not being supportive versus here’s why we can’t do it and here’s what we could do in the future.
Terrell Turner:
Add one thing?
Paul Barnhurst:
Yeah, please that. Go ahead.
Terrell Turner:
I think that’s a perfect time for accounting to really get some of their wish list requests across the finish line because if the F P&A team is like, Hey, we need to meet this deadline, the accounting team comes back and says, Hey, based on the systems we have in place, we cannot meet that deadline. But if you’re willing to go fight for us to get more budget to implement this new system or this new technology, this new tool, maybe we can start hitting that deadline. But I think when you’re honest about that, and I think the accounting team can definitely use that as an opportunity to help the FP&A team see like, Hey, here are, what are budgeting struggles are, if you can get us more budget for the department, or maybe if you can help get a budget approved for us to hire another accountant in on the team, maybe we can start meeting those objectives. And I think when you start looking at it that way, I think you can come out with a better outcome.
Paul Barnhurst:
I really like that. And that leads to a couple questions here that I just want to throw up from the comments. And I think we may move into this area a little bit, but Daniel said, not sure you can have a good FP&A cadence without a solid accounting workflow and tech stack. And I see everybody is nodding their head probably particularly on the tech stack part. And then the second, one of the biggest challenges I have witnessed is the lack of one democratized center of truth. And they’re mentioning that’s one area that hopefully AI and automation can help with. So maybe we talk a little bit how have you seen, and we’ll start with you Abdul systems kind of impact the relationship between accounting and FP&A?
Abdul Khaliq:
See having your proper systems talking to each other. We always have accounting system, which generally we call them ERPs. So when you have your ERPs and your consolidation and reporting tools, you need to make sure that they speak to each other. And I know Josh speaks about it quite a bit, about chart of accounts. Now chart ofaccounts may seen a very simple basic, basic tool or basic for accounting, but it’s also is very important to have your chart of account. And when I say out of account, its’s having that chart of account mapping into your reporting tools effectively. I’ll give you an example. For example, if FP&A is not aware of how the chart of account is built, and the accounting team builds that chart of account without having into consideration what FP&A requires as in reporting. Now if they build it and FP&A asks you for break further breakdown of product-wise or segment wise on your revenue, accounting will never be able to provide that. So it is important that both of the teams, they work together. And in order to for that, not to build the systems together, have those systems in place that will help you not only with accounting, but getting the output right and output is definitely for FP&A. And that starts with having proper systems in place. If you don’t have system, you will always struggle. You will always struggle with producing meaningful data and translating it into meaningful insights.
Paul Barnhurst:
Thank you, I appreciate that. And you know you mentioned something that I think is really important here is chart of accounts, even before you talk about systems, is thinking about how are you going to structure the data? What makes sense for the organization and the business to understand it? Josh, I know you spoke a few times about chart of accounts and I know you deal with a lot of startups and small companies, so maybe how do you advise them to think about chart of accounts and why do you think that’s so important When you’re setting up your systems and your technology to get right?
Josh Aharonoff:
Chart of accounts, ultimately explain to the readers of the financial statements, who can be the CEO, management investors, board directors, whoever. They explain what exactly is happening in the business. Now you could always give added commentary on top, but you’re not always going to have that opportunity. There may be an email chain that gets forwarded and people don’t have the opportunity to ask you questions. You want to give that perfect balance between, okay, I’m understanding what’s happening with the business just by reading this income statement, balance sheet and cash flows. But at the same time, I’m not being overwhelmed with data. And that’s something that I oftentimes see with a lot of our client when we start working with them, their chart of accounts show for a convertible note, every single note holder that contributed to that convertible note. And I always ask them, well, why do you feel that is so important for the readers of the financial statements to understand there’s a difference between work papers, which show the supporting documentation and who exactly invested what and your chart of accounts. So striking that perfect balance between summarizing data, not using redundant accounts, not using personally identifiable information, but also providing that detail where the readers of the financial statements can understand what’s happening is key to structuring a good chart of accounts.
Paul Barnhurst:
My favorite one I saw one time as it said fund of eating, and I thought first they were fond of eating. I was like, okay, this is an interesting chart of accounts. So yeah, I agree with you. Really important. Lyndi, from your perspective, how does good technology make your job and the relationship with FP&A easier, I know you’ve worked in some companies where technology’s definitely been a challenge and I’m sure you’ve worked in some where it’s better than others. What’s kind of your take on that?
Lyndi Porter:
I would say that the accountants need to understand the ERP system. Obviously they’re making the entries in there, but they also need to help FP&A be able to look for what they’re looking for in a timely fashion as well. Sometimes you don’t have time to provide the reporting and they need it right away to start their analysis process when you’re still wrapping things up. So having a system that they can access and they can utilize as well makes a really big difference.
Paul Barnhurst:
Make makes sense. So we had a question here I’m going to throw out, and I’ll throw this out to the guests here to see. I have not had to deal with 10Q and 10K, so I can’t really speak to this question, but we’ll see if any of you have had experience there. Says, is it normal for an accounting department to be completely sidetracked by the Q and K, the audits and deliverables interrupt their function and in turn delays turnaround close for FP&A? Has anyone had much experience with that? I think you have, right, Terrell?
Terrell Turner:
Yeah, I will say, yeah, I think it is very easy to get sidetracked by those things. And I think that’s where you got to have very strong leaders within the different functions. So in the accounting function, the FP&A function, and in my case I was in investor relations of having to have a conversation saying like, Hey, which one is the priority of talking to the FP&A team? Like, Hey, I know you need numbers to run your FP&A analysis, but we have 45 days to get this Q out or then get this K out, or Hey, we have a earnings call coming up so all of your FP&A projects are going to be secondary until we meet these deadlines. And I think just having that upfront conversation, and I think really setting everybody’s expectations, because a lot of times, I think the challenge that I saw before we started doing that is the FP&A team was just trying to function as business as usual, or for the accounting team, they were going through an audit or they were trying to get the Q or the K out and they’re like, we can’t function as business as usual because we have these other priorities and it just costs so much friction.
So we had to step in and really say, Hey, we’re going to make a judgment call. Here’s what the priorities are. Like, hey, after they get let’s say 80% through with the Q, then they can start looking at some of your FP&A requests. But you need to prioritize which ones do you want to come first? Which ones do we need to figure out a different strategy?
Paul Barnhurst:
I love how you said the prioritization and it reminded me of an experience I ran into multiple times when I worked in FP&A. I was also doing sales commissions and there be time the budget was due or the forecast was due at the same time as sales commissions. And my boss would be like, are you going to deliver the budget on time? And I’m like, well this month, no, because you probably want me to pay our salespeople first. I mean, if that’s not important, I can do the budget first. Never once did I have a business leader go, no, no, finish the budget, don’t pay our salespeople every single time. I was like, all right, we’ll give you cover from above and tell them why this isn’t reasonable. Because people will get it if you have those conversations and prioritize. Right? Investors in the street is more important than an arbitrary, which it’s usually an arbitrary FP&A deadline. There’s usually no crisis internally that’s going to happen if the forecast is delivered a week later. Right. But there is going to be a problem if your 10Qs delivered late, your 10 K, right? The impact is huge.
All righty. So moving kind of back to the questions here. I’m going to throw this one to you, Terrell. Cause I know you’ve worked on both, both sides of the aisle a fair amount. You’ve also worked in investor relations. So maybe I’ll ask you this first question, what makes a good accounting partner? And then maybe what makes a good FP&A partner?
Terrell Turner:
Yeah, I think a good accounting partner is a person who knows how to do accounting. I think that that’s just standard number one. They have to know how to do their job in accounting. But I think is also curious about after I do my job in accounting, what happens to these numbers? Who’s going to look at it? What types of decisions are they going to make? What types of questions are they using Mmy work to go answer and go address? Because I think an accountant who have that perspective is able to start anticipating some of the questions that they’re going to have and I think they’ll become more proficient at their job. And then I think also that type of accountant is not going to go through what I would guess I would call just this feeling unappreciated. Because I think a lot of times, and I did this myself for a while, is spend so much time focusing on what I thought was important in accounting. And it wasn’t important to anyone else outside of accounting. So I felt unappreciated. But when I started really understanding what other people were using the information for, then I could say what let me focus on what really matters. Now I think from an FP&A perspective, I think definitely an FP&A person who actually knows how to do FP&A work that standard number one, they have to know how to do their job.
And then I think they also are also asking the question of, hey, these numbers and these presentations, these financial forecasts that I’m putting together, where did this information come from? And what are the indicators or what are the drivers that’s driving this? And then I think going back and having a conversation with the accounting team of like, Hey, here are the key metrics that we’re following. Here are the drivers that we think are going to change and influence those numbers. And really just starting that open dialogue with the accounting team of, hey, you’re the one that’s actually doing the accounting. What do you see the drivers as? And I think when both of them can work together in that perspective, I think then you have kind of the best of both worlds. You have a really good accountant and you have a really good FP&A person that can really work together, create a great process and a great end product.
Paul Barnhurst:
I really appreciate that. I love how you said not just end product but process. Because you do rarely get a great end product, not a repeatable one without a good process. And then I add a laugh when you said first part is they have to understand FP&A because I’ve seen a few that, well, you wonder we’ll leave it at that. And I see Terrell laughing too, so I know there’s a story behind that. But I’m going to ask one of the questions we had from a LinkedIn user here. It says, for an FP&A career, which is the most supportive educational degree today, can a ACC C a become a strong backbone for an FP&A career in the current financial system? And I will say there is not one path. There’s not one degree. Many people come from an accounting background and get their CPA, you’ll go through audit.
Some come from investment banking, some from come from consulting and strategy and some come from an MBA and a finance background. Now there are a number of different certifications, and the key is one, knowing what you like, knowing what you want to accomplish with your career, deciding what’s best for you, a CPA is solid, it always gives you something to fall back on. CMA is a great, the chartered management account, and it has a lot of overlap with fp and a. You have the FP&A certification from the Association of Finance Professionals and others. I could go on and on, but I’ll stop there and see. Does anyone have any thoughts on that as far as maybe any advice around education in FP&A?
Abdul Khaliq:
I guess you have spoken about it and what I understand where CPM makes you a good accountant and it really builds your foundation. CMA gives a good perspective on budgeting and planning processes, whereas it doesn’t go too deep in accounting side, but it gives you overall perspective. So if you’re specifically looking for education in to excel in FP&A, then CMA could be probably a good idea to start with.
Paul Barnhurst:
Yeah, I think CMA is a great way. I’m, I’m currently taking the FP&A certification, which is from the Association of Finance Professionals, so it’s another great one that’s out there. Alex mentioned that one. And so if anyone has questions about, they can ask me. Also, for those of you who are accountants and maybe looking to make that change to FP&A about, I think it was it six months ago now, Terrell and I did an episode with Chris Ortega, and I’m sure we can put it in the show notes where he talked about accountants and how they can make that transition to FP&A. No, not the focus of the show today, but definitely I think a lot of people ask about, and that’s a question I’m just going to ask everybody here. We always get a few accountants that want to make that switch to FP&A. What advice would you offer, and Lyndi will let you go first on that.
Lyndi Porter:
The area where I see a big gap often between accountants and FP&A is variance analysis. So I’d say if you’re looking to go into FP&A then that needs to be something that you enjoy and that you are successful at.
Maybe that’s why I’m doing this instead of FP&A. You definitely have to be able to dig in and understand those differences between budget and actuals.
Paul Barnhurst:
I think that’s a great point. Abdul, what’s your thoughts on that?
Abdul Khaliq:
I would say if you are either trying to make a transition from accounting to FP&A or FP&A to accounting, need to start understanding the basic needs and requirements and processes, that’s very important. You need to know when the transition, what it takes for you to make that transition. Transition. Either it is like your company provides you with an opportunity, then it’s excellent, right? Then you take that opportunity and you run with it. But if not, then what you are doing on your own to take that initiative and make that transition what it takes. You need to understand that and work for it. The only advice I would give is for you to have that career plan. How do you think and how do you feel you would be able to make that transition and write it down? The best thing to do when you look at a goal, the end goal, that sometime looks huge, but when you break it down into smaller steps, smaller milestones, that becomes achievable. And I would even say to break that down, that goal to the extent that what you can accomplish today as small as what you can accomplish today towards that, your bigger goal. So bigger goal, small steps towards your bigger goal, and that will help you make that transition.
Paul Barnhurst:
Great advice. Always good to break it down and figure out in small steps how you can, you know, how you can accomplish on this. I really appreciate that. Josh, what’s, what’s your advice,
Josh Aharonoff:
Speaking from personal experience as a CPA, who transitioned to FP&A? There’s so much to share on the topic, but I’m going to do my best to be able to bit concise. As I know we’re running a little bit low on time. The biggest thing to me is getting really good at Excel. And that may be a little bit of a controversial comment because a lot of people feel there are all these amazing softwares out there. But to me, Excel still is the de facto tool that finance and accounting professionals use. And when you get really good at Excel, when you understand all the different formulas that you can use in order to amortize at booking into revenue and cash collections and all of that, on top of the fact that me personally, I love Excel shortcuts, and I know Paul, you and I have spoken a little bit about this in the past, and you’re like, you know, how really valuable are Excel shortcuts to me?
When I’m in the zone and I’m building something and I’m talking to a client and as they’re describing things, I’m just using my keyboard and making it come alive. It’s like so exciting for me. So that’s probably the number one thing that I would say. On top of that, getting familiar with data structures. You have to realize when you put together a financial model, majority of the time, it’s not just going to be a one-time thing that you’re doing is going to be an ongoing analysis. And that ongoing analysis means you’re taking data from different formats, from different locations, whether that’s your ERP, whether that’s your database, whether that is your CRM, understanding how to pull that into a spreadsheet and how to design a way to transform that data into an output is a really key thing when building a strong financial model as well.
And that gets into a topic that I know, Paul, you and I have spoken about a lot as well, and that is understanding how to build a three statement model. Now I’m going to caveat it. You gave me some really great advice that some organizations are so big, you don’t have a three statement model. You’re just doing one narrowed section in an FP&A function, which I could understand, but the majority of people who are looking to get involved in FP&A, especially in small organizations, when you build a three statement model, you in essence connect all three statements from one another. And you understand so much more about how to really tell a story with everything happening in the business instead of just one side. And it’s for that reason why I think accountants transitioning to FP&A, there’s such a stronger opportunity and it’s so much more within your grasp than FP&A a transition to accounting. And you have to kind of learn these fundamentals of journal entries and accounting topics and all of that. So those I would say are the biggest things for me for what an accounting professional can do to transition to FP&A.
Paul Barnhurst:
And I’ll just say I second all that. I caught half of it because my computer just crashed on me and I had to restart. So I apologize for leaving the stream for a moment, but I’m sure it was all correct, whatever you said, Josh. We’ll throw that question over to you. Terrell, any advice for people maybe last word?
Terrell Turner:
Yeah, I would say, I mean, I think probably the most or the skill that I see that is the most overlooked when it comes down to moving into FP&A and trying to be successful in FP&A are communication skills. Because I think that a lot of people do focus so much on the technical side that they forget in FP&A part of your job is to tell the story that the numbers are communicating. Because when you’re in accounting, a lot of times the people who are receiving your end product of your accounting work are people who kind of have an idea about numbers and finance. And a lot of times when you’re in FP&A the person who’s receiving your end product or the person you have to give feedback to, they don’t have an accounting or finance background. I mean, they may have a sales background, they may be in engineering or they may be in any other department other than finance or accounting related.
So I think you really have to find a way to work on your ability to look at the financial information and how do you communicate that to someone who doesn’t have your background? And I think the better you get at being able to do that, I think that will set you up to be very successful in FP&A. And I think you’ll get better as an accountant. You’ll get better as a finance person because if you have to practice explaining these things, that means you’re going to have to really know it and understand it yourself. And so I always tell people is find ways to work on your communication skills. For me, it was writing blogs and sometimes studying comedians of how do they tell a story and five minutes go from start to finish, tell a very concise story of just really watching their strategy, how they did that. And as I study them, it made me better at explaining financial information in a very short period of time.
Paul Barnhurst:
Great advice, communication and storytelling is so important to FP&A as you have to influence the business. So great advice from all of you. Well, we’re coming up on the end of our time. There’s another question I’m going to ask here, but before I ask everybody that, I just want to remind people, if you enjoy FP&A Today , please go to your podcast platform of choice, Spotify, Apple, leave a review, subscribe to be notified when new episodes come out, whether the review’s good or bad, we love feedback. So please go do that for us. We’d appreciate it. Also, if you want CPE credit that’s available for this episode through earmark and also if you have your FP&A certification, we now have the ability to get continually education hours for that as well. If you have questions about that, you can contact me. That will be coming out shortly. But just a reminder there. And then we’re going to wrap up with one question and then we’ll give a thanks to our audience and let everybody get back to work. So this is my favorite question to ask everybody. And let’s see, we’ll start with Josh on this one. What’s your favorite thing about Excel? function feature in Excel?
Josh Aharonoff:
My favorite thing is to use Power Query to take a financial report where you have dates going across horizontally to unpivot and term it into structure that a machine can understand.
Paul Barnhurst:
And I have a video on YouTube walks through exactly how to do that. I love on pivot.
Josh Aharonoff:
Love it too.
Speaker 1:
Let’s go to Terrell next.
Terrell Turner:
Yeah, I would say my favorite function is probably pivot tables because a lot of times when I’m working with someone on the spot. Especially with a lot of law firms, there’s like 10 plus years worth of data. And to be able to just create a pivot table right there on the spot and summarize it very quickly for them, it always creates a wow effect that they’re like, oh my gosh, I never seen it that way before. So I would say pivot tables are probably my favorite right now.
Paul Barnhurst:
They’re a great one. We have a one audience member that said Copy paste, so I don’t know if that’s my favorite. We all have ours, so there we go. Abdul, how about you?
Abdul Khaliq:
I would say, I wanted to say pivot table, but Darrell has explained it quite pretty well. I would say the simplest and most easiest to use is used to be VLookup, right? And then it’s transitioned. It became even advanced with X lookup. You use the Xlookup, you can merge the data from, you pick the data. Yes, you need to have a common cell or common data fact, but I think that’s the simplest one, and that can save you a lot of time. And then obviously second comes the pivot table. It’s, it’s much easier to thousands of transactions. You just pivot into a format that is usable.
Paul Barnhurst:
Great. That good one there? I love X lookup, V lookup. We have another guest that said Power Pivot dashboards Give the Wow Factor. I’ll agree with that one. That’s always a good one to use. We have others coming through as well, but we’ll give the last word here to . Lyndi What’s your favorite thing about Excel? I agree with Terrell. Definitely pivot tables. I use ’em every day. Yeah, I think a lot of people love pivot tables and we’re seeing a lot of comments coming in, but we’re at the top of the hour now, so I just want to thank our guests for making time to be on the show with us today. So thank you, Abdul, Lindy, Terrell, and Josh. And a special thanks to our audience for taking time out your day to join us, and we look forward to having another one of these in a couple months. We have one scheduled in May, so we’ll see you then. Thanks everybody.
