Mastering Financial Planning and Analysis

Welcome back to CFO Weekly, where we're talking with financial leaders about how to build efficiency in their teams, create time for strategy, and ultimately get results, with your host, Megan Weese. Let's jump right in.

Megan: Today, my guest is Paul Barnhurst. Paul is a finance professional with 12-plus years of finance and FP&A experience. Paul earned a bachelor's from BYU and MBA specializing in finance and a master's of information management from Arizona State University. Paul has worked in several industries including the US government, travel services, finance, automotive, cyber security, e-commerce, and more.

Paul possesses a strong background in budgeting, forecasting, financial planning, financial modeling, report building, and business partnering. Paul recently launched his own business called the FP&A Guy providing FP&A consulting services for small and mid-sized companies, FP&A training, and FP&A content creation, including webinars, blogs, and sponsored LinkedIn posts. Paul resides in Salt Lake City, Utah with his wife and daughter. He enjoys running, hiking, and the outdoors and is very active on LinkedIn, regularly publishing thought leadership in the FP&A space. On LinkedIn, Paul goes by the moniker, the FP&A Guy. Paul, thank you so much for joining me on today's episode.

Paul: Thank you for having me, Megan. I'm really excited to be here and talk with you for a few minutes.

Megan: Today, we're going to be focusing on financial planning and analysis or FP&A, its importance, and the tools available to support both the practice as well as the people who specialize in it. I'm really looking forward to this conversation and learning from you, Paul. Let's get started.

Paul: Sounds good.

Megan: First, let's start with you and your story. If you could share how it is that you got to where you are today?

Paul: It's a great story and I can definitely say it's not where I ever saw myself, but I think that's how everybody's career goes. I heard it said the other day, "Careers today are no longer ladders. You just think you just kept trying to move up the ladder, there's squiggly lines and that describes my career. I started in procurement, working for the government, pretty quickly realized writing government contracts was not for me. Then, I worked briefly as a business analyst for the government, went back to grad school. Out of grad school, I took a financial reporting job because it was 2008 as an analyst-type role. I wanted to do something in the investment space, but graduating in 2008 with my MBA with no investment experience, that wasn't happening.

Took a job, worked in a really a reporting role, and then an FP&A role came open, and really didn't know what it was. Took the role and I've been in FP&A ever since. That was about 2009. I worked for American Express, then joined a SaaS company, software company based out of Dallas called Solera, was with them for a little over four years. About a year ago, joined a company called DigiCert. Just finished up with them recently and launched my own business this year. I do content creation, training, consulting in the FP&A space.

Megan: What is it about FP&A that really captured you?

Paul: I think for me, the things I really enjoy about FP&A is, one, you get a view of the whole business. You really get to see what's going on through the lens of the financials. When FP&A's done right, you get to help influence and partner with the business. I love that working with different people and being able to be involved in what's going on and helping shape the business. I was really fortunate. Particularly when I worked at Solera, they really valued FP&A, and you were involved in almost every decision. Sometimes, it almost felt like too much, but it really helped me learn the business and see the value of good planning and linking your strategy and your operational plan, and really being that advisor with a financial lens to the business.

Megan: As you mentioned, you have your own business today. What inspired you to make that leap? How did you work up the bravery to make the leap from corporate to entrepreneur?

Paul: It's a great story. Since I was a kid, I wanted to run my own business. In high school, I wrote a couple of business plans. I did an entrepreneurship class. I actually competed in a state national contest. I graduated with an entrepreneurship degree in undergrad, but just never really had an idea or the courage to start something. About six months ago, people started to approach me. I think in one week, I got like three job offers and approached about working with different companies to do content creation. I went to my wife and I said, "Hey, I think I can start a business." She looked at me like crazy.

I still had the idea in my mind and talked to her about it. It was about six weeks later and telling her different things were going on, she goes, "I think you can do this." I go, "Are you sure?" She's like, "Yes, I'm okay with you doing it." I'm like, "Okay, I'm going to put in my notice today." I put in my notice that day. Actually, back in February, I ended up doing an extended transition with them which helped make it a soft landing but been working on my business ever since.

Megan: Let's talk about your business, the FP&A Guy. What is it that you do?

Paul: It's a great question. One, I do a podcast called FP&A Today that's sponsored by a software vendor called Datarails. I host that podcast. I do content creation daily on LinkedIn in the FP&A space. I also do Excel training. I will be launching some additional training later this year, do some consulting. I build a 3-statement model for a business as well as I'm doing some different events for vendors, webinars around financial modeling, KPIs, different subjects that help people be a better FP&A professional.

Megan: Who is your ideal client? Who are you trying to attract?

Paul: There's two sides to it. One is working with these finance vendors, doing events to attract people who are wanting to be better at their career, wanting to learn about a subject. One of the first things I did is I did a webinar for a large vendor. We had about 240 people attend on financial modeling. I'm really passionate about helping people be better with their structure and design, whether it be Excel or financial modeling, as well as being a better business partner. There's two sides. One, partnering with some of these vendors really to help spread the message and to help reach the people that are looking to improve their FP&A skills and be better FP&A professionals.

Megan: Let's go back to your time at Solera for a minute. While you were there, you developed a financial reporting tool. Tell us more about this tool and what is the importance of financial reports in the financial world?

Paul: There's a lot of different types of financial reports, but obviously, they're critical, especially if you're a public company. In this case, what I designed is we had just put a new ERP in place, and we didn't have any good reporting that rolled it up beyond the transactional level to be able to compare it to the forecast and understand what was going on. They had created this data dump and I took that and built a report in Power Pivot/Power BI, the Excel version of Power BI, and built this report and then convinced the business to productionalize it. They went ahead and built some cubes, and it became a global report that allowed anyone to go in and see what was happening at a transactional level, be able to roll it up by entity, so you could compare it to your forecast and understand the items you need to understand for variance commentary. When I left there, four years later, it was being used globally.

Megan: That's awesome. Let's talk a minute about tools and technology related to FP&A. It's been my experience that they're lagging behind the rest of the accounting field. What are your thoughts?

Paul: Definitely, I've heard numbers. I haven't seen a recent number, but the last number I saw said for planning tools, so just talking FP&A planning and there's definitely other areas, but the core planning, budgeting, and forecasting tool, 70% are using Excel.

Megan: Wow.

Paul: Excel has some great tools, but when it comes to the collaboration and the workflow, and as soon as the company gets big, you get stuck in that Excel nightmare that everybody's dealt with where you're spending all your time reconciling the numbers and trying to find out why this file doesn't tie to that file. It's definitely been a little behind, but it's been a very hot space over the last couple of years. Tons of companies, what I'd like to call third-generation planning tools have come into the space over the last couple of years.

Megan: Let's talk about those tools for a minute. First of all, what makes them third generation?

Paul: That's a great question. The way we define third generation, some of the earlier tools can meet some of the requirements of third generation, but typically, they're lower price point. They're designed for small to medium businesses. If you look when FP&A tools first came about, it was Hyperion, it was SAP, it was Oracle. Six-month implementation time, big enterprise companies were using them. You had tools rolled out like Adaptive, Planful, Vena, and most of those tools are aimed at the mid to the large market. They got better. They were more low code, but they still may have had some code. They were closer to self-service and a shorter implementation time. They've got better as they've rolled out, but these third generations have come out for many of them have implementation times as short as a few days. Some of them might be a few weeks up to maybe five or six weeks. They're generally very low price points compared to the other tools. They are much more self-service. They're much more that no-code low-code. That's really what we're seeing is a lot of startups in that area that we call the third generation tools and there's probably 20, 25 tools, I'd say in the last five years that throw into that bucket.

Megan: In your experience with that group of tools, I'm not sure if you can share this or not, but are there any that are your favorites or that you feel are more impressive than others?

Paul: I wouldn't necessarily say favorite. I do get asked that question and I think it comes down to preference. There's different things I like about different tools like Datarails sponsors my podcast. If you want to stay a 100% in Excel, they're a great choice. They're one of those tools that keeps you in Excel and bring structure around it. Some people want to get out of Excel and so there's a number of other tools that do that. There's a tool called OnPlan that its engine's completely built on Google Sheets. If you're a Google shop, there's some benefits. There's others that do a really good job on reporting. Abacum, there's ones that are designed towards startups what I call forecaster finmark.

There's others that are much bigger on the modeling, causal, and some that focus on headcount, Doublefin, Stratify. They each have different strengths. I can say the tools I've seen another one, B2B Mosaic. I'm sure I'm missing others, so somebody will remind me I skipped one. Each of these tools has different strengths. Overall I've been impressed and liked different things a bit just about all of them. For me, if I had to make a decision, let's say someone said, "Okay, you have to choose a tool tomorrow." It would depend on the business. how clean the data is, the team I have, and the systems we're using because some of them integrate with different systems better than others.

Megan: Let's put the tools and technologies aside for just a second. How have you seen the field of FP&A evolve over, let's say, the last 10 years and where do you think it's heading?

Paul: It's changed a ton, just even the last two, three years with the pandemic. If you go back 15, 20 years ago, FP&A, I used to call it FP&R, financial planning and reporting, lots of board decks, disconnected process. Today, FP&A is much more integrated. Sometimes you hear a term called xP&A, really just in the finance world, which means extended planning that the financial planning should make sure it includes the operational and the whole business is much more focused on collaboration.

The other two areas that have really grown over the last few years is what we call business partnering is a common term. It's the idea that you're really a partner and advisor, almost like a consultant for the business on behalf of the CFO to make sure you're maximizing the capital of how we spend that next dollar working with the business. The second thing that's really exploded is scenario planning. When COVID hit in 2020, every business all of a sudden cared about cash flow and wanted to run a million different forecasts. It became really important to be able to run different scenarios.

What happens if we're shut down for six months? What happens to cash for shut down for three months? What does it look like for sales drop by 50%? In some businesses, all our sales just doubled. What does that look like? How do we hire the people? What happens to our cash? The number of forecasts that have had to be performed on average annually, I think I saw a number since COVID started, have gone up 50%.

Megan: Wow. That's true. So many more scenarios that people want to consider since two years ago.

Paul: Exactly.

Megan: According to your LinkedIn pro profile, you're also an advisory board member at Born Capital. Can you talk to us a little bit more about this role?

Paul: That's a relatively new role, and it works well with this third-generation market guide. We're putting out a planning guide this summer that highlights probably about 15 planning tools. It's not a comparison saying, "Hey, this one's better than that one," but what it is, it's making people aware of the different tools. Maybe mentioning a thing or two we like about them and just helping people become aware of the new tools that are in the market. I'm working on that with Born Capital. They're one of the co-sponsors of that along with the Business Partnering Institute out of the Netherlands, a guy by the name of Anders Liu-Lindberg. The three of us together are doing that.

I started working with Born Capital from that and then they asked if I'd be on their advisory board. Still really new. They've asked some of my thoughts on different things. We've done some presentations, what do you think about this as a planning tool, because Born Capital is specifically focused on investment in early-stage companies for the office of the CFO. It's strictly financial technology geared toward the CFO.

Megan: Anders is going to be a guest on the podcast in a few weeks.

Paul: Great.

Megan: I'm familiar with him. Have you ever thought about putting together a magic quadrant type of thing like Gartner has done for some of the bigger technology out there?

Paul: We discussed doing that with the planning guide and we shied away from it, especially this first round, as we look at the guide as really more of an introduction, and we wanted all the vendors to feel they're getting their name out there. As soon as you start comparing, no matter how fair, no matter what criteria you use, you lose a lot of people, so we made the choice strategically. We felt it was the best choice to just really emphasize on showing what's out there, helping make people aware, and then letting them make their own decision.

Megan: Just putting the facts out there.

Paul: Exactly.

Megan: What's your advice to someone out there who wants to get into the FP&A profession?

Paul: I think there's a couple of things. I get asked that question a lot. If you're an accountant, I think the biggest thing is curiosity and wanting to learn about the business and how to communicate. Accounting is very much you're looking back. It's you're tying to the penny. It can be a very structured process. It doesn't mean there's no creativity, but you don't always have to know the business is very transactional, FP&A is a lot about relationships. It's a lot about understanding the business. If it's somebody in accounting, I tell them to volunteer for projects, start to read articles about FP&A, follow people on LinkedIn that can start teaching them about that. If you're coming from other areas, maybe you're coming from investment banking or consulting, then it's just really learning to make that transition, the budgeting, the forecasting, some of those types of things. It really depends on where the person is at in their career and how big of a pivot they're making what advice I'd give somebody.

Megan: Just looking at those backgrounds, accounting, investment, banking, consulting is there one that is a better stepping stone into FP&A than the others?

Paul: I'd say traditionally most have come from accounting but especially in the tech space, you see a lot like the consulting because you're already doing the business partnering, and you see a lot of different companies. I think one thing that helps in all three of those if a lot of the accountants have audit experience. I think something that helps a lot of people in FP&A is being able to see a lot of different companies and how they work. That's not how I came into FP&A, but I've heard from so many people that that experience of seeing a lot of different companies and industries is really invaluable because you start to see different ways to do things.

Megan: You talk on your side about variance commentary. What is variance commentary and why is it important for an FP&A professional?

Paul: Variance commentary, sometimes people call it BVA. You'll hear different terms for it, but it's basically comparing your actuals against the prior year plan or prior forecast, whatever comparison period. Where it's so important is it's something you do every month. You do it every quarter. You do it at the end of the year. It's really to help you understand how you're tracking against your goal or your objective. A plan's giving you some numbers that ties back to a strategy, but the plan's wrong the day you print it. It's probably wrong the day before you printed it. It's never going to be right. What's important in that variance is not so much the numbers like, "All right, I missed by a $100,000." Doesn't tell the business anything, but being able to go to the business and say, "Look, we missed our revenue by $100,000 because our salespeople aren't ramping up as quickly as we thought they were.

The ones that aren't ramping up as quickly are on this team or they're here or we missed our hiring plan, and here are some thoughts we have of what we could do to close the gap. Then, you started to bring some strategy, some thought, and some insights into it. That's where variance commentary really becomes valuable is really you can help make those course corrections with the business to stay on track and also help them be aware of things that have gone really well so they can continue to do those things that generate outperformance.

Megan: I can see how just an audit background would be helpful in that space having to look at one year versus another and put together the management discussion analysis, so that makes a lot of sense.

Paul: Exactly. It's really helpful to have seen a lot of different things and see how they put that together. Accounting also can be very valuable because then you understand the inner workings of why something may be timing. It may be due to accounting. Every FP&A person needs to understand accounting, whether they have an accounting degree or not.

Megan: Lastly, as a finance leader and as an entrepreneur, what is keeping you up at night right now?

Paul: For me, it's just scaling my business. As a finance leader, what kept me up often was it varied, but trying to hit that plan, trying to figure out how you get there. I remember particularly during COVID, there were just a lot of so to speak sleepless nights of how do we keep the business afloat and make the adjustments that they need us to make to hit our numbers, to meet the investors' needs because I was working for a company that was heavily transactional. We supported automobiles and automobile claims. If people aren't driving, they're not getting in accidents, and you're not generating that revenue which means a good thing. They're not getting in accidents, but obviously, it impacts our business. That was probably the biggest thing is trying to figure out when something like that would happen. A big event would happen. how do we help the business get through that? Those things that would keep me up at night. Today, it's really the things that keep me up is how do I help the most people and drive my business forward to accomplish the goals I have for myself?

Megan: Just curious, where would you like to see the FP&A Guy in, let's say, three years?

Paul: That's a great question. I think in three years, I really look at 80% of my business being training, having launched from online training, doing some in-person training, continuing to provide content, webinars, things like that. Really, I see the business primarily as a vehicle to help improve FP&A for companies, whether that be through Excel training, whether that be helping with tools, with business partnering with the different areas, budget and forecasts. Right now, we're working on putting a course together to potentially train a company. We're still working through that proof of concept, but train a company on FP&A. Those types of things get me excited to help others be better at what they're doing.

Megan: For people that want to visit your website, it's thefpandaguy.com?

Paul: It is. Pretty simple as thefpandaguy.com. You'll see more content come through LinkedIn than you will right now on the website. I post daily on LinkedIn and you can find me under Paul Barnhurst. My hashtag is the FP&A Guy. Also, people can follow the podcast on any sources out there. It's called FP&A Today, and it's on all the podcast platforms.

Megan: Awesome. Paul, thank you so much for being my guest today.

Paul: Thank you for having me. It was my pleasure, Megan. I really enjoyed being on the show.

Megan: I've really enjoyed learning from you and our discussion around FP&A, and some of the emerging tools that are out there to support this function including you. Thank you. To all of our listeners, please tune in next week. Until then, take care.

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