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Practitioners Consider the Role of FP&A at FinNext 2018

  • By Andrew Deichler
  • Published: 3/19/2018

SAN FRANCISCO -- FinNext 2018 kicked off Sunday afternoon with a special FP&A Roundtable discussion, sponsored by Peloton. Going around the room at the beginning of the roundtable, the group was primarily focused on different ways to build up an FP&A function.

Seizing on that sentiment, Bryan Lapidus, FP&A, a contributing consultant for AFP and host of the event, began by asking the group what FP&A should actually “be” as a function.

Jonathan Crane, FP&A, senior manager for FP&A for Hamilton Company, responded that what FP&A should be to an organization largely depends on that particular organization’s needs. “FP&A’s role is to help the company with where they’re going and help them get there,” he said. “FP&A should be that part of the company that can speak on the finance and operational side, and depending on the company and where it’s going, that can mean different things for different people.”

Hamilton’s FP&A department grew out of its cost accounting group about three years ago, Crane noted. Since that time, FP&A has developed into hybrid function involved in strategic planning and forecasting, as well as working with IT to provide solutions for different parts of the company. “That was a need that our company had, and we grew to fill that vacuum,” he said.

It is not uncommon for FP&A professionals to move over from the accounting side, or for FP&A departments to grow out of functions like cost accounting. But while FP&A often gets conflated with accounting, there is one key difference. “Accounting is very focused on transactions,” said Peter Geiler, FP&A, fiscal director for Child, Family and Community Services. “Transactions are the history. FP&A is focused on planning—the future.” 

A third attendee agreed, noting that FP&A is simply a more interesting role. “Though I have an accounting background and a CPA, figuring out where the last $15.43 need to be booked wasn’t very exciting for me—I like to round to the million and move on,” he said. “So I always had an accounting manager under me and he was in charge of the history, and I’m in charge of the future.”


One area that FP&A struggles with is how far into the future it should look. That brings up questions in terms of capital structure and FP&A’s role in it. “I like to think that we are the planners and we look into the long-term,” said one practitioner. “And so you think about capital structure and do you have a picture of your capital structure five years down the road? I think [capital structure] is an FP&A function, but maybe if we had someone from treasury, they would say that it’s their responsibility.”

Lapidus then asked the group whether FP&A or treasury has ownership of capital structure at their organizations.

Geiler responded the question of responsibility over capital structure largely depends on the time scale and the type of industry. “In construction, if you’re building a high-rise, it’s not a 30-day job—it’s four or five years. But you look at other industries like nonprofits, which is where I’m at, we rely on the federal government for funding. We’re worried about the next 90 days because that’s all we have funding for. So there’s a huge difference around industry when you look at your planning horizon,” he said.

Another FP&A practitioner responded that, again, it comes down to industry. In his sector, real estate, treasury is primarily focused on short-term investment. “But really, what’s happening at a property that’s generating revenue and that’s possibly for sale—it’s really going to be FP&A that is going to provide treasury with what that longer term cash outlay for inflow is going to be,” he said.

Capital structure is forward-looking and is, in some ways, dictated by Wall Street, said another attendee. “Depending upon where you’re bond ratings are, it will determine where your capital structure should be, and a lot of that is based on benchmarking in your particular industry,” he said. “So if you’re trying to improve your credit rating, part of that is your capital structure that you’re trying to build. Are you overleveraged, or not leveraged enough? I think that is all taken into consideration.”

The practitioner added that, at his organization, capital structure is handled by a combination of FP&A and treasury. “We have the long range financial forecast, but we work with our treasury group,” he said. “Oftentimes, we’ll work on different financings that they might be able to carry out going forward, which will adjust our capital structure to try and meet what rating agencies are looking for.”


FP&A has also generally become more and more involved with operations. Lapidus next asked the group to what degree FP&A is involved across the organization.

Crane responded that his FP&A function is “heavily involved” in the operations. He meets with the operations people on a daily basis, sometimes more than he meets with finance or accounting. “In our situation, we’re a fast-growing company in biotech. And we do manufacturing, so it’s a lot capital,” he said. “We have to plan our capacities to produce according to our demands, which keep skyrocketing. So I’ve been working with operations on a continuous daily basis so we can look forward enough and make sure we have appropriate infrastructure for when we grow to a certain spot.”

Jake Bailey, FP&A, vice president and CFO of CL Energy Rockies, said that he essentially sees FP&A as a hub. “Of course, we all want to think we’re the center of the company,” he said. “But traditionally, accounting and finance were siloed. FP&A grew out of the need for people who can learn technical aspect, who can work with IT and operations.”

At one of his former companies, Bailey was actually moved out of accounting to work directly under the COO. “I had become such an important business partner that the accounting department didn’t really know what I was talking about anymore but the COO did,” he said. “I think part of FP&A’s job is to break those siloes down and be the center of the company, in a way. And because of that, I think the executive team can look to FP&A and say, ‘These guys always know what’s going on everywhere.’”

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