There is more to finance than you think!
Wei Fan, our Head of Financial Planning & Analysis, talks about the differences between the teams within Finance and what they do behind the scenes to keep the business on track.
1. As the Head of FP&A, can you tell us the difference between Finance & Accounting (F&A) and Financial Planning & Analysis (FP&A)?
Good question! Many people think it’s the same thing, but actually what the two teams do are very different. A F&A team looks at the past, or what the company has already done. This includes accounting records for every transaction, and current financial statements such as cash flow and balance sheets. FP&A, on the other hand, is all about the company’s profitability and future financial projections.
In FP&A, we look at the planning of the company by analyzing the business history, understanding the present state, and determining the most viable way to move forward to help the organization reach its strategic goals.
2. Tell us more about your role!
In my current role, I look after the company both at the group level and at the individual business teams level. At the group level, our team works closely with the senior leadership to assess, guide, and identify ways to support the company’s short and long term goals.
We set up business management accounts and reporting structure, coordinate budgeting and forecasting processes for all of our operations, and advise on the financial feasibility of different business directions to help management shape their strategy and set financial targets. (I promise I’m not just saying buzzwords.) Once the business strategy has been set, our jobs don’t stop there! We continue to support and drive the strategy – for example, setting up KPIs to track the financial health and business performance, and taking corrective actions such as resources rebalancing when needed.
At the individual business teams level, we act as partners, or mini CFOs, for each department. Each member of our team account manages specific departments. I overlook three different departments, so it is all the more important that I have to understand and differentiate between their business objectives and operation models. That way, we can better partner with them to set up functional KPIs that align with the corporate direction and tailor financial models that cater to their business needs.
3. What do you think are the attributes needed to do well in a FP&A role?
Treat the corporate business as your own. Not only should you pay close attention to your customers to better serve them and gauge the market for areas of revenue generation, you should also know where every single dollar is received and spent.
Like other customer facing functions, strong communication skills are needed to build trust with the teams you work with, as well as translate financial numbers to talk to decision makers. Although financial knowledge is indispensable, a good analyst should also have a good business sense and the analytical skills to identify any gaps and flags in the business.
4. Trivia time!
Which is better? Why?
Case 1: Getting $100,000 at once
Case 2: Getting a penny that’s doubled every day for 24 days
The answer really depends. If a penny is doubled every day for 24 days, then on the 24th day there will be $167k. If this amount is guaranteed, then I would choose Case 2, as it will be difficult to earn $67k more even if I were to invest the $100k given in Case 1. If this amount is not guaranteed, as would be the case with real life investments, then I would choose Case 1 rather than take the risk.
(Feel free to message me for a debate )