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The Fractional CFO’s Inspiring Guide to FP&A

Transcript 

Paul (host):

Hello, everyone. Welcome to FP&A Today I am your host, Paul Barnhurst AKA the FP&A Guy, and you are listening to FP&A Today. FP&A Today Is brought to you by Datarails, the financial planning and analysis platform for Excel users. Every week, we will welcome a leader from the world of financial planning and analysis and discuss some of the biggest stories and challenges in the world of FP&A and we’ll provide you with actionable advice about financial planning and analysis today. This is going to be your go-to resource for everything FP&A. I am thrilled to welcome Kathy Svetina with me. Here is a little bit about her. She went to DePaul University. She grew up in Slovenia. She got a degree in Finance and Accounting, and worked for a number of large corporations among Discover Financial Services and AON, and some others during her career. And then she started her home business a few years ago called NewCastle Finance. She works as a fractional CFO supporting women-owned businesses. Kathy, thanks for joining us today. We’re thrilled to have you on the show.

 

Kathy (guest):

Thanks so much for the invite, Paul. I’m super happy to be here.

Paul (host):

Great. Well, maybe, could you start and just walk us through a little bit of your background, tell us how you got into FP&A, and what, you know, what’s kept you working in FP&A?

 

Kathy (guest):

You know, originally when I thought about going into finance and I always wanted to be in finance ever since I was 12 years old, believe it or not. I thought that I’m going to be a stockbroker and then an investment banker. So, the funny thing that happened was I got into college. I started studying investment banking and I was able to actually shadow some of those people because the college that I went to, DePaul University, had a lot of good relationships with the businesses around it. And I realized this is absolutely not what I want to be doing. You know, I was lucky that I realized that very, very early on. So, then I switched into corporate finance and that’s how I got into FP&A. Obviously, there are no FP&A courses in college.

 

Kathy (guest):

So essentially everything that I know about FP&A has been through my career in corporate finance. And I started in accounting originally, which was great because it gives you that foundation of the financial statements and believe it or not, I still like doing T accounts. They’re a lot of fun to do. I recommend doing them sometimes. And then I moved into various FP&A roles in different companies. Like I said, billion-dollar companies. I was supporting marketing sales, and then operations. And then I ended up being in global shared services for a major publishing company in the Netherlands for six years. And then I moved into banking for about two, two, and a half years doing a lot of FP&A for them. And then I started my own business.

 

Paul (host):

Oh, great. Now I appreciate the story. I’m not sure I could quite agree on the T accounts. The rest I followed, but then I, I don’t have an accounting degree, so that might have something to do with it.

 

Kathy (guest):

Agree to disagree. How about that?

 

Paul (host):

It won’t be the first time. I think in one of the episodes, someone told me their favorite feature was merge center and I’m like, we’ll just have to agree to disagree. I can’t say that’s my favorite thing to do in Excel. So, I get it. So, I know you run your own practice, fractional CFO services, and you support women-owned businesses. Can you talk a little bit about, you know, what led you to start your own business, and then why did you choose to focus on women-owned businesses?

 

Kathy (guest):

So, I come from a background of entrepreneurs. So, my dad is an entrepreneur. My aunt is an entrepreneur. And, you know, looking into their journey and how they were running their businesses, it was almost like looking from the outside in. And I noticed they were really struggling. And the thing that they were really struggling with is finances. So originally, I never wanted to be an entrepreneur, but it was like, it feels like you have, when you have it in your blood, it’s just, there it’s constantly in your mind. So, once I left my last role and I was deciding, you know what, what’s next for me? I said, you know, I really want to do something different. I could go into another FP&A role in corporate finance, but it just didn’t feel right. And I really wanted to go and support the small businesses because large companies have so many resources supporting all the finances.

 

Kathy (guest):

You have the treasury department, you have the tax department, you have accounting department, you have the FP&A people. But when you go into the small business world, even if it’s multiple million dollars that they’re making, you don’t have anyone actually supporting them and doing all the planning, all the budgeting, all the real analysis. I mean, you have the bookkeepers and accountants, but we all know that bookkeeping and accounting is about history, right? It’s about what happened in the company. And maybe a little bit about the present, putting the reports together, but nothing really about that strategic planning for the future and actually making decisions like the real management decisions. So, I wanted to offer that to small businesses. So that was the number one thing. And the other thing was I wanted to offer that to women-owned businesses because my personal mission is to have more women be in the executive roles and the CIO roles and to really get there in their business to grow their business, they need to be very comfortable with their finances and they need to really know how to actually use them to get to that point.

 

Kathy (guest):

And I really wanted to support that. So that’s why my whole mission of Newcastle Finance is to support growing women-owned businesses.

 

Paul (host):

No, thank you. And that, that makes a lot of sense. So being that most of your customers are probably new. This is the first time they’ve had fractional CFO or FP&A services, do they come and find you typically? And how do you find they feel once they realize kind of the benefit, they get from having somebody. How does that process go?

 

Kathy (guest):

So, the majority of them, the way they find me. I wish it was the case that someone just, you know, wakes up in the middle of the night and says, I need a fractional CFO. Unfortunately, it doesn’t happen that way. The way they usually find me is because someone tells them, hey, you really need someone like this in your business. And it’s usually their accountants or the bookkeepers who say, this is not my expertise. You really need someone with more advanced thinking about strategy, about finances. So, they would refer them to me. Or, sometimes, you know, their operations people would actually say you need someone. So, there’s a lot of referrals that I get from people who are supporting the type of growing businesses that I support.

 

Paul (host):

Now. That makes sense. I mean, it’s always, you know, word of mouth is always a great way to get business. And that makes a lot of sense. And I imagine working with bookkeepers and different things because they just want to do the accounting. They’re not looking to do future planning. And so, when you go in and you first meet with a company, how do you kind of strategically help them plan for the future? What do they usually have in their mind of, you know, FP&A? Like when you come in and sit down with them, are they thinking, okay, you’re just someone who’s going to build out, you know, my budget or how do they kind of see that? And how does that kind of process go when you first sit down with a company and help them understand really what your services are?

 

Kathy (guest):

So, in terms of FP&A it’s, it’s for us in finance to know what FP&A means. And unfortunately, anyone outside of finance has no idea what FP&A does. I’m sure people can relate to this, a lot of parties, like what do you do? FP&A. They have no clue. So, they’re not really coming into the business and asking, you know, can you do financial planning and analysis for me? They come because they have specific problems, and the problems are usually I am growing. It feels like I am growing really fast. And I do not know whether I can afford it. Can I really afford the people that I’m hiring? Am I hiring them at the right compensation levels? Am I going to be running out of money? Or are the decisions that I’m making the investment that I’m making in the business? Are they really going to give me that return on investment? And I have no idea how, or even how to even like where to start. So that’s where we usually start, or, or they have some type of, I know that I need structure in my finances, and I have no clue where to even start.

 

Paul (host):

And that totally makes sense. The one is the concern over capital burn, right? Am I going to run out of cash? Can I afford to do these things? Am I being a good steward with my money? And the second is okay, I’ve got big enough. I know I need to figure something out on the financial side, but that’s not me. Right. I got a bookkeeper that at least keeps the accounting straight, but I need more than that.

Kathy (guest):

Exactly, exactly.

 

Paul (host):

And that makes a lot of sense. So, you know, as you meet with, with businesses and you help them through, you know, kind of KPIs and measuring things, but what are some of those first things that you, you typically try to look at with the business?

Kathy (guest):

So, the first thing, and we have to also, you have to keep in mind that a lot of these businesses do not have the luxury that big businesses have. Sometimes they don’t even have the data there. So, we have to really start with, what do you really have? What type of systems? What type of software are you using to get you the data that you need to have? So that’s number one, the question is, is the data even there? And if they have the data, is the data even accurate? And if it is accurate, how easy is it to get it? Do you have to essentially jump through 10,000 different hoops to get the data on a monthly basis that you need? Because that might not be, that’s not optimal at all. So, if you have to wait 10 weeks to get a particular set of data when it’s already outdated, that’s not good.

 

Kathy (guest):

So those are the things that we look at. So, once you have the data, you know that it’s accurate, it’s easily accessible and you can actually replicate it to get that data. Then we start looking at how you are going to be using it, right? And it really depends on the business. It depends on where they are and what type of phase they are in their growth. Do they have any initiatives happening? What are they currently focusing on? Are they focusing on growing the sales? And we look at, I would look at their CRM, what type of information is their CRM giving them? Right. One of the things that I always get excited about when I see the CRM is if they have confidence levels, the minimum, and maximum of the sales deals. When is the deal going to be closed?

 

Kathy (guest):

Because that is a type of information that I can use as a fractional CFO to figure out the revenue and their cash flow in the next three, three to six months depending on their pipeline. So those are the types of information that we can actually put in. And then we start developing the KPIs, but the KPIs are really dependent on the business. The major one, if they were, I would say one that it’s really, really important, especially for the growing businesses that I go and work with is cash. It’s always, always cash.

 

Paul (host):

Sure. No, and that makes sense. And I figured you’d say cash and then understanding that sales pipeline is always helpful. And how often do you find that they have a good handle on their pipeline? I’m guessing with smaller companies, it’s often a mess most of the time.

 

Kathy (guest):

Yeah.

 

Paul (host):

So, some Excel spreadsheets with old information.

 

Kathy (guest):

Yeah, exactly. So, the first thing, as I said, it’s important to get the data in a reasonable amount of time. So, if, if I see that happening, I will go and advise them, hey, maybe we should take a look at this different software because it’s good for them. It’s good for me. I can actually help them plan for the future better and, I mean, it, it really is the first step. So, there’s a lot of before we can do any type of FP&A, or even touch it, it has to be that we have the systems and the processes correctly done and that we’re using the right tools so that we can get that information.

 

Paul (host):

And do you find they’re pretty open to putting kind of those systems in tools in place kind of getting their house in order? Or do a lot of them say, I don’t want to, you know, I don’t wanna spend that money. How’s the kind of typical responses you try to help them understand those investments, to get the data in a shape where you can really do some of the analysis you need.

 

Kathy (guest):

They’re very open to it because it is a growing pain and it’s a growing, growing issue for them. And they know that if they don’t solve it right now at the point that they are where they are, they’re not going to be able to grow. And they understand that without the data, they won’t be able to make good decisions. Because if you, if you don’t have good data, you just cannot make good decisions. It just doesn’t happen.

 

Paul (host):

No, I, I totally agree. And that totally makes sense. That’s good that you know, you’re working with customers to realize that, and they understand they’ve hit that point. Right. Because everybody hits that point where you’re like, all right, I have got to invest in some more tools, this isn’t working. Right. And put things in order, so to speak. And I know when you say, when not having the data, because I’ve worked for some companies were just a total, you know, complete mess with the data and spent, you know, forever cleaning things. And I’m like, all right, do I do FP&A or do I do data cleansing. Yeah. Which I think we’ve all had those roles where you feel like you’re just doing data cleansing. Yeah. And so

Kathy (guest):

And that’s really not a good use of FP&A’s time either. I mean, we, we can do data cleansing, but you don’t really want to use our time doing data

 

Paul (host):

Cleansing. No, it’s you know, it’s not the best use of dollars nor obviously, are they getting value in the return? You know, if the data cleansing is a one-time effort and it’s really going to provide strategic value it makes sense. But if all you’re doing is data cleansing every time and not getting to a point of automation, it’s just wasting everybody’s time.

 

Kathy (guest):

Yes, exactly.

Paul (host):

So definitely I have seen that a lot. So, do you have a certain industry that you mostly see with these growing businesses or kind of see them all over the place? Or what do you typically, what do you typically see?

 

Kathy (guest):

So typically, I am mostly in the service-based industry, but not because I picked it that way. It’s just because the customers find me, but I am across the board. I can work with any industry. And I do, when people do ask me it’s, you know, okay, can you work with this industry and that industry? And I say, yes. And the reason for that is you don’t really want a fractional CFO that’s tied and married to one particular industry. Because in my career I’ve seen lots of different companies, lots of different industries, and you get takeaways and best practices from each of them. So, someone who has a wide range of experience is actually more beneficial to your company because they can bring more knowledge, more best practices, see what worked and what didn’t. And it’s, it really is there as an advisor and a sounding board to the founder and to the owner. So not having someone who’s tied into the industry is very beneficial to the business.

Paul (host):

No, and that makes a lot of sense. You bring a different perspective, see different industries, and like you said best practices. And so maybe talking a little bit about best practices, how do you think, you know, with your company’s kind of best practices around doing that budgeting and forecasting, do you go in and kind of start by trying to keep create an annual, you know, 12-month plan? How do you typically approach helping them, you know, build out their budgeting and forecasting process?

 

Kathy (guest):

So going all the way back, the time I come in, they have never had a budget. They have never had a forecast. They understand the value of it, and they see why this is important, but no one’s ever done that. And usually, there’s a couple of reasons why no, even done that one is because the data that they had wasn’t available that you need for that type of budget. It’s not just throwing something on the wall and seeing what sticks. You really want it to be usable for them. So that’s why, so that’s why I said first starting with the data and making sure that the accounting is done correctly because, um, if the accounting isn’t done correctly, then we have to go and scrub a lot of that.

 

Kathy (guest):

So, a lot of times I would go into the business before I do any type of work for myself, I would do the financial health check, making sure that their accounting is done right. That they have an appropriate bookkeeper, that I have someone who does their taxes, and if they have the data. If they don’t have the data, then we have to start going deeper and getting that type of data. Once we have all of that, and that is usually six to eight months right there to get them prepped for the budget. And for the forecast. Once We have all of that, then we can start doing the budget. And then usually what I will do is I would look at the historical information, obviously, because I don’t know how reliable that is. I really have to look at it and look at it from, you know, does it pass the sniff test?

 

Kathy (guest):

There’s something off here. What’s going on? You know, why is the revenue so wonky? A lot of times what happens is because they’ve never really had proper revenue recognition. The revenue at the P&L is completely, you know, one month you have a hundred thousand loss and then the other month you have 400,000 profit. It’s just, it’s bad. So, making sure that that’s done right. And once we normalize it, figure out what’s happening, then I will go and start doing the budgets and the budgets right now, the way how I do them, because you have a lot of tools that you can use for small businesses. There are all these tools that small businesses can use. But for me, for personally, I still rely a lot on Excel, and I have a love, hate relationship with Excel, just throwing it out there, but it’s still one of the best ways to really control the inputs and the outputs because then I don’t have to figure out what the software is calculating. I can just figure it out myself. But I will not let the software actually calculate the three by modeling for it. So hopefully that answers your question.

 

Paul (host):

No, that’s a lot of good information there. And I think many people have a little bit of love, hate relationship. You know, some people absolutely love Excel. Some people hate it. Most people love flexibility. They hate the errors and some of the challenges, but it’s still one of the best tools out there. Right? We all end up going back to it because it was incredibly flexible. And as I heard one CEO put it, you know, it’s basically the operating system for finance in many ways, which is amazing, because it’s a 40-year-old technology. It really is a credit I think, to what Microsoft has done, that they’ve managed to, you know, make it such a used tool after all these years, there’s not many programs that are that old, that are still that extensive so impressive there as far as the, you know, the the budgeting and forecasting, a lot of that makes sense.

 

Paul (host):

Right? You mentioned the months of getting the data in order and the time to clean that all up before you can really get to it, especially the whole cash versus accrual accounting. You know I did, we bought a company that I did the model on, and it took a while to figure it out. As we start looking at the model, we’re like, all right, this has to be cash accounting. There’s no way that all the insurance benefits should be in one month, every year. Right? You know, it’s kind of expensed throughout the year. So, trying to figure that all out and get it to a sense where, okay, when that company comes over, we now need to treat this all as accrual and restating and all those fun things. So that’s a big project to help them get to that point to really understand how the books need to be. To make sure you’re budgeting and forecasting cash correctly. Right? Yeah. And all those types of things, that makes a lot of sense.

 

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Paul (host):

So, before you started your own business, you worked for a couple of large companies and it sounds like a couple different industries. What did you see between the different companies as you went through your career, did you see in the way of changing for FP&A, and how did you see it change from when you started to kind of where, where we’re at today?

 

Kathy (guest):

That’s a great question. I think you know, originally when I started in, in these corporations, I was in the accounting department. So, and like I explained, you know, before I think it’s very important for FP&A to start in accounting, not staying there for long, but because it gives you that foundation to see the numbers and to start to question whether something doesn’t feel or look right. For example, revenue recognition, right? If you do not have the background in accounting to know, like seeing those types of swings, it’s really hard to explain. So having that background it’s super, super important. But I think over, over the couple of years when I was, you know, going from accounting, I think, FP&A started going from just reporting to actually being almost like an internal consultant.

 

Kathy (guest):

And that’s how I see FP&A nowadays as being that internal consultant to the company because, you know, right now what I’m seeing, especially on LinkedIn is there seems to be like two camps of people. One that’s pushing FP&A towards more modeling and coding and pushing it towards more data-driven. And then there’s the other camp that it’s more business partnering, being more of an internal consultant. So, I am definitely in the camp of being an internal consultant, because I really think that is where the value of FP&A lies, especially with all the tools and the modeling tools coming, coming outside right now. I mean, there’s so many companies and Paul, you know this because you, you, review all of these. There are so many tools out there that can actually do a lot of the modeling for you. So, making sure that you have those types of conversations with the business, with the business and you can actually put the numbers together, seeing what makes sense, knowing the business, expecting not just what’s happening in business, what’s going to happen in the economy.

 

Kathy (guest):

That is where the true value of the FP&A lies. And  I’m seeing this progress for, and the expectation, at least in the businesses that I worked in before I went on my own, that they really want to see that internal consultant. And you know, no one else in the business has access to all the data and to all the tables that we sit in. I mean, you can easily go to sales marketing, you can go to the CFO, you can go to the C-Suite, and you have access to all of this when you’re in FP&A. No other department has that. And that is so valuable for FP&A.

 

Paul (host):

No, I totally agree. And yeah, you definitely see a lot of that. You know, I saw one poll, I think the other day, where 60% of people that were in finance said they needed to learn a programming language. And I’m like, I’m not sure even if 60% knew them, that that would be the best use of time. You know, obviously, there’s a challenge of the technical skills and they continue to grow, but where you add the real value, and I would totally agree with you is on the consulting side. And that’s what you know that I’ve seen. I used to like to think of it as, almost instead of FP&A was FP&R just financial planning and reporting. There wasn’t a lot of analysis. I mean, compared to today, now it’s such a huge part in being that consultant, partnering with the business and having that view to be able to go to them and say, have you thought about this, being able to look at the numbers and show them things and help them think through what should be next is really where the value comes.

 

Paul (host):

You know, much of the reporting and other things can be automated. There’s a lot of great tools like, you know, like datarails out there that, you know, can help you with the, with the budgeting and the forecasting and giving you the database. So, you’re not stuck in, you know, Excel, hell some of them will work great in Excel. Some of them have gone different routes, but they help bring you some of that versioning and that control and that automation you need. Right? I mean, if that’s all we’re doing, then what value are we bringing to the business?

 

Kathy (guest):

And, you know, that’s actually exciting to see these tools coming out because now you don’t have to spend so much time on figuring out that the errors in Excel are, you know, are not populating. Or that the data is scrubbed. Like we talked about before, you’re not doing the data scrubbing because the software’s doing that for you. So, it’s really freeing your time to do these value-added activities, being the partner to the business, having those types of conversations, and asking those really insightful questions around, what are we doing? Does it make sense for the business? Maybe we should do something the other way? Maybe I can model it for you. Let’s see how this pans out. So really being that anticipatory partner in the business and helping them figure things out. It’s, I mean, essentially, we all want the companies to be healthy, and sustainable. My whole thing is about healthy, sustainable businesses, and FP&A is a great way to get there.

 

Paul (host):

No, I totally agree. I mean, there’s so much value that can be brought by FP&A I remember, a general manager saying, you know, he knew he had good FP&A when they helped his words were shape the P and L. What he meant by that is you’re not just reporting it, you’re helping influence it and drive it forward. And that really stuck with me is that’s what we’re supposed to do. And that’s what an internal consultant does. Right? It helps solve problems and improve things. And if you’re not doing that, either the company hasn’t realized the value which I’ve seen. Or you’re not doing it right. It’s one of the, one of the two or maybe, and I mean, there’s always a third option you’re in, in that role where you’re just doing reporting. And I guess if that’s what you like, that’s fine.

 

Paul (host):

But I don’t think of that as FP&A. You know I’ve really enjoyed kind of talking and learning a little bit about, a little bit more about your business and your background. You know, it sounds fascinating. I’ve always loved learning about small businesses. You know, as a kid, I did entrepreneurship in high school and I wrote a business plan and competed in some contests and, you know, never really started my own business because I was always like, well, there’s never a good opportunity. I’m like, I go buy a franchise, but then I’m just buying work basically, I’m just marrying myself to something where yeah, I’ll make a little bit more, but is that really what I wanna do? And so, I can totally relate to that. You know, you mentioned before we started the podcast wanting to start your own business coming from a family of entrepreneurs and being able to work with entrepreneurs, you know, kind of fun because that’s something I’ve always found fascinating is that small business world. So, I really liked hearing your story and hearing how you provide those fractional services. Because I’ve had the opportunity to do a little bit of that now, but not much I’m kind of excited. I think that’s a great opportunity and very rewarding. I would think, maybe talk a little bit about that, or just how, you know, how is it rewarding to see these businesses kind of grow and maybe, you know, a favorite experience or something that’s really meant a lot to you in helping these businesses?

 

Kathy (guest):

Yeah. I mean, you know if you’ve been in corporate finance and most, I would assume that most of your listeners have been, especially at FP&A, you know, that there there’s sometimes ties where you really work on, on a particular analysis or a model and then it just kind of goes into the never, never land. Never to hear from again, the presentation just kind of withers down

 

Paul (host):

A wastebasket.

 

Kathy (guest):

Yep, this does not happen in small businesses. It really doesn’t because they do not have time to waste. If they need the analysis, they need the analysis for a reason and they are ready to take action. I can give you an example, which is also, it was very recent, and I think it’s also a good example of FP&A done in the best possible way. So, I have a client right now she was really struggling with the commissions for her salespeople. Like before we started doing this project, she had no defined commission plan. It was really all over the place. It was basically every single salesperson that she had had their own thing. Every person had their own plan. It was really hard to track, and you know, when it’s hard to track, it’s hard to predict and it’s hard to really pay. And when people don’t understand how they’re being paid, they can get really resentful. So, it wasn’t really based on anything. It wasn’t based on a model. It was just mostly like what feels right? So, the outcome for that, for the business was that essentially if we remained on the same commission plan, the business would be losing money because no one really took it into account the margins, the cost, anything of that. So, you can imagine it was, it was a problem.

 

Paul (host):

Yeah. Huge problem.

 

Kathy (guest):

So, when I started doing this and I started looking into it, the first thing that I, you know, you can, you can put the financial model together. You can have a couple of scenarios and which is what I did. But the other thing that I’m also thinking about is putting this scenario in the business together. How is this going to drive the behavior of the people? Right? So, it’s really, especially in the sales commission example, it’s, you know, you can put the model together, looks great on the spreadsheet. But what type of behavior are we really rewarding? What type of behavior are we going to get from the people? So, I can model as much as I can. And I have a gist of how the behavior’s going to look like, but what I really did need was someone from sales, someone who lives and breathes sales.

 

Kathy (guest):

So, what we actually ended up happening is we hired a sales consultant that was sitting on these meetings, sitting on the models, and having a conversation like, does this make sense? Does this type of plan, how would that reward people? Is that something that we can choose? So I, use this example because it’s a beautiful example of FP&A, of finance working together with sales, working together with operations, and with the founder and a business owner, everyone working together in a room to come up with a plan that makes sense, not just from the financial perspective, but also from the business and from the behavioral perspective. So, what ended up happening, we came up with this plan. There were two types. It was very easy to understand. It’s easy to predict. It’s very easy for people to actually understand what they’re being paid on, how they’re being paid on, and it incentivizes them on the margins. So, they have to go and hit certain margins to get that commission plan. And right now, we implemented that about two months ago and we are already seeing really great results in the business. Everyone’s on track. They know what to expect, and they’re really trying to hit those margins because we put that right behavior into the actual model, into the actual plan.

 

Paul (host):

That is a great example of, you know, cross disciplines working together and how, you know, you are being a fractional CFO, kind of FP&A support can bring value to help get that process started. And, you know, real awareness to recognize, look, this isn’t my area of expertise in the sense of the incentives. I can give my thoughts and I can have a general idea. But let’s go ahead and bring somebody in. It will be worth it in the long run and helping the business understand it’s an investment that if we all come together and you get this right, it drives the business forward. I think I heard once that, you know, a well-designed commission plan on average, like the best commission plans, I think it was like 17 or 18% of revenue can be driven just by those plans, you know, on average, a good plan. And I’ve had the opportunity, to design some plans. In one job, I had worked with the head of sales, and I had never done it before. And it was a real challenge. It was a real learning experience and helped me realize the value. And I can still remember how mad some of the people were when we rolled it out. You know, it was over a hundred people it impacted, and you can never win with everybody.

 

Kathy (guest):

Yeah. Because I mean, you are dealing with people’s livelihoods. And I think people are even more emotionally invested in commissions versus in their salary because it just, it feels, it feels so visceral. So, making sure that when you’re putting these together, they’re well thought of in numbers and in behaviors because it’s really hard to change them.

 

Paul (host):

Yep. No, I, I learned a ton. I calculated the whole sales org for a couple of years, as well as at one point, you know, helped put a number of the plans in place, you know, reviewed them different levels of working with sales ops and they were just so critical to get right. And that back and forth of discussion where there’d be times, well, sales would want to do this. You like, well, financially that doesn’t make sense, you know from a finance perspective, I can’t sign off on that. So, let’s find a middle ground that makes sense. Because we can’t lose money on the deals because that’s good for the sales guy. You know that doesn’t work very long. So yeah, no, I can relate. That was definitely, probably one of the better learning experiences in my career. And it was rewarding to see when it worked right. So, I think, you know, we’re coming up here toward the end. Just a few more questions here for you. So, one question would be, as you look back over your career, not just as a fractional CFO, but if you look over your kind of your whole career, what’s probably the achievement you’re most proud of. Like if you were in a job interview and they asked you to share, Hey, what’s your greatest accomplishment? What would that be?

 

Kathy (guest):

You know, the example that I gave, I wouldn’t actually say it’s my greatest accomplishment, but it’s something that’s been really recent. And it’s something that I’m proud of. It’s because like I said, it really drives the strategic value of finance and I am also not just, you know, I always think of it. Yes, I am in finance. I do it. But I also like to be a spokesperson for finance as well, how valuable it really is. So, I think that’s, what’s such a great example of, of that, um, you know, an accomplishment that I’m super proud of, not just in terms of what I did, but also what finance can actually do for business and, and actually, you know, you can see the real results happening.

 

Paul (host):

No, thanks. That’s great. And I thought you might share that one and I can, I can see why, so next question here, you know, as you look at FP&A, and you look toward the future, what do you see as the biggest opportunity and biggest challenge going forward for FP&A,

 

Kathy (guest):

I think the biggest opportunity is probably how we think about finance. Because I think historically when we thought about finance, it was mostly about numbers. But it really isn’t. Like finance is I think at its core, if we get away from, you know, we’re just, we’re just doing the numbers, we’re not doing just the numbers. We’re really there to drive the business to make it healthy, to make it sustainable. I hope at least that’s our goal. That’s definitely, certainly, my goal. And how do we do that? It’s not just through the numbers, but also about having those soft skills and developing and developing the right relationships with the business. There’s a lot of opportunities there. So, I see that as growth for finance. The challenges would be, I think that we just don’t get into the weeds. You know, like you said, coding and modeling, which is important. But I’m like, you, you can have the knowledge of it, but you don’t have to actually be the one doing it. So, what I would say is, you know, if you wanna do that, that’s fine. But the real true value of finance is in being that business partner and making sure that your career is going towards that way too.

 

Paul (host):

No, that’s great. And kind of some advice I, you know, give there and we’ll talk a little bit about that more i. We had Carl Seidman on, and he had mentioned what I really like when you talk about those opportunities is he had recommended people. Look If you’re going to work in FP&A, there are two things he talked about, learns how to communicate. Like, I can’t say it enough. And then he talked about the most important skill is the ability to anticipate. And you know, you don’t think of that, how they don’t nobody in the school is like, if you’re going to work in finance, you need to learn how to anticipate things. Yes. We talk about assumptions. Yeah. You talk about numbers and things. But I just love the way he boiled it down. And both those soft skills really make you a good consultant.

 

Paul (host):

Right. And that’s really what FP&A should be. Yes, we’re doing consulting through the numbers, and we get a view of the whole business, and you have to have the technical skills. You’re not going to get there without having proven that you can work in Excel, proven that you understand finance, that you have an understanding of accounting, that you can visualize data, but it’s really those abilities to communicate the ability to think strategically that allows you to advance and become a trusted partner. Without them then you know, the business can find, some can find plenty of people to have technical skills and they can just put together a budget. That’s not where the value comes from.

 

Kathy (guest):

I definitely agree with that.

 

Paul (host):

So, one question we like to ask everybody here is just kind of a personal question for our audience, kind of a unique question. And that is, what’s something that not many people know about you, something they wouldn’t find online.

 

Kathy (guest):

I mean, one thing you would find online that I like puzzles, but you would not find online that I’m also a huge fan of Lego. And I don’t know if you can see those behind

 

Paul (host):

Me. I wouldn’t guess that.

 

Kathy (guest):

Yeah.

 

Paul (host):

Oh, those are okay. I can see them a little bit notice those are Legos. So, you’re

 

Kathy (guest):

Actually, uh, these are actually Lego flowers that are put together.

 

Paul (host):

Oh, wow.

 

Kathy (guest):

I like to do this and believe it or not Lego now actually has a whole series targeted just for adults. It’s 18 plus. And they, and they’re trying to be more for adults who are doing Legos as sort of a mindfulness type of Zen experience and that’s essentially why I do it because they really are a great relaxation for me. And I just love doing Lego. So, I have a lot of modular houses on my dining table. My husband supports it from the side, but yeah.

 

Paul (host):

That’s great. I mean, most of my Lego experience has been when I’m playing with my nine-year-old daughter and helping her build something. So, my wife does like to sometimes just put them together. Like she has a few kits that she’s kept to herself. She’s like, I’m not letting me because the pieces will be lost and I just wanna actually put it together. So, she has a little bit of that as well. She enjoys that so I can see that that’s fun. So, you know, Datarails is our sponsor for this podcast and they’re big fans of Excel. So, one question we like to ask everybody, I know you mentioned your love, hate relationship with Excel, you know, and some of those challenges, but what’s your favorite Excel function and why?

 

Kathy (guest):

My favorite absolute, absolute favorite Excel function is. And I think only started using it about a year and a half ago and I really, I think like the heavens open, and the angels came down when I, when I started using this and I’m really not exaggerating

 

Paul (host):

Here. Wow. The angels come down that

 

Kathy (guest):

And the rainbows and puppies came too. It’s power. I’m picturing that in my head. Yep. I’m with you on that one Power Query.

Kathy (guest):

I really, you cannot, you cannot beat that. And if you do not know Power Query, please go learn it. It will change your life.

 

Paul (host):

A hundred percent agree. And I’ll tell two things related to that because I am evangelical at preaching learn Power Query. So, the first is, you know, I started a job about five years ago. Didn’t know what power query was and was asked to do this project and started researching. And I’m like, oh, Excel’s Power Query. Then I’ll power pivot. And within like two months, I had built this model that allowed us to see all the transactional data with the forecasts. We didn’t have that system in place. And this was a global company that was going from a holding company, trying to combine all the companies together, and they’d done 50 acquisitions. So, it was a total, you know, data mess, right? Systems everywhere. And finally, had put in an ERP and after just a few weeks or a few months of the FP&A teams in the different areas, getting to use this tool, which was very kludgy.

 

Paul (host):

It was a terrible model. You know, I just built it. And the first time we were able to convince them that they should build it globally. And it’s still used by that company. And it started with me learning Power Query. Now I also learned some power pivot and the data model, and it went beyond that. But it opened a whole world to me. And when I think about Excel and Excel training, I don’t know if you saw it, but I put a post out this week on LinkedIn, very, you know, lots of comments, a lot of back and forth. And I said I think the way we’re training Excel is wrong. I think learning how data is structured, and how Excel tables work should be taught very early, because that opens the world to power query, and it opens the world to power pivot and to do analysis that you can’t do otherwise. Yeah. Some people can figure it out in formulas when they have that Ph.D., and they write super complex formulas. But nobody else can ever figure it out. We’ve all inherited that model where you’re like, I’m starting over. Because it’s going to take me two days just to figure out this one page and there’s 30 pages in this model, you know, and Power Query changes that it really does.

 

Kathy (guest):

Exactly. And I think with Power Query, it really helps if you have at least a little bit of a background in relational databases. Yes. And I, and I actually took that. I took, and I know I said no coding in FP&A but originally in college, I took a couple of SQL classes. I took a database class and the reason for that was not because I wanted to do it, but because I wanted to have that knowledge, and if you just have the basic knowledge of that, you’d be great at Power Query.

 

Paul (host):

Yeah. Well, my first two years. So, I did a Master of Science and information management with an MBA in finance. I originally started in procurement and then switched directions when I pretty quickly realized writing government contracts was not what I was doing for 30 years. So, I, you know, went back to school and did finance and that Master of Science. So, I had a database class as well. Learned a little bit of SQL. And my first job after I’d done a little bit before I did a little bit of a business analyst role, right before I went to school, I’d done a little bit, writing a lot of SQL. Working in access databases. And that gave me a really good foundation and has been very helpful because understanding how to get the data when you need to is very valuable. It’s not where you should be spending all your time.

 

Paul (host):

And totally, I agree with you there. And I don’t necessarily think of SQL as coding, but it’s, it’s a step it’s, it’s close, right? It’s along that path. And so, I’m, I’m a big fan of what you can do by having that understanding. And there’s so many tools now like Power Query where you don’t really need to learn SQL. You can do probably 80% of what you need just through the interface with some basic training, and learning how data is structured. Relational data is really valuable. I preach that a lot of understanding what a normal table is versus trying to put summarized data in a pivot table, which drives me crazy when I see that.

 

Kathy (guest):

Oh yeah. And I would say, you know, no, just enough to be dangerous.

 

Paul (host):

That’s what I like to say. As I told one person. He Inherited my processes, and he was a technical guy. They brought in and I kind of helped training him as I was rolling off to a new company. And he knew Python and all kinds of things, very technical. And I said I did this all in Excel. And as I told him, I go, it was the janky way of doing things. That’s the definition I’d use. I call it a very janky process. And he goes, I was like, I’m amazed. You did all that in Excel. How did you ever get it to do all that? And 90% of it was through Power Query. And then the, you know, the Power Pivot data model. I mean very few formulas, almost no using formulas. And it, you know, then they went through and really built it with the database and put in the tools that we all need to really do the job. Right. Of course, as I leave, then they invest the money to do it. Like, come on couldn’t you have done that a couple of years ago.

 

Kathy (guest):

It always happens that way. Right.

Paul (host):

That’s how it works. So, I’m with these, you can tell I’m a big fan of that one, but I know we’re coming up on the end of the time. So just have one more question for you. So, you know, what advice would you offer to our audience? If they asked you what, what should they do today? The number one thing they should do to become a better FP&A professional and to be that consultant versus that technical support person.

Kathy (guest):

You know, we talked a lot already about this, about focusing on the soft skills, such as, you know, presentations, persuasion and listening. Listening is a big one. And you can go in a variety of different ways. Obviously, you can take courses, you can go and read a lot of books, but the best way to really learn is either do it or observe someone who does it. And I cannot tell you how valuable it is to watch salespeople, good salespeople in action. So, if you have the option, especially if you’re in FP&A it means that you’re in a bigger company, go hang out with a lot of salespeople. You will learn skills that will last you for a lifetime. Salespeople and marketing. People are very good with storytelling, actually figuring out how to get that engagement, how to get that interest and salespeople, great salespeople are great at listening. So, if you hang around them, you will absorb a lot of this knowledge just by default.

 

Paul (host):

You know, that’s the first time I’ve received that answer, but that is so true. I mean, in the two roles I’ve enjoyed the most in my career were the ones I worked closest with sales and spent a lot of time with sales and marketing and now running my own business, you know, and doing some influence marketing, doing content creation. I see, I know exactly what you’re talking about is I work with these different marketing companies to try to come up with campaigns and also to sell my own products that was invaluable, that experience. And I think, you know, seeing this side of things will make me a better FP&A professional will make me better understand just how important those skills are. So, I’m with you on that. I think that’s, you know, that’s great advice and somebody can’t go wrong by, you know, observing the sales and the marketing people, because we all need those skills. Yeah. They really are critical skills.

 

Kathy (guest):

And if, if you don’t have people that you can do that in your company, what you could also do is connect with them on LinkedIn. LinkedIn is a great place to learn outside of your industry and you will learn that way as well. So that’s another option.

 

Paul (host):

Totally agree. And one other, I advise along that, that way, if you wanna understand marketing and content start posting on LinkedIn. Put yourself out there a little bit, you know, you just have to be willing to not let anything offend you and recognize that some posts are going to bomb. Some posts you might get a lot of comments on. And sometimes you won’t always know why, but just keep trying and learning. And that’s another great way to kind of get a feel of the marketing because to a certain sense, not to a certain extent, you really are marketing yourself. When you put yourself out there on LinkedIn, you’re marketing your content, you’re marketing your brand, who you are. You’re showing that you have knowledge in your career, and everybody has some knowledge or value that others can learn from. So that’s another, I would advise you mentioned connect with the people on LinkedIn, but also, you know, kind of put yourself out there. I know I’ve seen a number of posts from you and a lot of good content that I’ve seen where I’ve learned some things, I hadn’t thought of that or learned something new. So, I’ve appreciated that.

 

Kathy (guest):

Thank you.

 

Paul (host):

Well, thank you for your time. We really appreciated having you on the show today. I know our audience will love to listen to this and I, you know, I found it fascinating to hear your story and just a difference you’ve made as a fractional CFO, especially for woman-owned businesses. It’s something that’s needed. You know, we need that diversity and need to make sure we’re giving every segment of our population, those opportunities to succeed, to be CEOs, to have successful businesses. So, congratulations for, you know, being willing to be a champion in that area. I think it’s great. And thanks again for being on the show.

 

Kathy (guest):

Thanks so much for the invite, Paul. This was really fun and thanks again for inviting me.