It may be too early to expand an acronym that’s still in fluid form and not fully defined. However, there’s a case to be made to add a “C” to FP&A. As the role of financial planning and analysis (FP&A) expands, and the importance of soft skills rises, there should be some official recognition that technical skills only go so far. If executives cannot tell their story and influence decisions, they are not doing their jobs.

In a recent AFP FP&A roundtable in Boston sponsored by Peloton, over a dozen FP&A professionals gathered to discuss top-of-mind issues. The conversation quickly turned to the necessary skillset for today’s successful practitioners. Yes, fundamental finance skills remain important, yet most of the discussion revolved around the interpersonal skills, such as influencing and the communication competencies of successful professionals. This was also the case during two previous roundtables in New York and Chicago, as well as countless conversations with FP&A professionals in the United States, Europe and Asia.

“FP&A execs need to be puzzle solvers, not number crunchers,” insisted one practitioner. Although you still need to have the technical competency to get into the weeds, “communication is the key. FP&A needs to be able to communicate back out to the business and leadership.”

Building a business partnership

Good communication skills are also critical in being able to build collaborative relationships with the business. “FP&A professionals need to have the ability to move from the tactical to the strategic, to advocate for the business while sharing the corporate strategy with business leaders. That requires walking a fine line and having advanced political skills,” said the head of FP&A at a pharmaceutical company.

A finance executive from a defense manufacturer agreed. “[FP&A professionals] walk a fine line,” he said. “They cannot just be a bullhorn for the CFO and CEO because that won’t win them the trust of the business leaders. Yet they can’t just advocate on the part of the business because they need to be objective advisers who can say no when that needs to be said, but explain the reasons so their partners understand it’s not arbitrary.”  

In fact, excellent communication and interpersonal skills have become a must-have rather than a nice-to-have, as FP&A has pivoted from a backward-looking reporter of what’s happened before to a forward-looking prognosticator of what’s going to happen next. Finance professionals must be able to dig into the numbers, identify emerging patterns and effectively and concisely tell the story of that trend, often visually, and always in a digestible manner to business leaders and management.

According to Rudy Garcia, AVP of FP&A at Sizmek, working with the business is a key role of FP&A that is only growing in importance. “It’s about interacting with each of the heads of the functional areas and understanding what they need in order to move forward,” he said.

William Howell, the FP&A manager at payroll and HR technology provider, Ceridian UK, insists that “communication is at the heart of being able to build that credibility and achieve successful partnership.” FP&A needs to be encouraged to see and know other parts of the business, and some of that communication has to be face-to-face.  Even if finance execs can’t visit in person, they should make a point of meeting with business executives as they visit headquarters. 

Howell stressed the importance of clearly explaining the budget and the plan in jargon-free terms. “There’s no point in holding people accountable for something they’re not aware of in the budget,” he said.

What sets FP&A professionals apart?

In fact, this ability to speak to business leaders in their own terms, to communicate complex concepts in simple language, to influence decision-makers and drive action is what sets FP&A executives apart from their accounting brethren. While both report numbers, each speaks a very different language. Accountants follow rules and speak in GAAP terms. They rarely need to go beyond “going over” the numbers and their reports follow a strict set of prescribed formats dictated by convention and law.
 
FP&A meanwhile needs to explain why the numbers are what they are: good or bad. FP&A must show future alternative outcomes and describe each scenario in plain English. Its role is to provide insight into what has taken place and foresight into what’s likely to happen going forward. That requires excellent communication skills and the ability to navigate the trust of business and senior management—not an easy political line to walk.

Hence the “C” in FPA&C.