Financial planning and analysis (FP&A) is the hottest topic in finance around the globe, with businesses increasingly relying on FP&A to support growth and business partnering. But this is uphill task, requiring the right mix of skills and attitude—a combination of which comes from experience and evolved work traits.

A common adage is that FP&A professionals need to move beyond being scorekeepers and become business partners. But business partnering is not an off-the-shelf product; one needs to develop it over the course of his or her finance career. It has more to do with the approach rather than learning. There is no panacea definition for business partnering, and that is what leads to deliberation and discussion of a host of aspects which come under the umbrella of business partnering.

Business acumen

To ease out the task, FP&A professionals should look at business partnering as business acumen. Business acumen is the ability to look at a situation as a business manager or an entrepreneur would and provide solutions. It is the ability to look for the best way to drive business. Business acumen helps the business respond as well as transform.

FP&A professionals need to talk business to gain credibility with their business peers. The more they trust your understanding of the business, the more they respect your advice and consider you to be partner. Business acumen is the combination of business understanding with a filter of financial perspective.

FP&A professionals can develop business understanding by recognizing the underlying drivers that move the business forward. Understanding drivers like market, competition, customer perspective, internal business metrics, company philosophy, will help align the FP&A thought process with that of business leaders.

Business analytics results and conclusions purely based on data points may give historical perspective, but may not provide predictive and prescriptive insight, which is a required theme in today’s business environment. Business leaders would like to see what is coming next rather than just get a feel of what happened in the past. Developing business acumen continuously helps FP&A do a predictive analysis.

Two different approaches

Let us examine a business scenario where FP&A needs to highlight deteriorating customer profitability, due to certain product mix, to the sales team. One approach could be communicating this with data, pointing out that the customer segment is becoming unprofitable and the company should reconsider doing business with them. This most likely would lead to a negative response from sales, considering the fact that such lower profitable products are part of overall mix strategy and this is a possible entry into more market share where the company is not present.

A second approach could be to examine the manufacturing and supply chain footprints of such products and bring to the table an alternative that could be explored along with the problem of lower profitability. This would not only lead sales team into looking into the issue with an open mind, but also prompt them to explore the options for addressing the issue

In the second approach, the FP&A professional is using business acumen, trying to partner with the business, rather than just being a data cruncher.

What separates a finance professional and a finance business partner is business acumen. Experience is what makes you a seasoned business professional, the more you deal with diversity the better you emerge.

Raju Gupta is global financial specialist for The Timken Company in Bengaluru, Karnataka, India.