Communication: The Most Underrated FP&A Skill for Budget Season

By: Jarred Liscio, Manager, CFO Advisory

As we approach the fall months, we will continue to focus on various key factors that make a successful budget season and leave the end users/audience with a valuable and insightful operating plan. In this article, I would like to take the opportunity to call out one of the most important and often overlooked skills of a financial planning and analysis (FP&A) team, which can be the difference between a smooth budget process and a chaotic one. 

First, let’s take a moment to think about what we might imagine an FP&A team doing during the peak of budget season. We might picture a person buried in their cubicle, knee-deep in spreadsheets, sipping their fourth cup of coffee while continuously hammering on their keyboard. But this image, I would argue, is not entirely accurate. Although working in spreadsheets is still a large part of building the budget, the FP&A team primarily finds themselves acting as a liaison between the various teams throughout the business and management. 

And that brings us to the most crucial and underrated skill: communication. 

The FP&A team acts largely in a project management capacity in essentially every stage of the budget process. In fact, this role begins even before the start of the planning procedure. The first action item that should be done is to hold a ‘pre-kick-off’ meeting. This is the team’s opportunity to speak with all the participants throughout the company several weeks before the budget work begins. In this pre-kick-off meeting, the team will run through the timeline for deliverables from all parties and what input will be needed from each group. Clearly and effectively communicating expectations for the budget season is a critical step to make sure all stakeholders are in alignment. 

This role of managing the process continues throughout the duration of the budget season, as well. The FP&A team often serves as the main point of contact between upper management and numerous teams throughout the company. This can include working with the sales team to hone in on the sales forecast, the HR team to anticipate any updates in headcount spending, and operations to quantify day-to-day activities. The finance team will continue to liaise between these parties to present the findings and trends thus far, explain any variances between inputs and expectations, and communicate any changes that need to be made between them.

Typically, one of the last stages of a budget process involves the finance and management team presenting the final deliverable to the company’s board, which can be comprised of owners, advisors, and investors. In this setting, the finance team often has to work with management to craft the thesis of the budget. This can include determining which metrics/KPIs to highlight, identifying any risks and opportunities, and potential scenario analyses. Here, the team will hone their financial storytelling skills to best convey this thesis to the audience in a way that fully defines where management intends to take the company in the coming year. 

So, as we begin to prepare for the upcoming year’s budget season, I would like to challenge any preconceived notions as to what the main responsibility of the FP&A team is during this period. While financial modeling and consolidation are undoubtedly still major tasks, equally important skills are managing the multiple parties involved in building the operating plan for a business and effectively communicating all expectations throughout the process. 

PreviousNext