153. Financial Modelling Excellence: Top tips from The FP&A Guy, Paul Barnhurst
Nov 21, 2023
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Renowned financial modelling expert Paul Barnhurst talks about the importance of good assumptions in financial modelling, practical tips for accurate financial models, the role of financial modelling in planning and decision-making, strategies for agile budgeting and forecasting, the evolving role of FP&A professionals, and how to gain a seat at the table.
Accurate financial modeling is crucial for financial decisions and can significantly impact a company's stock price, performance, and job security.
Implementing rolling forecasts can enhance agility in the planning process and improve accuracy, adapt to uncertainty, and hold the business accountable for performance.
Deep dives
The Importance of Accurate Financial Modeling
Accurate financial modeling is crucial as it impacts financial decisions and can significantly affect a company's stock price, performance, and job security. A model's accuracy can determine the success or failure of budgets, forecasts, and resource allocations.
The Role of Rolling Forecasts in Agile Planning
Implementing rolling forecasts can enhance agility in the planning process. By refortcasting regularly and adjusting projections based on changing business conditions, companies can improve accuracy, adapt to uncertainty, and hold the business accountable for performance.
The Significance of FP&A Having a Seat at the Table
Ideally, FP&A should be highly regarded and valued within an organization. When stakeholders prefer the input of compliance, legal, or other departments over FP&A, it indicates a need for improvement. FP&A should actively participate in strategic conversations, be involved in decision-making processes, and be viewed as a trusted advisor.
Ensuring Directional Accuracy and Effective Accountability
To assess the effectiveness of planning and FP&A capabilities, CFOs should consider if the process generates directionally correct forecasts. Additionally, the ability to hold the business accountable for actual performance against projections should be evaluated. The planning process should facilitate intelligent conversations, identify variances, and prompt corrective actions.
In this episode of CFO 4.0 podcast join Hannah Munro, as she chats with Paul Barnhurst ‘The FP&A Guy’, renowned financial modelling expert and host of the "FP&A Today" and "Financial Modellers' Corner" podcasts. Get ready to dive deep into the world of financial modelling and discover why it's such a crucial skill in the world of finance.
Highlights from the episode:
The importance of good assumptions in financial modelling.
Practical tips for building accurate and useful financial models.
The role of financial modelling in planning and decision-making.
Strategies for more agile and effective budgeting and forecasting.
The evolving role of FP&A professionals and how to gain a seat at the table.