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What does your typical day at work look like?
Terence: FP&A work revolves around its two components – Financial Planning, and Analysis. Financial Planning (not to be confused with insurance!) involves formulating the company’s strategic plan or annual budget. Depending on each company’s budgeting process, the entire exercise can stretch anywhere between 3-6 months!
The Analysis component is a constant cycle of forecasting and analysis. Forecasting involves looking ahead to build an informed view of the company’s results for the next month, quarter, and year. After the books close each month, I analyze the results to see how we performed versus the forecast and budget, and communicate my findings and recommendations to company management.
Any spare time is spent on general business support as well as improvement initiatives. Examples include revenue and margin modelling, product launch simulations, cost-benefit analysis, as well as system improvements such as an upgrade of the ERP or SAP system. Done right, FP&A work is incredibly exciting and highly visible – at the forefront of modern Finance teams where you have the opportunity to closely partner stakeholders from all the business!
How did your past audit experience help you jump into the FP&A role in the IT industry?
Terence: I think FP&A is an industry agnostic role – the skill set is highly transferable across different industries. I happened to find myself in the IT industry, but could have easily moved into any industry post-audit.
Audit experience sets a strong foundation for FP&A to build upon. While schools provide a theoretical foundation in accounting, audit is a practical session of seeing those theories applied in real life. It helped me gain insight into why things are done a certain way – particularly in understanding how data and numbers flow in a company’s financial ERP system. This has equipped me with the right framework to analyze company results and dive into its revenue and cost drivers. It is also easier to identify and troubleshoot potential errors when something looks wrong, as my audit experience has honed my instincts in spotting any accounting or control deficiencies.
How did you acquire your IT skills – did you learn them on your own or was it mandatory training in IT companies?
Terence: In audit, I used Excel frequently – picking up basic formulas and pivot tables to make sense of large data sets and identify anomalies. When I moved into a commercial role, I picked up Power BI and Tableau, and further honed my Excel and PowerPoint skills – you’d be surprised at how much there is to learn!
To equip myself, I attended formal training like Microsoft’s Power BI workshops, ISCA’s Business Analytics and Reporting (BAR) course, and inhouse Tableau training. There was also lots of learning on-the-job – whatever wasn’t imparted by my boss, I learnt from Google or YouTube.
Today, there is no shortage of (free!) resources online such as LinkedIn Learning, YouTube, Coursera, and Udemy that we can utilize for learning. While it may be challenging to become proficient without a real life application or use case, you would nonetheless possess some degree of technical knowledge and familiarity with the software – which counts for something!
What differentiates FP&A in the IT sector as compared to other sectors?
Terence: The IT sector is broadly split into hardware, software, and services. For services, revenue recognition is straightforward – with each passing day, revenue is recognized as services are delivered. For professional services which are billed by headcount, analysis would revolve around number of people deployed, rank and qualifications of the staff, as well as the associated manpower costs and overheads.
Software (including SaaS) is similarly straightforward as revenue is recognized over the license period – think of your Spotify subscription, Microsoft Office licenses, or Steam game purchases. Analysis would therefore be focused on key metrics like customer acquisition cost, churn, customer lifetime value, and monthly recurring revenue.
Hardware is comparatively more complex because revenue is recognized when goods are delivered or when projects are deployed (more common). To illustrate, imagine SIM wishes to upgrade its campus Wi-Fi. If a company sells Wi-Fi router sets as-is in boxes, it would be a straightforward case of recognizing revenue upon delivery. But this is often not the case – SIM would likely engage an IT company to install and set up the Wi-Fi network, which
implies a service element bundled with the hardware component of the contract. Revenue recognition would be based on percentage of completion or milestone billing – for example, tagged to the number of routers installed and certified working. In such companies, forecasting and analysis is highly project-driven and relies on inputs from critical business partners like sales, operations, and delivery teams.
What are some tasks or responsibilities that you find most challenging but exciting?
Terence: Currently, a significant part of my job involves margin forecasting. Gross margin (the percentage of profit on sales) is challenging to forecast because you have multiple
drivers that fluctuate like price, volume, product mix, country mix, forex rates – and this is just on the revenue front without diving into costs!
Similar to analysts who cover stocks and build up their reputation via a consistent ratio of recommendations that turned out right, it is also possible to be a FP&A analyst who forecasts and projects margins with a consistently high degree of accuracy. A lot of the legwork involves talking to business partners to get an accurate handle on the company’s operations. It is definitely challenging but also rewarding because I get to validate my forecasts to see how close we were versus actual results, and continually improve by applying learning points from past variances.
Could you share more about your business partnering experiences – what soft skills you have picked up and your exposure to different departments (sales, delivery, industry vertical and technology horizontal teams)?
Terence: Accountancy and finance traditionally involves a lot of number crunching in the background, but the landscape has quickly evolved. Business partnering comes into play – this means becoming a trusted person for financial advice and open discussion.
For example, product developers possess technology expertise but they may not be as well-versed in numbers. It is important to establish ourselves as trusted business partners so that they feel comfortable approaching Finance anytime, to talk about anything – it could be about modelling or cost-benefit analysis for a new product launch, or even topics that are traditionally not in the Finance domain as they feel we are able to value-add to the discussion.
In order to be trusted, we must be reliable and competent – and hence it is important to be comfortable around numbers and analysis. Business partnering opportunities will come as we deliver the bread and butter of Finance.
For example, if we slice the numbers by account or by customer, we would naturally be partnering with the sales colleagues as we highlight a particular customer’s fall in sales (and corrective actions to be taken). If we slice the numbers by product, we will liaise with technology and product experts as we collectively seek to explore (and rectify) a certain product’s unexpected underperformance. Lastly, if we slice the numbers by geography, we would communicate with regional colleagues to understand the specific country dynamics (and how we can collectively reach our goals at a regional level).
Communication, presentation, influence, persuasion and relationship building are soft skills I picked up along the way (and am still working on!). Think about the ideal project team member that you would like to be grouped with – reliable, competent, and a pleasure to work with – the workplace is no different. Be that person!
How do you encounter the opportunity to transition from audit to FP&A?
Terence: It wasn’t a direct transition – my first role after leaving audit was in sales operations! While there are similarities to FP&A, a key difference is that sales operations often resides within the Sales organization instead of Finance. Hence, analysis and reporting is focused on sales, salespeople, sales pipeline and sales forecasts. This prepared me for a future FP&A role due to the common skill set – with the added advantage of business partnering experience with Sales.
I was blessed with wonderful bosses who were incredibly nurturing and was rotated from Sales Operations to Finance – where I had the opportunity to pick up a hybrid of management reporting and FP&A – and finally to one of the business units, fulfilling the role of a Finance Business Partner.Eventually, some good opportunities came along. I explored them and decided to take up a pure FP&A role.
What does the career pathway and progression look like in FP&A?
Terence: FP&A is a very specific branch of accounting and finance. In commercial firms’ Finance departments, there are generally three tracks: the accounting track, finance business partner track, and FP&A track. You could stay on one pathway and climb the ladder – starting from analyst, to senior analyst, manager, senior manager, director, so on and so forth – or you could switch pathways as you go along.
It is less common for those in the accounting track to switch tracks – the movement is often between the FP&A and Finance Business Partner pathways. I personally encourage you to gain experience in both tracks because FP&A roles give you a bird’s-eye view from the HQ perspective while FBP roles give you a hands-on perspective on the ground. Throw in some
accounting experience picked up along the way or from audit and you have a well-rounded finance professional!
Where do you see yourself in the next 5-10 years ?
Terence: I think it is hard to make these sort of predictions – I have learnt that life just doesn’t work that way! I prefer to view things one step (or two) at a time and focus on the present. What is important is to do our best wherever we find ourselves: to be a good steward of whatever we are entrusted with, and to leave things better than we found it. This extends beyond work – I hope to be a good husband, father, son, brother, friend, mentor, neighbor, citizen, and of course colleague.
In the near future, I will be switching to the FMCG industry in a FBP-type role. I am grateful for the opportunity and look forward to learning about the industry, building new relationships, and making an impact. Life is short, so enjoy the ride!
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