More FP&A teams should take advantage of the secret power of Monte Carlo simulations, argues Jamie Genge, Head of Financial Planning and Analysis at the UK’s National Physical Laboratory (NPL).
Genge runs FP&A at the NPL which employs 775 scientists to provide research in science, engineering and technology to support scientific and commercial innovation in the UK. Some of the world’s most significant innovations have origins at NPL, including radar; packet switching, the forebearer of the internet; the ACE computer; and the caesium atomic clock.
Jamie’s start began studying Human Geography before moving to audit at PwC. Jamie went to work for the National Physical Laboratory in the UK where over 11 years he has held multiple roles, including his current role as head of financial planning and analysis for the National Physical Laboratory (NPL).
In this wide-ranging interview Jamie provides his take on
- Moving from audit to FP&A
- How FP&A acts as bid support in governmental organizations such as the NPL
- His passion for Monte Carlo analysis, a mathematical technique to account for risk and upside in decision making
- How Monte Carlo is used in the sales funnel, with examples from NPL
- How NPL conducts its budget and forecasting
- Bottom up vs Top Down budgeting
- The pride of building a team in FP&A as one of the greatest career achievements
- The challenges and opportunities in FP&A at this crossroads
- Jamie’s gardening project as an analogy for FP&A
Paul Barnhurst:
Hello, everyone. Welcome to FP&A Today. I am your host, Paul Barnhurst AKA the FP&A Guy, and you are listening to FP&A Today. FP&A Today is brought to you by datarails, the financial planning, and analysis platform for Excel users. Every week, we will welcome a leader from the world of financial planning and analysis and discuss some of the biggest stories and challenges in the world of FP&A Today. We will provide you with actionable advice about financial planning and analysis. This is going to be your go to resource for everything FP&A, I am thrilled to welcome today’s guest on the show. Jamie Genge. Jamie. Welcome to the show.
Jamie Genge:
Thank you, Paul. It’s a pleasure to be here.
Paul Barnhurst:
Yeah, no, we’re super excited to have you, Jamie is coming to us from the UK, just outside London and a little bit about him. I’ll just give a brief bio here and then give him an opportunity to share a little bit more about himself. He earned his bachelor’s degree in human geography. Then he went on and earned his accounting certificate. He worked as an associate auditor for PWC, and then after working as an auditor, he went to work for the National Physical Laboratory in the UK where he held multiple roles, including his current role, which is head of financial planning and analysis for the National Physical Laboratory (NPL). So Jamie, could you maybe start by just telling us a little bit about yourself, take us through your background and help our audience get to know a little more about you.
Jamie Genge:
Yeah, absolutely. So, um, came out of university, as you said of human geography, not necessarily the typical finance background. I didn’t want to be a teacher although there’s obviously nothing against that. I wanted to get a good grounding in business. That’s why I went into audit. So human geography was good because it gave me a lot of training and critical thinking, which is clearly very important for FP&A business partnering and finance more generally, but also enabled me to basically look into many different subjects, whether it was economic or historical philosophical history. So that was why I did that. Audit was great, um, like speed dating for companies. You really get to see a lot of companies that it’s really therefore gives you just a great grounding in business and how different places are, gives you also a good view of the whole P&L detailed testing and all the way up to the, um, analytical reviews. And I think that’s probably where the FP&A seed was planted. So from there I went to Serco which was a more commercial analyst role, um, did that for two and a half years. It was bid support, financial modeling. So I learned that Excel was much more than a calculator. Then I got an opportunity to do a one year secondment at NPL, went there on a one year secondment to get management, accounting experience, and 11 years later, I’m still at NPL.
Paul Barnhurst:
Well, great. Thank you for sharing that. And it’s funny how that works. You go somewhere thinking you’ll be there a year, two years, and you know, four years, five years, 10 years later, you’re still there. Life, life has a way of always working out a little different than we planned. Okay. I really appreciated your example of speed dating for auditing. I will admit in my head, I saw, you know, a bunch of guys and girls sitting at tables and you’re rotating every few minutes doing, you know, speed dating back during the single days. So it kind of gave me a chuckle, but it’s a good analogy. I don’t think I’ve heard that one before, but you know, kind of moving on here a little bit to the kind of the FP&A side. Can you walk through how you ended up working in FP&A? I mean, obviously you did some auditing, you did some bid work. And then you moved toward FP&A. What was it that attracted you to FP&A?
Jamie Genge:
Okay. So as I mentioned, the analytical reviews in, in the audit where you look into a company’s future work out, if they’re going concern, that was probably where the seed was planted. And then to be honest, from a commercial analyst perspective, what you’re doing is you’re forecasting the future of a potential contract that you’re bidding for. So although it isn’t necessarily called FP&A it is doing the same kind of thing. And then in management accounting, obviously you’ve got things like month end and reporting, and you’ve got lagging indicators, but the passion I really had was the forecasting of the future looking into scenarios. And that’s how I got that experience. And I took that, went into a more specialized role for a few years where I was focusing mainly on the bid support at NPL, but then eventually FP&A came back my way. I took it on about 2018 and have been doing all the budgeting forecasting and five year planning for NPL since then.
Paul Barnhurst:
Got it. Well, great. So maybe, you know, before we jump into a little more about FP&A I think bid support is something that some FP&A departments support. You know I started my career working in procurement and more analyzing the bids we got from contractors. And trying to understand them and say, is this, you know, a price the government should be paying for something? Because I started my career with the Navy. So maybe talk a little bit about what you did with bid support and how that’s helped you as an FP&A professional having that experience?
Jamie Genge:
Okay. So before the bid support at NPL, I was doing the financial modeling for the bid. So it was almost like I went to the other side of the fence and there was still financial modeling in my team, but there was also reviewing other people’s modeling for the smaller bids. So what you’re trying to do is make sure that the numbers make sense, that you test the assumptions, the key assumptions you test the price, if it’s not grant work then is it reflecting the value to the customer? If it is grant work, is it actually following the eligible costs that are actually allowed to be claimed, but not including anything that wouldn’t be allowed to be claimed. And then also at a more macro level, an NPO level or a company level, you would be saying, how does that fit into the portfolio? What’s the balance like across the board?
Paul Barnhurst:
No, that makes sense. And I kind of laughed when you said, you know, Hey, is it grant work? Are they following all the rules? Because I remember doing those same things, you know, but for the department of defense and the rules were like four books that were like this thick. It’s like being creative and coming up with different ways to do proposals, but follow all these rules. That’s probably why I’m not still with the government is, was just like, all right, it’s a little too restrictive for me to try to imagine all of that, but I can remember doing those things and, you know, definitely brought a lot of value to see proposals and thinking a little different way from what we might typically do in FP&A. So you know, talking about FP a I think the last roughly six years or so, you’ve been, you’ve headed up the team there at NPL. Talk a little bit about what’s under your team purview, how it’s structured, you know, what functions do you guys manage?
Jamie Genge:
Okay. So, yeah, as I said before when I first set up the bid support team, I moved from being the finance manager, doing management accounting into a role that was basically just me to begin with. And that was on the bid support. But over time that grew and, you know, as a team demonstrates that it’s doing a good job, it starts to get more things under its belt. So we took on the orders of reporting, looking after the sales funnel, reporting on, bits and opportunities. When I say looking after the sales funnel, what I mean is analyzing the sales funnel. We’re making forecasts on what might come out of the sales funnel from a contractual perspective, how much revenue, how much profit as well. Then over time, it’s about 2018, the FP&A function came over to my team. So I picked that up and started doing the budgeting, the forecasting, the five year plan. And slightly later than that, the sales and operations planning process was set up at NPL. I was the finance lead on that. And I’m now the owner of that process. So there’s that element. And then obviously there’s still the bid support investment appraisal or basically the financial modeling.
Paul Barnhurst:
Got it. Okay. So it sounds like you got, you know, a few things under there, which makes a lot of sense. The bid support, the, a little bit of the sales and operations, as far as the sales forecasting, some of that, that side, and then, you know, the traditional FP&A your month end, your budgets, your forecast, those kind of standard tasks we all see in, in FP&A, I imagine with, you know, your background and having done a lot of bid support, you know, seeing auditing, obviously you’ve worked a lot with financial models. And you know, one of the things that has become a big has become really big in the last couple years with COVID with, you know, energy crisis with conflicts, abroad, all these different macro events that keep, you know, shaking up everybody’s world is the need to be able to do scenario analysis, but not just scenarios. I mean, those are nice and you can do scenarios in Excel, but another is really performing sensitivity analysis as well, to understand the range within a scenario, to know how much it moves. And I understand you’re a big, you know, big proponent of Monte Carlo. So maybe could you start by just telling our audience, what is Monte Carlo and how does that aid somebody who’s doing a sensitivity analysis?
Jamie Genge:
Absolutely. So it’s a mathematical technique to account for risk and upside in decision making. So what it basically does is rather than having a number, it substitutes it for a probability distribution or a three point testament. So instead of saying the number is a hundred pounds or a thousand pounds or whatever you would say based on estimates of what it’s likely to be, it’s more likely to be between best case scenario 80 pounds, worst case scenario 200 pounds, most likely is a hundred. And that would then give you your three point estimate. And you do that for all the main drivers that you’ve got in your model. And then you run a large number of simulations and every time there’s a scenario, I say there’s a thousand scenarios. Each time the cost would be somewhere on the point that we’ve just talked about somewhere between 80 and 200, but with a skew towards the most likely. And when you do that across the whole range of drivers that you’ve identified, that gives you distribution of probable outcomes, you know, that gives you more than one number. It gives you a range of numbers and based on the inputs you’ve put into that model, you can have some confidence. And usually we use about a 95% confidence that it’s between X and Y. So that’s how Monte Carlo works in a nutshell.
Paul Barnhurst:
Got it. So I mean the way to think about it, if I’m understanding it right. And I remember doing some in college is it’s really, it’s a simulation that you assign some ranges, it runs all those scenarios based on those ranges and assigns a probability to the likelihood of a, with a certain number, like saying, okay, you know, based on the inputs you’ve given us based on running this a thousand times. We’re 95% confident that your ultimate number’s going to be between 92 and 106.
Jamie Genge:
That’s it, rather than trying to say the number’s going to be 95 and it doesn’t take into account there’s an upside and a downside and obviously it won’t completely predict the future, but given the inputs you put in around those different probabilities, it gives you more of a spread.
Paul Barnhurst:
Sure. It allows you to think of things in more than just kind of one scenario, right? Just looking at it and being like, okay, it’s either this or that. Or it’s, you know, this number, it allows you to understand that there’s always a range, which makes a lot of sense. So, you know, why are you such a big fan of Monte Carlo? What is it that kind of got you started using it and how has it worked for you?
Jamie Genge:
So at NPR I’ve been using it for the sales funnel, I mentioned this earlier. So traditional portfolio analysis would say, you go through your sales funnel and against every potential contract, you put a probability, you times the, the likely value by the probability, add it all together. And that gives you what you are going to get from your sales funnel. It only takes one or two things that are bigger that have a low probability or any probability to completely skew that. So if you’ve got something that’s many times bigger in the sales funnel than everything else, and you put 50% probability, that ultimate scenario is never going to happen with Monte Carlo analysis. It’s either in the number that the bottom or it’s out of the number, and that’s done a thousand or however many times you program the software. So therefore you get a range of scenarios that would actually be able to happen in real life.
Paul Barnhurst:
That makes a lot of sense. And I was just thinking, as you were talking about that, you know, one of prior roles I had where we did a lot of renewal business, but yet we cheated the one stage, which I think was stage three over five, and then there’s contract and closed one. We treated it as 80%, but the reality of this was a renewal. It was really probably 98%. Because we had about a 2% churn rate. So we always knew whenever I presented that weighted number, I’m like, okay, I know this is understated, but it was what everybody had agreed to. And being able to use some kind of Monte Carlo and looking at it a little differently, gives you a better idea of what that range really is.
Jamie Genge:
Absolutely. The other thing I really like about it is you can using the software, at least you can identify what variables or what drivers had the biggest impact on the bottom line. So you might be surprised that one of your indirect costs that you’ve highlighted has a bigger proportion of a bigger impact on the bottom line than actually growing your revenue by two times or something like that.
Paul Barnhurst:
Got it. So does it give you kind of a linear regression or does it give you some kind of score that tells you how significant those different variables are to the overall kind equation? Is that how to think about that?
Jamie Genge:
So the software that I use ranks them in order of biggest to lowest impact on the bottom line, but then it also shows you the value. So it’ll give you say 500 K swing between the lowest and the highest impact
Paul Barnhurst:
That makes sense. How do you use Monte Carlo? Is that an add in to Excel or what’s the typical, you know, kind of way you find people doing Monte Carlo?
Jamie Genge:
So I think there’s quite a few different products out on the market. The one I’ve been using since I picked it up is called at risk software, and it is an addin to Excel. So you build your model in Excel, but where you want to put in a variable and say that that’s a driver, you would just assign it with a best case, a most likely, um, and a worse case. And then you do that to all of them, put which cells, which outputs you want to see what I’ve just been talking about on, and then you just run the simulation and put it in. I think it can do a hundred thousand times, but when I’ve experimented, it doesn’t make much difference past about two or 3000. And you get your answers.
Paul Barnhurst:
And that makes a lot of sense. Once you get past a few thousand, you know, you’re, you’re going to have so few outliers and you got so many data points that it’s going to skew, especially if you have any kind of, I would imagine it does some kind of normal distribution statistically behind it. You know, those additional data points aren’t going to make a big difference.
Jamie Genge:
No, not, not in any of the experiments I’ve done. And that, I think from the rule of thumb, I’ve picked up, my research is 2000 to 3000 is quite an adequate amount of scenarios.
Paul Barnhurst:
Got it? No, that makes a lot of sense. So if somebody’s interested in learning more about this, would you say they need to have a kind of a basic understanding of statistics or how, what advice would you give to somebody who’s interested in, you know, implementing some kind of Monte Carlo simulation in their FP&A department?
Jamie Genge:
Absolutely. So the software providers I’ve mentioned give a more comprehensive overview of Monte Carlo than I’m doing now. So there’s a lot of, um, really useful information out there at the, at the hands of Google or any other browser. So YouTube, there’s lots of people. Who’ve done videos on how to use Monte Carlo, even how to do it in Excel. I haven’t tried it myself, but I know that you can do it with random numbers, um, generation.
Paul Barnhurst:
No, that makes a lot of sense. And I know you can do it in Excel and I’ve seen somebody do it, especially now that Excel has dynamic arrays where you can, you know, spill your numbers. It makes it easier to do some of those simulations and run sensitivity today than it was before. Absolutely. So just, it takes a little bit of time. I would imagine to get it all set up, if you wanna do it a hundred percent without any add in
Jamie Genge:
Yeah.
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Paul Barnhurst:
One other thing, you know, in, in the budgeting and forecasting process, and this is, this is you’re talking about that. It made me think about it. You know, when you do your budgeting and forecasting, what do you find is the most important part of that process? When you’re getting ready to do this kind of annual budget, where do you focus most of your time?
Jamie Genge:
That’s a great question. And it’s hard to single out one single thing. You need the whole process to work. You want it to be done in a timely fashion because things become out of date. And then you start trying to, to mark the homework that you’ve already done. So you wanna do it timely. You wanna do it as simply as possible, but still with, um, a decent amount of, of granularity, because you wanna drill up and drill down. Communication is absolutely vital so that the stakeholders that you are working with understand what’s required of them, why, and then actually understand what they’re answering and then you pull it all together, and you’re making sure it makes sense, your sense, checking it, you’re running it past the stakeholders. You eventually need to approve it, making sure that it aligns when you add it up to the strategic plans of the company. And you know, you try to identify and understand what are the main, um, variables that, that we need to focus on in more detail and have scenarios around it.
Paul Barnhurst:
As well. Yeah, there’s a lot there that you said a lot of good points and you know, a couple things that jumped out to me as first, you know, communication is key. Any process you’re going to run, especially a process that often takes months. You know, some people might get it done in a few weeks, but I’ve traditionally found it’s a few months to do an annual plan. But if you don’t communicate, you’re going to lose interest from people. So that’s critical. One thing you mentioned is, you know, finding that right. Granularity so how do you find that? Are you someone who likes to build, you know, a plan you like to see a bottoms up and you know, every little assumption top down, or how do you manage that? You know, making it granular enough that you have confidence in it, but staying away from it being so granular that it’s so complex that your models and the whole process almost falls under its own weight. If you know what I’m talking about. Yeah. How do you manage those two things?
Jamie Genge:
So we’re a project based organization. So everything, the building block, is a project. And, from that information, you build your bottom up, but it’s important that you’ve also got a top down and you compare the two, because the top down is the one that you, you are hoping the bottom up adds up to. And then you’ve got a reconciliation process and understanding how to, how to get the two to, to join up.
Paul Barnhurst:
That makes a lot of sense. And I hear a lot of people say that and I’m a fan of having that top down. And sometimes that can come from corporate or the general manager, whoever somebody in the business has this idea of where we should be able to get to you, take everything, you have taken all those projects and say, based on what we’re seeing today, the probabilities we put on it, we can get to a hundred and they wanna get to 110. And then the real fun begins is where do you end? And how do you figure out the gap from the top down and bottom up? Cause I’ve generally found there’s almost always a gap.
Jamie Genge:
I’ve never spoken to anyone. Who’s found that there wasn’t a gap if I’m honest.
Paul Barnhurst:
Yeah, exactly. I agree. And it’s almost, and it’s always a gap it’s never like you’re way over or almost never. Yeah. Almost never that you’re over. It’s always, they want more,
Jamie Genge:
It’s a bit of a, there’s a Donald Rumsfeld unknown, unknown in that gap. If you’ve got all of the order book of what you’re actually going to deliver, because you’ve got a contract, you’ve got a potential sales funnel. There’s generally things that aren’t in the sales funnel yet. And that’s what makes up that gap. And then it’s all about understanding where the business is likely to find those unknown unknowns and become knowns.
Paul Barnhurst:
Well, thanks for sharing a little bit about Monte Carlo simulation and you know, be able to talk through that with me. I think it’s definitely something the finance profession should use more. So moving on to the next question here. This is something we like to ask. Everybody gives them an opportunity if they want to brag a little bit about themselves, but as you look back over your career, what is the accomplishment you’re most proud of something you would share in a job interview?
Jamie Genge:
Okay. Um, I’d say it was building the team that I’m now leading. So as I mentioned before, in about 2013, I set up the bid support and the sales funnel analysis part of that team. And it was just me for a while. And, and in order to do that, it wasn’t necessarily easy because you have to make a business case. You’re talking to the CFO, in my instance, you can’t just go and say, I wanna do X, Y, or Z. You have to actually give good reasons for it. So you make a business case, where’s the value going to come from? You use some negotiation and selling techniques, um, when it makes sense, it’s easy to do. So we, I set up that team with her support and then over the years, as I’ve mentioned before, more has come over and I, I really enjoy recruitment and have been lucky to have some great people in my team. Um, it’s very important to recruit the right people into a team. Isn’t it. And yeah, that’s culminated with in 2018 taking on the FP&A function and with that, the business planning and the five year planning and the SAP process,
Paul Barnhurst:
No, that, that, that’s always rewarding to see something be built out and grow and provide real value. And as you mentioned, you kept taking more and more on, and we talked a little bit about this earlier. It reminds me of, you know, the saying the curse of competence. Yeah. Once you demonstrate competency, you keep giving, being given more and more responsibility. So, you know, as you look at FP&A today, and you look at where it’s going, what do you see as the biggest opportunity for FP&A.
Jamie Genge:
Okay, so these are two things that I think are interrelated. One is the FP&A process itself. And the other is the external world. Risk and reward. Increased risk, increased reward. So from a process point of view, I think that particularly with the pandemic and now with the inflation, um, increases that we’ve been seeing across the globe, um, it’s increasingly important to be demonstrating value. And in order to do that, you need to be an agile FP&A function. So you, you don’t just stick to a calendar and say, we’re going to forecast in June because that’s what it says in the calendar. You, you need to know the management information needs to be known when it, when it’s needed. So you need to understand what’s needed by talking to key stakeholders and then quickly coming up with what’s needed rather than, you know, doing a full blown process where that might not be necessary.
Jamie Genge:
So in order to be agile, I think one of the biggest opportunities is looking at different software applications. Uh, Excel is great, and I think there’ll always be a role for it, but software can definitely help, I think too, and that’s an opportunity and a challenge, who are you going to pick? Um, how are you going to implement it? So I think that’s the, the process side from the external world side, obviously there’s been, I’ve just mentioned a couple of things that are going on in the world. Those challenges really highlight the importance of having a team that’s dedicated to looking at the future and ensuring that the company remains a going concern, that it’s sustainable, that it has the information needed to make those important decisions.
Paul Barnhurst:
Yeah. No, thank you. There’s a lot there. And I, I think the key I took away probably twofold is one company needs to be agile. You need to be able to forecast when the business needs it, not just when the calendar says. Yeah. Because if there’s a big event, a shock to the system that comes from the external environment that you didn’t plan for, you have to be able to quickly understand how that impacts your business and, you know, as good as Excel is, it has its limitations. And so, as you mentioned, having that tool that can help you, that can enhance Excel or, you know, otherwise, you know, one example being Datarails who sponsors our podcast, you know, they provide a planning tool that helps with that, making your process more agile and bringing some of that functionality that Excel does not have on its own. So I think, you know, you brought up two great things there being agile, and also making sure you have the systems in place to support the ability to be agile on the flip side. What do you see as the biggest challenge for FP&A today?
Jamie Genge:
So I, I think I touched on this mm-hmm <affirmative>, as I’ve heard the definition of, um, have you heard of a, what the VUCA world is it’s, uh, volatile, uncertain, complex, and ambiguous. So I think that definition was coined in the late eighties, you know, just after that the Berlin Wall fell down and then there was a period of inflation, certainly in the UK, in the early nineties. I think that’s now probably just as relevant than, uh, than it ever has been and working out how to forecast with that going on in, in, in the external environment, it touches on what I’ve already mentioned. It’s a challenge because sometimes you can be seen as the people who should hold the crystal ball and that isn’t ever possible. You might get lucky sometimes, but that’s why scenario planning, what if and contingency planning is so important. It’s not just trying to say here’s a set of numbers. It’s saying here are the actions you would take in these circumstances. And the more of that you do, and the more prepared you are for, you’re never going to be prepared for everything completely, but the more preparation you do for different scenarios, the more quickly you can pick up a plan that’s already there and then use it as a business.
Paul Barnhurst:
That makes a lot of sense. And that’s great advice. And I hadn’t heard the VUCA before, but that makes sense. And just the uncertainty in the world, like, you know, fuel prices, inflation. I definitely felt it today as I filled up for the first time in a couple weeks. And my car was about as close, empty as it could be. I pushed it to the limits. And when I filled it up, I’m like, I don’t think I’ve ever spent this much for this vehicle for, you know, a tank of gas. I’m like, well, there goes the plan to do this or that, because it all went into my tank. So yeah, I mean we fill it personally in our lives, so definitely it’s critical to our work. That makes a huge difference in that bottom line, whether something’s profitable or not understanding those changes and being able to be flexible to manage all the uncertainty in our world. So I appreciate that answer. So now we’re going to get a little more personal. We like to ask all our guests this, what is something that not many people know about you, something they wouldn’t find online.
Jamie Genge:
Okay. Um, well I grew up in the countryside, so, but during lockdown, me and my wife were living in a flat in west London with no garden. So that was obviously, uh, difficult for everyone, but I found that difficult. So as soon as we could last year, we bought a house with a garden. Um, I’m quite a practical person. So I’ve been doing a lot of DIY since in the house. Increasingly I’ve been in the garden and particularly with the veg patch and I think FP&A and a becomes useful here because you start off with a plan. What are you going to put where? When are you going to do it? You make a plan. You work out what’s going to cost, whether it’s seeds or, um, soil or raising beds, then you, um, also work out how much time it’s going to take you, roll your sleeves up and you get on with it. But you’ve also got to expect the unexpected. So, you’ve got weather, you’ve got slug, snails caterpillars, and hopefully you’ve got harvest and all the hard work pays off, but it’s a learning mindset because you’re always also thinking, what am I going to do next time? What am I going to do next year? And you also can be agile. My spinach is all bolted. It’s gone to seed and it’s no good anymore. So rather than having that for another few months, I cut it down. I put some lettuces in and I’ve taken advantage of an opportunity.
Paul Barnhurst:
No, that’s great. Great. I love how you took that and turned that into an FP&A analogy. That was a great example there. No, I do some gardening myself. And as you said, all that, it made me think I really need to go out and put a little bit of water on a couple plants. There’s one area where we don’t have our automated sprinklers on at the moment. So I can, I can relate to that. And I grew up doing gardening. So great answer there. I appreciate that one. So now we’ll turn to what I would call everybody’s, uh, favorite tool for FP&A some people said, our operating system Excel. So do you have a favorite Excel function?
Jamie Genge:
Do you know? That’s a great question. It’s one I love asking in interviews and nine out of 10 people would say VLOOKUP. Or If they’re showboating, they might say, HLookUp . But if you interview a financial modeler, they almost never say that. They all say something like some product or index and match.I would say SUM product, although I’m aware that if you use it too much, when it’s not needed, it’s the one formula to rule them all. But it also does have a bit of a processing demand. So you can’t just overdo it with SUM Products. I’d say there’s an underrated one there, and it’s just the sum or the plussing and minusing. And if you just want something from an audit point of view, to be able to say in six months time, what were the assumptions? What did it add up to? Those are all the formulas you really need. Yeah. I’d have to go with SUM Product. I think,
Paul Barnhurst:
Uh, yeah, SUM Product is definitely a great one and you can use it’s so versatile. You can use it to sum things up. You can use it as a product. You can use it to filter things if you want. Over the years, Excel has built a lot of functions to try to do what people were doing with SUM Product. Yes. A lot of the new functions, the filter and, and others that they’ve added, you know, for office today. So yeah, definitely very versatile. I recently did some training where the CFO that had me do the Excel training was like make sure you teach some product. I want to make sure that people are using it. They know that they don’t need to break it into six different parts and have this helper column. They can just do it all in one formula.
Jamie Genge:
The other thing I’m passionate about is using flags rather than Nested IF statements and I think the rule behind all Excel is keep it simple because the simpler it is the simpler it is for you to understand in a few weeks, when you come back to it, the more likely you are to have broken out the logic and therefore followed it in the right way. It’s easier for someone else to pick up. And you focus more on the data that goes into the model rather than doing all the calculations in order to get your outputs.
Paul Barnhurst:
I totally agree that the simpler you can make the model, the easier it is for you to pick it up and for somebody else to pick it up, because we’ve all been there where you pick up a model and you’re like, I’m just starting over. it will take me to figure this out. I can just rebuild it. That’s a great lesson and advice that everybody should take wherever they’re at in their career is just remember, keep it simple. And speaking of advice, that leads us to our last question we’d like to ask you, is what advice would you offer to someone starting as an FP&A professional today?
Jamie Genge:
So from a mindset perspective, being curious, but also being willing to work hard and continuously learn. So the best way to do that, I think, is to try and build an internal network, talk to people that are in other parts of the business, um, understand where they’re coming from. They’ll also understand you and you’ll be better prepared to collaborate with them in the future. Then externally there’s lots of ways to, um, even, you know, LinkedIn, there’s loads of people with great advice. There’s experts that you can follow and pick up lots of tips every day on LinkedIn. You can also network there and start to build a list of people. You may find a mentor. I’d also say to be deliberate with your career. So one thing you can do is map all the experiences, the key experiences that you’ve already had into maybe a spreadsheet, like there’s a forecasting tab, business partner, and to have a reporting tab. And then you can use that to do some gap analysis for the next role you’re going for. And then you can use that information to seek particular experiences that you need to be able to take the next step in your career. Basically it’s about taking control of your career and at the same time being open, open to opportunities because they usually come in unexpectedly and out of nowhere.
Paul Barnhurst:
Great advice. And I know you’re a finance FP&A person. When you say map it out in a spreadsheet, use different tabs. That is totally an answer I would expect from a finance junkie, but that’s great advice because at the end of the day, if we don’t control our career, it will control us. We need to map out our path. And I really like where you said, figure out what experiences you have and what experiences you need to help you get to where you wanna go. You know, if your ultimate goal is to be a CFO or a VP of FP&A a then figure out what the key experiences you need are and how you’ll get there. So that’s really great advice. And you know, in general, I’ve really enjoyed this show today. I love being able to spend a little bit of time with you and appreciate you sharing your passion and your understanding of Monte Carlo. I think it’s a great tool that people should be using more often. I appreciate learning a little bit about how you stood up a team there at NPL and about your favorite Excel function, SUM Product that’s, you know, a favorite of many people. So again, thank you for taking the time to be with us. Jamie, I’m really excited for our audience to get to listen to this episode and learn a little bit more about you and the experiences you’ve had along your journey.
Jamie Genge:
Brilliant. Thank you very much, Paul.