Today’s guest is…Paul Barnhurst. Usually sitting in the presenter’s chair, this special edition sees Paul Barnhurst, aka The FP&A Guy (and host of FP&A Today), reveal the highs and lows from his storied career in FP&A at American Express, Solera, and DigiCert. Guest host is Annette deYoung, FP&A Solutions Consultant at Datarails, herself an FP&A veteran at companies including manufacturer, JL Clarke.
Highlights? Discover a rookie error that saw Paul deliver bonuses to the worst performers (yes, you read that right), rather than the best. How he met Jimmy Carter. The inside story of FP&A forecasting for American Express’s (then) money-spinning Travelers Cheques business, and how his biggest FP&A tech accomplishment is still in place at a previous company.
Get to know your host as Paul reveals:
- The winding road to FP&A from his beginnings in government procurement contracts
- His big break at American Express despite “not really knowing what FP&A was”
- With a love of numbers, why he was drawn to FP&A as his passion
- Accounting vs FP&A and the best techniques he has used to manage the relationships
- His key learnings to becoming a truly excellent FP&A business partner
- The fears and journey in leaving big corporations to become a top FP&A consultant
- Why finance tend to be such laggards when it comes to tech adoption
- What’s it actually like using Google Sheets?
Follow Paul Barnhurst on LinkedIn
Full transcript below
FP&A Today is brought to you by Datarails.
Datarails is the financial planning and analysis platform that automates data consolidation, reporting and planning, while enabling finance teams to continue using their own Excel spreadsheets and financial models.
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For AFP FP&A Continuing Education credit please complete the course via the Earmark Ap, must pass the quiz with 80% accuracy and send the completed certificate to pbarnhust@thefpandaguy.com for issuance of 1 hour of credit toward your AFP FP&A Certification.
Hello everyone. Welcome to FP&A Today. Today we have a special guest host, Annette Young, and you are listening to FP&A Today with her. FP&A Today is brought to you by Datarails financial planning and analysis platform for Excel users. Every week, we 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. We will provide you actionable advice about financial planning and analysis today. This is going to be your go-to resource for everything FP&A related, and I’m thrilled to welcome today’s guest on the show because today I get to be the guest and Annette gets to be the one interviewing me. So I’m going to go ahead and turn it over to Annette now and let her ask the questions.
Anette DeYoung:
Hey, thanks Paul. And it’s great to be here as the guest host. I think I was a guest on this show. It’s been months, but on one of the shows. And so yes, the roles are a little switched today. And so now everybody who listens to you and watches you in the FP&A podcasts, now they get to actually hear more from you instead of the other guests in FP&A.
Paul Barnhurst:
Yeah, so it’ll be interesting to see how I do.
Anette DeYoung:
Yeah. Well, welcome to the show, Paul.
Paul Barnhurst:
Thank you. Thanks for having me. Great to be here.
Anette DeYoung:
Yeah. So you know what, we’re just going to go ahead and get started. I did post on LinkedIn to see if there were any burning questions. I do have a few, but we’re going to start with something a little bit more basic today. So Paul, could you start by just giving us a little bit about you and your background?
Paul Barnhurst:
Sure. Yeah. So I’ll give you a little bit about my background. I actually started my career, funnily enough in procurement for the government. I was civilian, but I worked for the US Navy for about four years, writing contracts. Pretty quickly I realized writing contracts for a career was not where I wanted to be long term, and ultimately made the decision to go back to grad school and did a dual degree in MBA in finance and a master of science information management. And I went to work for American Express. At first I was doing report writing and as well as also managing a cash forecast and an FP&A role came open and it was a promotion. So I applied, not even really knowing what FP&A was, but hey, if I can make more money, I’m in. And amazingly enough, I got selected and that started my FP&A career. That was, I’d say 2010, late 2009, somewhere in there. And been doing FP&A ever since. Worked for a few different firms, Solera, a global automotive company, Digicert, in the cybersecurity industry, and then started my own business just over a year ago in March of last year.
Anette DeYoung:
So I have to ask the procurement for the government. And then you decided to go into finance and accounting. What was your motivation there? I mean, other than procurement for the government?
Paul Barnhurst:
Well, honestly, so the procurement part for the government, what I planned on going into, I originally was going to do more system type stuff because I had worked in a business systems office on a joint requirement board, kind of moving away from procurement. But when I took my advanced finance class, I’d always liked numbers. I really just fell in love with the class and decided to go more the finance route. I kind of wanted to do some investment banking stuff, but I graduated grad school in 2008, so that wasn’t really an option. The market wasn’t in a place to hire somebody with no experience to do that. And so I found a finance role that turned into FP&A and just kind been doing it ever since.
Anette DeYoung:
Great, thanks. So since we’re going to focus on the FP&A, what is it about it that you absolutely love? Why did you decide right, FP&A compared to maybe other parts of finance?
Paul Barnhurst:
Yeah, so I think the thing I like most about FP&A is working with the business. It’s the business partnering side. It’s some of the areas where some companies will also have you doing some of the operations. I’ve done a little bit of sales ops, a little bit of Rev Ops, but really it’s the business partnering. It’s helped driving the business forward, working with them. I’ve never really had a outside I had one, but generally I’ve never had a corporate finance role. I’ve almost been always in the business unit supporting the business directly. And that’s really what I liked in FP&A being able to make a difference, and feel like you’re impacting and knowing what’s going on and seeing the whole business operate. Those are things I really enjoyed. I mean, budgeting, forecasting, I like building a model, figuring out drivers and trying to be close variance commentary and some of those things and not as much, but it’s important part of the job.
Anette DeYoung:
And so you mentioned that you’ve never held a corporate finance position. Always kind of like SMB, right? Where everybody kind of works together. So I come also from the same type of background where accounting and finance, they’re usually only a couple of people. They’re not completely separated from each other, they are in corporate finance. So how was that working with, of course you have a finance degree, but working with accountants, I mean obviously one’s looking at history, you’re looking at the future. Just give me some backgrounds on maybe some of those relationships between those. They’re so close, but yet so far away.
Paul Barnhurst:
What was interesting, when I first jumped into an FP&A role, one of the companies I worked for at America Express, we would post some of the journal entries. So that was kind of different. And a lot of our accounting outside of the controllership was offshore, so worked a lot with India. So I definitely worked with them a lot and had good relationships. I look at it as really a partnership. One of the big areas often we’d work a lot in is accruals, providing supports, helping with audits sometimes, and explaining how things were done. When I worked in the travel industry, it was American Express Travel side. We had some different entries that were unusual for a lot of businesses and they took a while to get the auditors comfortable and even some of the accounting people. And then as time went on, one of the more interesting partnerships I had, well kind of two. One I was working with controllership a lot because we had some stuff in the business that we had to clean up because they’ve kind of been left to their own and they hadn’t had any FP&A oversight.
And this was international, some of our small markets. And so they were recognizing things not necessarily GAAP compliant. And so there was a lot of working with controllership very closely to try to bring them in line and standardize the approach. And then the other time that was really interesting, where I had to work with actually treasury and accounting quite a bit is I did the forecasting for travelers checks for American Express. And 99%, almost a hundred percent of our revenue came off the balance sheet. Either the interest we earned from all the liabilities that from prior year sales and abandoned property. So we could take breakage revenue outside the U.S. And so we’d take a percentage basically assuming some of it would be abandoned property and never getting cashed. And so that was really interesting cause I’m trying to forecast calls for the portfolio I ran, ‘Hey, when’s this municipality going to call its bond early because of interest rates and do we have enough or are we going to have to sell some of these to manage your cash?’ And things like that. So that was a really interesting one to coordinate with treasury and with controllership around how the balance sheet accounts work, because that was the biggest piece of the business.
Anette DeYoung:
And I think because I did about five years in banking. And yes, I will agree that coming in the balance sheet is completely upside down compared to a normal business. Loans are assets. So you know, almost have to relearn what you’ve learned in school when you’re going into the banking industry for sure.
Paul Barnhurst:
Yeah, no, for sure. And I’ve heard that and just even doing Travelers check and prepaid, got a little bit of that banking experience. So
Anette DeYoung:
All of excitement. Why did you leave a full-time FP&A role to focus on consulting and teaching?
Paul Barnhurst:
Why not?!
No. So it was a long time coming as a journey. My undergrad, which not many people know, I did business management with an entrepreneurship emphasis. I wrote my first business plan my junior year of high school and I came in fourth in the state competition. I wrote one again my senior year and came in fourth. And both years they messed up my score. So the teacher’s like, Hey, we’re going to take you to the national event. So I actually got to present at the National High School Business Association for a business plan. And so I’d always enjoyed writing business plans and the idea of business, but I’m by nature very conservative as a lot of finance people are. And just never had an idea that one excited me. And two, the nerves go, ‘Hey, I’m going to go out on my own. And about a year and a half ago, a bunch of things came together with a number of different ops.’
Someone wanted me to do a course, some consulting stuff, some influencer marketing deals with some vendors. And I told my wife, I’m like, Hey, I think I could start my own business. And she looked at me like I was crazy. And we talked about it for the next, I don’t know, six weeks or so. And one day she’s like, yeah, go for it. I’m like, you sure? Cause I’m going to put in my notice today so you better be sure. She’s like, I’m sure. And put in my notice that day and been doing it ever since.
Anette DeYoung:
So basically you were made for this, right? I mean obviously all the way from high school to today, it was just bound to happen eventually.
Paul Barnhurst:
Fortunately it did. I didn’t think it would ever happen, but I’ve always wanted to own my own business. So it’s kind of a dream come true.
Anette DeYoung:
Yes, it is. So looking back, I would say this has only been a few years, but I would say maybe looking back over the past 15 years or so, what would you say besides going out on your own was your biggest accomplishment?
Paul Barnhurst:
Oh, that’s a good question. I look back on my career. There are two that come to mind, but I’ll share one. So I just started a new role with the company. They just put a new ERP in place. They had just went from every business kind of being up their own portfolio where they were doing their own accounting and they created a shared service. And this company had done, at this point, I think 54 acquisitions over the prior 12 years. And a lot of those in the US. So there were 30 plus legal entities and a lot of different businesses. And we had no good insight because the reports weren’t very well built out when they first started the shared service and people were struggling. And so in my first few months I went through and figured out there was this one report they had built and I went ahead and I hadn’t really used Power Query or Power Pivot at this point.
I learned Power Query figured out Power Pivot could work. At first I was running it through an access database cause I didn’t know what I was doing. And I got this report working that allowed everybody to see their budget and the actuals all the way down to the transaction in this Excel report. And that was within a few months. And eventually the business realized cause people kept asking about it, that it was needed and they built it in some cubes. And it was used company wide, I like to call it. It was the low cost ghetto BI tool because they didn’t want to invest at the time. They had other projects that were taking priority. But that was one I was proud of. Cause four years later when I left, people were still using it.
Anette DeYoung:
Yeah, that is a great accomplishment. And that you really did change, I think the way that the business was run.
Paul Barnhurst:
It made a big difference. The accountants were using it, the business was using it, and it helped people better research and understand results without having to go through and look up journal entries in the general ledger, which takes forever and nobody wants to do.
Anette DeYoung:
It’s all that’s all that manual labor. Nobody wants to do it. And I think just because you created something that was used company-wide, a lot of times we’re trying to find ways in finance to teach the business to fish rather than always having to have the answer to the questions. And that’s where I think a lot of times we put in so many more hours because nobody has access to the data. They dunno how to use it or what it’s for. So I think creating something and allowing, educating those other business owners, if you will, that definitely seems to help so that you can actually for sure do things that I think are a little bit more for the business rather than just digging into data.
Paul Barnhurst:
And that’s where tools are so helpful when you have a good tech stack that can really bring light to those things. But sometimes you don’t have that and you have to figure out what works.
Anette DeYoung:
Yep, absolutely. That was it. The mother in invention is the mother, right? It’s necessity basically that whole work. Smarter, not harder. So we find ways
Paul Barnhurst:
Exactly. You’re like, I can’t continue to do it this way, so I’m going to find a better way. Sometimes just you feel like you have no choice. Right?
Anette DeYoung:
And then of course when you leave, somebody has to take that over. You were lucky that you actually had somebody to take that over. A lot of times. Either you leave a company and it kind of dies on the vine or you come into a company and now you have inherited something that somebody else’s brainchild and you have no idea how to use it.
Paul Barnhurst:
We got macros everywhere and code and you’re just like, all right, well if this breaks, I can’t run the report this month.
Anette DeYoung:
And so what do we do when that happens?
Paul Barnhurst:
Usually people start over most of the time.
Anette DeYoung:
So starting over, what would you say is your biggest, I would say, I don’t know, I’m not big on the word failure, but maybe your biggest chance to learn in your career.
Paul Barnhurst:
I’ve had plenty of those chances to learn. I like the way someone said it along those lines. I learned this when I was young. I was probably 20 when I first heard it might’ve been 21. Someone said, I’ve never had a failure. I’ve only had a learning experience.
Anette DeYoung:
Yes.
Paul Barnhurst:
And I really like that way of thinking about that. So I’d say one of my big failures or learning experiences. I was working for American Express and we supported the end customers. What we did is it was before I had worked in FP&A, we ran these programs where we incentivized the agents to sell certain suppliers. And so it was what we call preferred, our preferred vendors. And we do it as preferred rewards program. And this one had this totally different way they wanted to do it. So I set up the database and got it all working and ran all the reports and sent them and they paid them out. And then I realized, I think was I sent them that I had made a mistake in the weekly reports I had put in some code somewhere and ran everything backwards. So we were actually paying the worst performers.
Anette DeYoung:
Oh no.
Paul Barnhurst:
Instead of the best performers. It was a decent amount of money. Mean it wasn’t six figures, but it was five figures. And I had to bring that forward and explain. And that was a learning experience, just the importance of double and triple checking your work and making sure it’s right. And then we had to pay the right people out of our budget. Because the vendor had already paid all the wrong people. Absolutely. So that was not a fun one. That was probably one of the more painful ones. Then there was a time I loaded poll. Fortunately it was Poland, so it was a very small economic country force, but it got loaded all in the wrong currency for a budget one time. But at least it was a small country. I didn’t load the U.S all wrong.
Anette DeYoung:
That’s true. A little different then.
Paul Barnhurst:
So on a global basis it was barely even noticeable. But for that country it was obviously an issue.
Anette DeYoung:
It was an issue. So it mentioned double checking, triple checking, your work. What are some of maybe the tricks you’ve used that you’ve learned and used over the years for that exact reason? Because we know we live and breathe spreadsheets.
Paul Barnhurst:
When it comes to spreadsheets. I think a couple things, you know can put balances in place if there’s any actuals, make sure it ties. Whenever I would load something, I had it when the models were built outside of the system and then loaded to it and having it tied a check to go, okay, what I have in the model all get loaded. Is it all the right accounts? Because we’ve all had it. Someone adds an account and it’s not in your template. You’re like, all right, I didn’t know about that one. And you’re like, why doesn’t this tie? So first, having those checks throughout, if it’s a three statement model, does my balance sheet tie? I think checking, doing sanity checks, having some good principles like all right, I’m never going to hard code, I’m going to have a summary sheet. I’m going to have all my assumptions in clean places.
So I think the biggest thing that helps I’ve really learned, especially with starting the business over the last couple years, is the importance of using good design principles so that your model’s well structured and it’s easier to identify because the reality is, and we’ve all probably heard the statistics, what 90% of all Excel files have in error. Okay, yeah, that may be true, but how many of those are material? And that’s part of it. Cause you can do sanity checks. I think one good one I’ve heard with some people is put all your assumptions to zero, all your inputs and see if your model goes to zero. I, that’s one haven’t used, usually my models are very complex where it’s hard to do that. But I think with some models that’s a really good idea is going okay, that tells you you have a hard coded number, tells you something’s obviously not right if you’ve turned all your inputs to zero and you’re still getting an output. So I think sanity checks also help. You should know the business well enough to be able to look at something and say, is this realistic? Does this look right? Because there’s times if you know your job well, you should be able to spot material errors beyond just your checks. Some of that will just come from knowing the business.
Anette DeYoung:
So as somebody who’s just starting out in their career in finance, just because you said knowing the business, what’s a great way for those newcomers coming into the business world to get their lake and to start understanding the business when they don’t have the experience?
Paul Barnhurst:
Yeah, there’s a couple things. So one of the things I’ve done whenever I’ve gone into a new role is to try to figure out what are the industry kind of newsletters or magazines they’re out there and read them to start learning about the industry. If there’s competitors and they’re public, read their 10 K or their 10 Q, listen to an investor call. Beyond that, those things you can do on your own is talk to your boss about going out on a sales call or a sales meeting about listening in to a customer support call or if you’re a call center going for a day and listening to calls. So really making that effort to spend time with the business. Finally, I had a company where we were struggling to bring employees on board and we were bringing a bunch on board and I said, look, we need to change the hiring process.
And we went through and said, okay, the first week we really don’t want to have them do almost anything finance related. Let’s just set up meetings today with the kind of product, with the sales team, with the customer support, and just have them go out and learn the business. Then we’ll walk ’em through what we know about it. And so I spent quite a bit of time and found that really helped them come up to speed a lot quicker. So I recommend one, leaders have a program to onboard that’s about more than finance, focus it on the business in the early days. And two, if you’re the employee, take initiative if they’re not doing it both on your own and within the company.
Anette DeYoung:
No, that’s actually fantastic advice. Thanks. So what do you see as maybe the biggest opportunity and the biggest challenge going forward for FP&A professionals?
Paul Barnhurst:
Yeah, so I think industry, I think one of the biggest opportunities in some ways challenges and not, I won’t say just FP&A professional, I think finance in general as well is how are we going to use AI? How is technology going to continue to change things? We’ve all, I think everybody’s been shocked to see how quickly Chat GPT and these generative language learning models have started to be used. We’re seeing tools. I know Datarails released something their own, I know lots of other tools have, I know Google’s now playing catch up. So I think figuring out how you’re going to use that and incorporate it in your work is one thing that needs to be done. And I think that’s both an opportunity and in some ways it’s a challenge, but I think it’s mostly an opportunity. I think the other one is data, which goes both ways is how are we going to get better at working with data and ensuring we have good systems for data. Because there’s just an overload of data today.
Now what did I read every 18 months, the amount of data we’re producing right now is equal to all the data we produced prior in our history. So basically we’re doubling the world’s data every 18 months. We’ve been around how many years. It’s just amazing how quickly we’re adding data. And so I think being able to work with it, being comfortable, being able to ensure you can know what systems to access and how to get the numbers you need. And not only get the numbers you need, but I think just to actually I’d say more important is how do you take out the noise? How do you find the signal? What’s important? How do you present that in a way that you can influence the business? So I think those are really two things I see as both kind of some opportunities and challenges around them that I think will continue to get bigger. The use of AI and then managing data to drive the business forward because it’s easy to just analyze data forever. But if you’re not actually finding any insights or bringing recommendations, then you’re just basically goofing off, so to speak.
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Anette DeYoung:
So would you recommend as again, right in the FP&A career, whether you’re just starting out or even if you’ve been doing it a while, knowing your audience, so how would you recommend, right, so we do a lot of reports, a lot of analysis and a lot of output. So how would you cater almost like to the way that you the way that do your job to really think about who your audience is and maybe what they need because they’re all going to be a different.
Paul Barnhurst:
Yes. So I think there’s a couple different things, but I think the first thing it starts with is asking, even when you’re interviewing for a job, asking the person who’s interviewing the boss, what are your biggest challenges? What are your priorities? Because a business partner loves nothing more than for you to help solve their biggest pain point. So I think it starts with asking and understanding and then it goes much beyond that. So you build that relationship of trust, which I think is really important. You understand what their problems are and you solve some of them . Then the next thing is trying to think your business leaders when you’re putting presentations together. I was terrible for a lot of my career at this. Well I love numbers in a table, so I put a table in everything. No, most people don’t love a good table.
Really learning to be able to use visuals that clearly tell the story and that anyone can understand. And that’s something I’ve really learned a lot over the last few years. And I’ve bought a number of different books. I got one here, effective Data, storytelling, storytelling with Data, show me the numbers. And it’s really helped to read best practice. And now every time I put a graph together I really think, okay, what makes sense here? What will help me tell the story I need to tell instead of I like the way that looks and I can analyze that, not what the executive wants to see.
Anette DeYoung:
Yeah, and that’s funny because I actually do a bonus session for Christian when he does his FP&A bootcamp and we called it FP&A by Design. And that’s exactly what we’re talking about is how do you tell the story? You love the numbers, you love the table, you know exactly what it says, but give it to somebody who doesn’t understand finance. If they can’t understand what you’re presenting, then it’s no good. And so exactly we’re trying to teach that FP&A by design because there has to be purpose behind it rather than just a sheet full of numbers.
Paul Barnhurst:
Yeah, to totally agree.
Anette DeYoung:
So now I’m going to get a little personal
Paul Barnhurst:
Oh no, I’m in trouble.
Anette DeYoung:
No, I know. So what is something interesting about you that not many people know? You have a lot of followers on LinkedIn and I know you have a lot of followers on FP&A Today, so there’s a lot of people who know a lot about you, but give us something that maybe not so many people know.
Paul Barnhurst:
I’ll tell three. Okay. Because I usually use the combination of these when I do truths and a lie. But these will all be truths. Okay. I met Jimmy Carter once, this was 2008. I was in the UK in London, I was a Heathrow airport. I got on a flight and all of a sudden like the flight, some guy’s going around shaking everybody’s hand and I see two security guys, I could see the earpiece in the suit. I’m like, oh, those are secret service. And I look, I’m pretty sure that’s Jimmy Carter. And the guy next to me goes, who’s that? He was from the US as well, older than I am. I’m like, you really should know who Jimmy Carter is. And he went around the plane and he shook everybody’s hands before it took off.
Anette DeYoung:
Wow.
Paul Barnhurst:
So that was one. Second. And now I’m old and out of shape, but I used to run marathons. I ran my first marathon when I was 17 and I ran a time quick enough at that time to qualify for the Boston Marathon. So that was an accomplishment I’m pretty proud of. Let’s see, the third one is more embarrassing. So I’m getting ready for a race one time and I did have some spandex underneath. I had my running shorts and I pulled them off and didn’t realize it with my tracksuit. And I ran the race. I had a long single unfortunately, so it wasn’t very obvious. I ran the race and went to put back on my warmups and realized my shorts were sitting in them. So fortunately, like I said, I had a spandex underneath so I wasn’t like running in the brief, but it was still embarrassing nonetheless. So there you go. Not many people would know those things.
Anette DeYoung:
That is true. You can’t Google that and find that out. Right?
Paul Barnhurst:
No, fortunately none of those are on Google.
Anette DeYoung:
Sometimes we talk about, this was before the internet. We have no proof of any of this
Paul Barnhurst:
And it’s a good thing. Cause I did a lot of stupid things as a kid that I’m glad there’s not proof of nowadays. There’s proof of almost everything. You put something online and it’s never going away.
Anette DeYoung:
Ever, I know. So actually, and
Paul Barnhurst:
Kids don’t realize that,
Anette DeYoung:
So I know. So we actually do have a couple of questions from some of your followers. So I want to make sure to include these in our interview today. So I’m going to read this one here. It says, do you believe that in the near future we could see more CFOs, which have started as FP&A and they don’t have CPA certification.
Paul Barnhurst:
We’re already seeing it, we’re seeing more and more of that and I think we’ll continue to see it. Interesting to go back and listen. I had Casey Woo on, I think he was episode 38, roughly. And he came from investment banking, not a CPA background. He’s been a CFO I think five times now with startups. And he commented how the CFO is in the future going to be more like the chief Business intelligence officer. And what he meant by that is not, we’re going to do the technical work, but we really need to own the data. He referred how a modern, you could tell a modern CFO because they’ll put analytics under finance. And so we’re seeing more and more come from CFA because it’s become much more important to be that right hand man, to understand the commercial. Just understand the strategic, the analytics and a lot of those things fall under FP&A. Whereas you know can still come from the controller and the CPA background. And that’s a great background, but a lot of that’s being automated and viewed more transactional and governance and regulation and those type of things today where FP&A often gets a much closer view to the business. So I think that’s why you’re seeing more come from FP&A, but both routes have their benefits and you can become a CFO either way.
Anette DeYoung:
No, I completely agree. And so I think I was reading that there was a poll that was done with CFOs in that they see themselves as the most manual job in the C-suite. Would you agree with that?
Paul Barnhurst:
Unfortunately, yes, I would agree with that. I mean, I think, I was reading an article, I wrote an article about the use of AI and I mentioned in there I had found a chart that showed finances using AI, kind of that modern technology the least of all the departments. And I think there’s multiple different reasons for that. And then the second thing I think that’s a challenge is finance has to usually put together the data and the metrics across the entire business. They’re usually the ones who own a lot of those operational metrics reported at a company level, which means they’re getting into every single system. The sales guys typically just getting into Salesforce and maybe a marketing tool and the operations guys getting into an has two or three systems where sometimes FP&A, yeah, there’ll be a data warehouse sometimes some of that. But often they’re still getting into multiple different systems and that can be very manual because especially if it’s a very mature company that’s been around for a long time, they got a lot of older tools that don’t always speak well to each other.
Anette DeYoung:
So
Paul Barnhurst:
You’re laughing cause I think you can relate to that one
Anette DeYoung:
I definitely can relate to that one. So going back to not just the AI but technology itself in finance, it seems in that bell curve we are laggards when it comes to adopting especially new technology. Now I’m not saying all right, a lot of times startups, they’re going to be the first in line. But your point when you already have a business that’s been established, what do you think is really holding back the finance department as far as right, relying on tech to help with that day-to-day other than probably trust issues.
Paul Barnhurst:
So I think I would say probably three things if I was to think about it. First is just investment. Often finance is the last one to get it unless it’s regulatory. If I got to legally need it, if I want to go public, I know I got to fix some systems because the last thing I can afford is to restate my public earnings because my accounting system screwed something up or a person screwed it up because the system was a mess. And so I think that’s often where investment comes from. So I think there’s a challenge because if you’re a CEO, do you want to invest in a finance tool or you want to add that salesperson. Salesperson’s easier to quantify that sales system is often more direct. So I think there’s a little bit we said and the CFO looks at his limited dollars and usually is saying, okay, I can bandaid this, my team can manage it.
I want to make sure we hit that top line number so I’m going to invest it in the business first. So I think that’s one reason, I think that’s one challenge. I think some of the others is you look at finance and there’s the trust issue like you mentioned, but going beyond that kind of the black box idea, if we can’t get our hands on it and understand every little number, we are afraid to put it in place. And that’s why that’s one of the reasons Excel is so loved. Anyone can get their hands on Excel and look through it. And then I think in general, we often are sometimes are the busiest roles and we don’t invest enough time in our self-development. And I think in many ways that is often the biggest issue. I mean look at Power Query, it’s been around now since I think 2012 and I would bet of FP&A professionals, 10% are using it 20.
Anette DeYoung:
You think it’s that low?
Paul Barnhurst:
Yeah, I do.
Anette DeYoung:
Wow.
Paul Barnhurst:
I bet it’s under 50% for sure. At least in my experience, dynamic arrays, right? I mean I teach Excel and ask how many people know dynamic arrays in the room of 20 on average I might get two or three hands, I’ll ask how many know Power Query. If it’s a good group, half of them know it.
Anette DeYoung:
Okay.
Paul Barnhurst:
And this isn’t just FP&A, these are finance in general. I don’t think I’ve been in one room where the majority of te people are using it in a training yet. And so I think that’s a huge issue. If we’re not even using Excel effectively, why would we expect to be using all the other tools that are becoming available in addition to Excel to help us? So I think upskilling is the other area that really we need to do a better job.
Anette DeYoung:
Great. So speaking of Excel, you have to ask what is your favorite Excel function and why?
Paul Barnhurst:
I shouldn’t say Google sheets. I’m kidding. Let’s see, favorite Excel function. So my favorite feature in Excel definitely I would say it right now is Power Query. I love Power Query. And then beyond that really I’m going to go with a set of functions versus just one. So I’m going to cheat. Okay. But I figure I get to do that. It’s your show. It’s really the whole set of dynamic arrays. I love Unique, X lookup, the new set of arrays. I mean in fact, this will tell how big of a nerd I am. I bought this book and I know those people on the audio can’t see it, so I’ll read it, but it’s “Up Up and Array”. Tells you how much of a nerd I am that that’s the name of the book, dynamic Array Formulas for Excel 365 and Beyond. And I was reading it up, finishing it on my plane ride last week.
Anette DeYoung:
Don’t feel bad. You would not believe how many Excel books I had over my career too.
Paul Barnhurst:
Yes. So I love just some of the things you can do with all these new formulas now that used to be a nightmare.
Anette DeYoung:
So Excel has really come a long way, obviously from the beginning, which was a really long time ago. And I might date myself a little bit, but really my first job that I ever used spreadsheet software, it was not Excel.
Paul Barnhurst:
Well my in high school when I wrote my business plan, it was Lotus 123.
Anette DeYoung:
That was my first exposure, if you will, to spreadsheets. Excel obviously Excel’s edit. It’s been around a really, really long time. And we do see though that there are a lot of people that are moving to Google Sheets. How do you feel about FP&A using Google Sheets? As far, I know I see the look on your face, but you would not believe how many people I run into that tell me they’re a Google Sheets shop.
Paul Barnhurst:
Honestly, Google Sheets has benefits over Excel. Excel has benefits. I think it comes down to whatever makes the most sense for your company. I haven’t used Google Sheets a lot. I do like that it is cloud based it does have some unique formulas that Excel doesn’t for the most part, 90% of the formulas are the same i’d, one of the bigger strengths of Excel is it can handle a lot more data. Google was designed for the cloud and was originally designed, it wasn’t designed to handle a lot of data. And so some of the benefits are, hey, if you’re an overall Google shop, then it integrates really well. If it’s all cloud-based, there’s a little bit of better version control and security. Some of the things I know Datarails adds to Excel that you don’t get real well natively. I know they’ve done things to improve that, but I don’t think anyone feels like the collaborative experience in Excel is great.
We’re not going to write home about it. But it’s come a long way. It’s definitely a lot better. And so I think there’s pros and cons and you have to decide as a shop what makes sense for you. There’s even some new startup spreadsheets out there and I’ve seen some pretty cool things with some of them that do unique things and spreadsheets. The best thing is you can learn almost any spreadsheet and it’s going to transfer pretty well. 80, 90% if you learned on Google Sheets, it’s going to be very similar in Excel. And then if you decide to switch to equals. So I think that’s one of the biggest advantages. Spreadsheets in general versus planning tools. And I get Datarails planning tool that uses Excel, but I mean to have their own proprietary language, it may not transfer as easily. And so that’s one of the nice things about spreadsheets. So that that’s kind of where I stand. And I can see the benefits of both, but I don’t use Google much. I’d say the most I used it is I had to prepare a training for company and they were on Google. So I had take all my models and figure out how to build ’em in Google. It was the first time I’ve had to do something like that. So it took a while.
Anette DeYoung:
Oh I bet. And it’s funny because when Microsoft went from, was it 64,000 lines to now we’re well over a million, I think every finance and accountant professional out there like leaped for joy because we’re like, oh my gosh, we can actually bring all of this data in. But I don’t think Excel realized how much we started using Excel as a database. And that too kind of has its challenges, if you will. And that’s why we leverage other tech.
Paul Barnhurst:
Yes. Two funny, a couple funny stories around that. First is I decided to try, so right, there’s 1.2 million rows was like 16,000 columns I believe. So it works out 2 billion cells roughly. Something like that. I tried writing a sequence formula that’s an array to see if it could fill the entire worksheet. You can’t do it. There’s not enough memory on your computer. I think you would need, someone told me instead of 64 gig, you would need 1.2 terabytes of RAM to process a sheet that size, which just goes to show, yes, there is a huge number, but it’s just not realistic in a spreadsheet. It’s not a database to be trying to use every single row in column. And the second is one time I inherited a file from somebody that was 1.3 gigabytes in Excel.
They were using it as a database. They were doing the billing every month the last three years and getting a cohort churn analysis from it. And they weren’t saving it as an XLSB, they weren’t getting rid of old data. I mean we did just a few things that had it down to 300 meg. I say that loosely. And I was like going to, this process didn’t last long. I’m like, I can rebuild all this. You can get it in Power Query. I could probably halve the process. So it takes about two minutes each month and you don’t have these files. It take five minutes to open. But it never happened. They had some switches and rolled off that job. But that was one of my favorite when I’m like, it’s 1.3 gig, what are you doing?
Anette DeYoung:
That’s huge. That’s huge. And yes, when I talk to people, I always refer to my coworkers, Al and Frank, and those stand for Albatross and Frankenstein. And those are spreadsheets, right? Because yes, albatross says to your point, right, 1.3 meg, it’s huge because it just becomes unwielding at some point. But it started out as Frank where somebody, usually your CFO asks for something and to get it done quickly, you just do it not thinking that you’d ever have to do it again. And then you continue add onto it. Yeah, that’s great, but now can you do, now can you do, and then you get to that point where Frank turns into an albatross.
Paul Barnhurst:
I like that. I hadn’t heard it that way. I usually refer to ’em as Franken models. I’ve built a few of those over the years, but I hadn’t Frank and Al I, I’ll have to remember that. I don’t like that. But it’s very true. You keep bolting stuff on and you don’t think about the structure. Cause you just need to get it done. And before you know it, you got hard coded numbers, you got sheets with no name and hidden sheets and it’s just a big mess.
Anette DeYoung:
And before I left FP&A, that was kind of, they made fun of me. I actually have a placard because anytime somebody, I’m like, do you want it right or do you want it right now? Because you’re going to get something different.
Paul Barnhurst:
So true.
Anette DeYoung:
And to your point, especially in finance, we’re so busy all of the time and that’s why we don’t adopt is one of the reasons you said why we don’t adopt new tech, why we don’t adopt bringing in other solutions to help us to adopt. Remember why we just don’t have the time. And so we tend to just put it together because somebody needs it yesterday and that’s where that’s, that’s like step one, right? That’s where the problem started. That’s the root cause right there. So yeah, I have learned to kind of set those expectations because if you want it right now, you’re going to get a different output than if you just let me have the time to do it right.
Paul Barnhurst:
No, so true. I remember we had a new CFO and he would stand over the shoulder of people sitting there waiting for the report and the one girl finally turn to him and she’s like, you’re not helping things. If it’s going to take a little while, just go sit down and relax and I’ll bring it to you when I’m done. I need some time to ensure I get you the right numbers. But he would literally just stand, fortunately I was remote so he couldn’t do that to me. But he would stand over people’s shoulder and I’d see, I traveled just waiting. And then the one final just go calm down, relax for a minute and let me get you the right number.
Anette DeYoung:
We’ve all worked for those, right? For people just like that. Yeah. So that leads me into my last question, which again was a LinkedIn question. How do you feel FP&A improves business performance?
Paul Barnhurst:
Great, great question. And I think there’s a few ways, but I think one of the best ways it improves performance is to be there with the business, understand strategy and help ensure that the programs they have are resourced appropriately, that they’re realistic estimates to it and that there’s a solid strategy there to help the business go forward. And that’s why it’s so important to understand the business. I still remember, and this is one of the compliments I’m probably most proud of in my career, and I really, I’d worked really hard to get to know this business and I’ve been very involved. I had a business leader when I left. He goes, he’s like, you don’t just report the P&L, you help shape the P&L. And his idea was you’re helping influence the numbers by helping us make good decisions. And that’s really what it comes down to.
Ultimately, we’re stewards of capital under the office, under the CFO. And our job is to help ensure the business best uses that capital to help us grow. And if that’s being done, if we’re building good models, we’re providing good insights, then we can really add value. And that’s rewarding. I mean, for me, the other thing that’s extremely rewarding and has nothing to do with that is just training somebody, right? Seeing someone develop and grow. But that isn’t so much the business, but it can be in the sense of if you train good people, then you’re leaving the business better than when you came.
Anette DeYoung:
Great. So before we wrap up our podcast today, is there anything else that you would like to share with, I would say our view, but your viewers on FP&A Today?
Paul Barnhurst:
I’ll just say thank you for listening and it’s kind of been fun to be on the other side of the mic for a change and just appreciate how many people listen. I didn’t realize how big this would become and I totally love doing it and I’m grateful for everyone out there who takes the time to listen and keep the notes coming. I love to get the emails, the messages from people saying, Hey, I listen and this episode helped me with this or, I really appreciate what you’re doing. And so just a big thank you to the audience and a thank you to for playing hosts today. Yeah, it was my pleasure. Thanks Paul. Thanks Annette. Appreciate it.