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Accounting vs FP&A: Which Path Gets You to CFO Faster? · The Diary of a CFO

• 0:00
  Which track gets you into the CFO seat faster?
• 0:03
  Controllership or FP &A? I spent more than a
• 0:07
  decade in both roles, and now as a CFO, I can
• 0:09
  tell you this. The leap is hard no matter where
• 0:12
  you start. In this episode, I will share why
• 0:16
  the transition to CFO is so tough, what I learned
• 0:19
  in my own first year as a CFO, and what really
• 0:22
  positions you as the obvious choice for top corporate
• 0:25
  finance roles wherever you are in your career.
• 0:32
  Welcome back to the Diary of a CFO podcast, the
• 0:35
  podcast where finance leaders share the lessons,
• 0:37
  challenges, and wins that shape their careers
• 0:40
  as well as their organizations. I'm your host
• 0:42
  with Sia Kaman, and today I'm super delighted
• 0:44
  to have just me on this episode. As I celebrated
• 0:48
  my first year as a CFO, I took some time to reflect.
• 0:51
  Over that year, I realized I had so, so much
• 0:55
  interactions with our CEO, our founders, the
• 0:58
  boards, investors, funders, than I ever did in
• 1:00
  my whole career. a few things became very clear
• 1:04
  to me. And that is, first, there's a ton of content
• 1:08
  out there about how to be great in FB &A, how
• 1:10
  to be a strong controller, even what the ideal
• 1:13
  CFO looks like, should think like, should be
• 1:15
  doing. But there's almost nothing about that
• 1:19
  transition to CFO. And that transition, I can
• 1:22
  tell you, is brutal. I mean, brutal. You hear
• 1:25
  me? I knew it would be a challenge. Don't get
• 1:28
  me wrong. I thought... I knew what to expect
• 1:31
  and I thought that my accounting and FPNA background
• 1:34
  will help me the most. And I was wrong. And even
• 1:38
  though my schedule is crazy, that's why I'm still
• 1:40
  making time to make this podcast and create tools
• 1:43
  to help aspiring CFOs. Cause I do believe with
• 1:46
  all the technology out there, all the knowledge
• 1:47
  out there, we should not be learning things like
• 1:49
  that the hard way. So that was the first thing
• 1:52
  that really clear to me how there is so much
• 1:55
  things about how you can become a great FPNA,
• 1:57
  how to be a strong controller. but not so much
• 2:00
  about how you can make that transition from FP
• 2:02
  &L controllership into the CFO role. And the
• 2:05
  second thing that I also realized was that I
• 2:08
  could now see why I struggled for so long to
• 2:12
  first be seen as the obvious choice with the
• 2:14
  CFO role, to be seen as executive material, to
• 2:18
  have a seat at those tables where I felt like
• 2:21
  I could do where I belong, but for some reason
• 2:23
  I wasn't there. And that was despite my deep
• 2:26
  background in both accounting and FBNA and all
• 2:29
  the letters behind my name. I remember getting
• 2:32
  ready for my first in -person board meeting and
• 2:35
  I barely slept the night before. I still barely
• 2:37
  sleep in that before board meeting anyway, but
• 2:40
  I was so stressed out the first time. And in
• 2:42
  my mind, I did everything I could to prepare.
• 2:44
  I had slick slides. I had reviewed every variance.
• 2:48
  I went into the accounting system myself to double
• 2:51
  check invoices. Like it was full blown FPNA missed
• 2:54
  controller mode, right? That VP of FPNA and controller
• 2:58
  was like fully came to the surface as I was preparing
• 3:01
  for this board meeting. And then I got into the
• 3:04
  room. Within minutes, it was clear that that
• 3:10
  wasn't what the board member cared about. They
• 3:13
  wanted judgment, choices, risk. And I really
• 3:15
  felt like how you present a board meeting when
• 3:18
  you just FP &A is very different than when you're
• 3:21
  presenting when you are the CFO, because every
• 3:23
  time you open your mouth, it's a different expectations.
• 3:27
  Yes, I was prepared for this, but what it really
• 3:29
  did for me is really level set and made me realize
• 3:33
  that the transition was going to be somehow different
• 3:36
  than what I thought. when it came to that transition.
• 3:40
  And one thing I had to let go and I decided to
• 3:44
  let go after that meeting was this. I had to
• 3:50
  let go. I had to learn how to walk into a boardroom
• 3:55
  and let go of needing to prove I earned the seat.
• 3:59
  I had to get comfortable. in being in those boardrooms,
• 4:04
  in those rooms with these executives, these very
• 4:07
  talented, top -notch board member, and let go
• 4:10
  of the need to be technically impressive. Because
• 4:14
  the need to be technically impressive, to be
• 4:16
  impressive in any way, often gets in the way
• 4:20
  of actually being effective and... focus on what
• 4:24
  matters most in those moment. So definitely letting
• 4:27
  go of that need to be impressive, letting go
• 4:29
  of that need to show that I deserve to be there
• 4:32
  and really focus on what matters. And that's
• 4:35
  also when it clicked for me that the real challenge
• 4:38
  isn't choosing between accounting and FP &A.
• 4:41
  or treasury or tax for that matter. The real
• 4:45
  challenge is rewiring how you think and how you
• 4:49
  operate so you can successfully make that leap
• 4:53
  to finance executive leadership. And I want to
• 4:55
  show you exactly what it looks like. So let me
• 4:58
  give you an example. Let's say that sales comes
• 5:01
  in. and wants to launch a new product with a
• 5:03
  different pricing structure. And as always sales
• 5:05
  and marketing, they're all excited and they say
• 5:08
  we'll unlock a new segment. Life will be great
• 5:10
  after this. What would be the natural first reaction
• 5:14
  of a controller hearing that? Oh Lord, these
• 5:17
  people again. How will we account for this? Oh,
• 5:20
  we probably need a new GL. What about revenue
• 5:23
  recognition? Oh, that will break our spreadsheet.
• 5:25
  How about billing? We're already struggling to
• 5:27
  close month 10. So no, I'm not filling this.
• 5:31
  That's how I thought, actually, when I was a
• 5:33
  controller and sales and marketing would come
• 5:36
  in with this great idea about changing things.
• 5:38
  Now, what about the head of FP &A? What about
• 5:41
  somebody in an FP &A role? When they hear the
• 5:44
  same scenario, what would they think? Hmm. Was
• 5:46
  this in the forecast already? If not, we probably
• 5:49
  need to update ASAP. Maybe it will help us close
• 5:52
  some of the variances we already have. I wonder
• 5:55
  what's the expected margin. I probably need to
• 5:57
  talk to someone in the business so I can figure
• 5:58
  out what are the things I need to include in
• 6:01
  my scenario and really update the model I have.
• 6:04
  Trying to find things like when is it going to
• 6:06
  break even, what would it mean for the next couple
• 6:08
  quarters, for the budget, so I'm on it. Now,
• 6:11
  what about the CFO? When they will hear something
• 6:14
  like this, they'll probably say, okay, good idea.
• 6:18
  But what's the upside here? What are the risks?
• 6:21
  Did this move the company forward or are we just
• 6:24
  adding noise? How and where will we know if it's
• 6:27
  working and how are we actually going to operationalize
• 6:31
  this so we can quickly pivot if we need to? See
• 6:36
  the difference. And here's why. Controllers are
• 6:39
  trained and rewarded for compliance, accuracy,
• 6:41
  and internal controls. What my job was as a controller
• 6:44
  was to make sure that nothing breaks in the system,
• 6:48
  that the clothes was clean so that FB &A treasury
• 6:50
  tax were happy. And off my back, the auditors
• 6:53
  were satisfied at year end and any media review
• 6:56
  they had that the IRS and other regulators would
• 6:59
  not come knocking. When I saw a new product,
• 7:02
  my reflex would be what could go wrong? Is my
• 7:07
  accounting system ready? Is my Sage or QuickBooks
• 7:09
  or whatever system you're using, are the systems
• 7:11
  ready? And at the end of the day, can my team
• 7:15
  do this? Do we have the bandwidth to do this?
• 7:18
  Because we already feel so tight on time. And
• 7:22
  I can tell you, as a controller, when you think
• 7:24
  like that, it doesn't mean that it's a lack of
• 7:27
  ambition or strategic thinking. But the reality
• 7:30
  is for controllers, that's how their whole career
• 7:33
  has been built. And it was on making sure that
• 7:36
  the foundation of financial reporting is bulletproof
• 7:39
  for everyone else who depends on those numbers.
• 7:43
  Now let's think about FP &A. FP &A leaders are
• 7:46
  measured on three things as well, timeliness,
• 7:48
  forecast accuracy, and business partnering. So
• 7:51
  their credibility comes from understanding the
• 7:53
  business and having great financial models so
• 7:56
  that the management and board reporting are on
• 7:58
  point. So when they hear a new product, new pricing,
• 8:01
  what will be their instinct? Does it feel what
• 8:03
  we already share with management team? Do I have
• 8:06
  the right information to update my forecast because
• 8:08
  their job is less about compliance and more about
• 8:11
  advisory? And I lived in both of this, like I
• 8:14
  said earlier, as a controller. I sat in a meeting
• 8:18
  and the only thing I could think about when product
• 8:21
  development was talking was like, we don't even
• 8:23
  have the system to do this. And then a couple
• 8:26
  of years later, I became finance manager at a
• 8:29
  larger pharmaceutical company, now in an FP &A
• 8:32
  role. And I was like, Ooh, I wonder how I can
• 8:35
  model this. I was excited. I was like, Ooh, maybe
• 8:37
  we can do this. We can do that. But now as CFO,
• 8:40
  if I was CFO today at that company, my instinct
• 8:42
  will be completely different. And that is because
• 8:45
  in the CFO seat, you are forced to think differently.
• 8:49
  A CFO has to support the business push for growth,
• 8:53
  but also think about how to protect from the
• 8:56
  bets that could sink the whole company long term.
• 8:59
  That means that you're looking at the same product,
• 9:01
  the same, but the thinking changed. It's the
• 9:04
  same situation, but the thinking is going to
• 9:06
  change. You'll be wondering, will this meaningfully?
• 9:10
  change our trajectory or will they distract us
• 9:12
  from where we're trying to go? If it works, what
• 9:15
  is the upside? If it fails, how much downside
• 9:19
  are we exposed to and how can we limit that risk?
• 9:23
  Because the wiring here is really what shifts
• 9:26
  you from record it or model it to how to serve
• 9:30
  and protect. How can you support the big moves
• 9:33
  that a company is doing while shielding it if
• 9:36
  those big moves do not work out? Ideally, that's
• 9:40
  the rewiring that needs to happen so you can
• 9:44
  first be seen as executive material because the
• 9:46
  kind of questions, the kind of reactions you
• 9:48
  will have will be different. And that's really
• 9:51
  what will allow you to make the leap into executive
• 9:53
  leadership, to VP director, CFO, CAO and up.
• 9:57
  And that wiring is hard because a lot of what
• 10:01
  we do are second nature. So you have to be very
• 10:05
  intentional and that's really what happened to
• 10:09
  me as well. So for years, I thought that more
• 10:11
  credentials, more certifications were the answer.
• 10:14
  I even had, I was quoting the Wall Street Journal
• 10:16
  a couple of years ago about how, you know, I
• 10:18
  was all about it and then realized that most
• 10:20
  of my superiors didn't even have all these letters
• 10:22
  behind their name, but they were there. I was
• 10:25
  reporting to them. And so I had all these letters
• 10:27
  behind my name. It still wasn't enough to be
• 10:30
  seen as executive material. And that's what that
• 10:33
  wiring did. And for me, it started, the shift
• 10:36
  happened for me when I started hanging out with
• 10:39
  more CFOs, with more executives. And I started
• 10:41
  asking myself, how would a CFO react here? By
• 10:45
  those interactions, I started to understand,
• 10:47
  what are the things that they're concerned about?
• 10:50
  Because as a controller, what you're concerned
• 10:51
  about is very different than the FPM, either
• 10:53
  treasury or marketing. It's really true for anywhere
• 10:57
  you are in the organization. And so when I started
• 11:00
  pausing, When I would hear things like that and
• 11:03
  think, hmm, how would a CFO react here? Before
• 11:07
  I opened my mouth in any meeting, that's when
• 11:10
  people started seeing me differently. Once I
• 11:12
  started doing that, I noticed that I got pulled
• 11:14
  into bigger conversations and not just accounting,
• 11:18
  cleanup, or forecast updates. People began trusting
• 11:20
  me with judgment calls. And that's when I started
• 11:23
  being more comfortable around executives, more
• 11:26
  comfortable speaking up. And that's really what
• 11:28
  opened the door. for the CFO role when he finally
• 11:31
  opened for me, because you have to show up that
• 11:33
  way in those interviews for the CEO and other
• 11:35
  people to want you on their team. So if you have
• 11:38
  spent your career proving the numbers, keeping
• 11:40
  the books clean and polishing models, I know
• 11:43
  it's second nature to stay there. When something
• 11:46
  happens, even if you are a CFO, the business
• 11:49
  will probably need you to go left. But because
• 11:51
  of how you were wired to doing your former roles,
• 11:53
  you probably go right because that's what you
• 11:55
  used to. I'll give you another example. Let's
• 11:58
  say the month closed and the margins are down
• 12:01
  by 200 basis point and it happens to be material
• 12:04
  in your company and nobody saw it coming. What
• 12:07
  will be the controller's first reaction? Oh no,
• 12:10
  we need to trace it back. Maybe we booked the
• 12:13
  overhead allocation wrong. Maybe, oh, probably
• 12:16
  let's go through invoices or crawls and see where
• 12:19
  the culprit is. Because as a controller, it's
• 12:22
  all about accuracy and control. If the numbers
• 12:25
  look off, you instinctively go in the wheat to
• 12:27
  find out what happened, what invoice and all
• 12:30
  that, because you have been trained and rewarded
• 12:32
  to make things that way. You are rewarded for
• 12:35
  certainty, for compliance, for no surprises.
• 12:38
  So the first thought that will come to you, where
• 12:40
  is the error? Where is the control gap? Did somebody
• 12:43
  break something in the policy or what happened?
• 12:47
  As a FP &A leader, when you hear the same thing,
• 12:50
  What would you think? Probably, okay, what drove
• 12:52
  this? Let's rerun the model, let's update the
• 12:56
  forecast and see how we can better explain this
• 12:59
  because that's not what we told people and we
• 13:02
  should have been the one kind of predicting it
• 13:04
  could happen. Because in FP &A, their credibility
• 13:07
  comes from explaining results and forecasting
• 13:10
  the future. So the reflex is to diagnose the
• 13:13
  driver, talk to the business so they can be comfortable
• 13:16
  explaining why it happened. They're rewarded
• 13:19
  for those insights, for the models, for the storytelling,
• 13:22
  for the numbers. The first thought will be that
• 13:25
  because they anchor in analysis because that's
• 13:29
  how they show value and influence budgets. A
• 13:33
  CFO may see the situation very differently because
• 13:36
  they'll probably wonder, hmm, is this a one -time
• 13:40
  blip or is it a start of a trend? What levers
• 13:44
  do we have right now to protect the quarter?
• 13:47
  And if it's a trend, what is a structural change
• 13:49
  we need to do right now before it snowballs?
• 13:53
  And here is why. Again, CFO don't get rewarded
• 13:56
  for just explanation of explaining why we have
• 13:59
  a variance. They get judged on action. They need
• 14:02
  to decide quickly, OK, this happened. OK, is
• 14:06
  it noise or is it a signal? And if it's a signal,
• 14:08
  what do we need to do about it? what at the level
• 14:10
  we can immediately start looking at and preparing
• 14:13
  the company for the shift. And that's again,
• 14:17
  the rewiring I've been talking about that needs
• 14:19
  to happen for that smoother transition to a CFO
• 14:23
  role. Because in the CFO seat, you can't just
• 14:26
  stop when something like this happened to just
• 14:29
  find the error and get into the weeds of where
• 14:31
  is the invoice, who booked the allocation and
• 14:33
  all that. Or think about the model. You likely
• 14:36
  have a team that can help you do that, but You
• 14:39
  have to think about what is a judgment call I
• 14:43
  need to do right now. Does it change the game?
• 14:46
  What do we need to do about it now? There's no
• 14:48
  time for modeling and all these things. You have
• 14:51
  to think decision -wise. You have to be more
• 14:54
  decisive. You are not just an advisor to the
• 14:57
  business partner that owns a P &L, right? Because
• 15:00
  maybe in your FP &A role, you are the business
• 15:03
  partner to a unit division CEO, and you don't
• 15:06
  really own the financials they do. but you help
• 15:09
  them out. As a CFO, you own the whole financial
• 15:11
  statements, so it's a different game. And that's
• 15:13
  why the transition to CFO is just as hard whether
• 15:17
  you have an FP &A background or an accounting
• 15:19
  background. So the question is, what fully prepares
• 15:23
  you for the CFO seat? Well... It isn't just being
• 15:27
  great at accounting or FP &A because these are
• 15:29
  stable stakes, right? So what really makes you
• 15:31
  the obvious choice is how fast you can rewire
• 15:35
  those instincts and be seen as executive material.
• 15:38
  And that's why I built what I call the executive
• 15:41
  readiness framework. It is made of four pillars
• 15:44
  that boards and CEO and recruiters constantly
• 15:47
  look for. Executive substance. influence, brand,
• 15:51
  and network. And there are also two accelerators
• 15:54
  that accelerate, that multiply all of it. And
• 15:57
  that is the rewiring we've been talking about
• 15:59
  and alignment. So here's to give you a better
• 16:03
  overview of that framework. Executive substance.
• 16:06
  That's the depth and the scope of your track
• 16:09
  record. What do you have to substantiate the
• 16:12
  level at which you want to operate? Your executive
• 16:14
  influence Your ability to shape decisions and
• 16:19
  drive outcomes. Your executive brand. How do
• 16:22
  you show up as an executive person, period, incredible,
• 16:27
  whether it's online and offline, and then your
• 16:30
  network, your executive network. The people who
• 16:33
  you know, you trust, and it can open doors for
• 16:35
  you you didn't even know existed. And then you
• 16:38
  have the accelerators, the rewiring, and the
• 16:40
  alignment, which we can cover later. Together,
• 16:44
  this is a package that takes you from technical
• 16:46
  expert to trusted finance executive. So I created
• 16:50
  an online assessment that you can take today
• 16:52
  to see how you score on the core pillars of this
• 16:55
  framework. It's called the CFO Readiness Scorecard.
• 16:59
  Don't worry, it's not about testing whether you
• 17:00
  can reconcile the books or build a forecast.
• 17:02
  You already know how to do that. It's about showing
• 17:05
  whether you are being recognized as executive.
• 17:08
  material. The scorecard is free and you can take
• 17:11
  it today. The link is in the show notes, or you
• 17:14
  can also access it at the diary of a CFO that
• 17:17
  comes last resources. Now back to the question
• 17:20
  we started with, which track gets you to the
• 17:24
  CFO seat faster? Controllership or FPNA? The
• 17:28
  truth is neither of them can give you speed on
• 17:31
  its own. If you come off your controllership
• 17:34
  to the accounting route, you have often seen
• 17:36
  as a safe pair of hands. You're technically strong,
• 17:39
  you're excellent at controls and compliance.
• 17:42
  The roadblock you will have to overcome is a
• 17:44
  perception of you not being strategic enough,
• 17:48
  of you being too technical. And can you even
• 17:51
  think beyond month and close? Now, if you come
• 17:54
  to FBNA, you have a slight edge because you're
• 17:56
  often seen as more strategic because you're closer
• 17:58
  to the business. And you probably been in those
• 18:01
  board meetings around executives, but the roadblock
• 18:03
  you will need to overcome is your decisiveness
• 18:06
  and business acumen that are needed at that CFO
• 18:10
  level. Because again, you're no longer just advising
• 18:12
  and making recommendations. You have to own it
• 18:14
  because you own it all. You own the whole financial
• 18:18
  statements. Both paths build critical skills
• 18:21
  in the role. No doubt. Okay. So. I do recommend
• 18:25
  if you can, do a rotation in both functions if
• 18:29
  you're early in your career, but you can always
• 18:31
  take some kind of course to help you understand
• 18:33
  the key concept in H. So for example, if you
• 18:36
  came to the accounting route, take a few courses
• 18:38
  to learn more about FP &A, try some that are
• 18:41
  more practical and have case studies so you can
• 18:43
  learn. I'm a guest faculty at the Wharton FPNA
• 18:47
  certificate, will be biased to recommend it,
• 18:50
  but there's also a lot of other courses out there
• 18:53
  like at CFI and other places. But the key here
• 18:57
  is that you do not need to quit your job and
• 18:59
  go take a lower level job at a different function
• 19:02
  to get that knowledge. There's plenty of resources
• 19:04
  for you to elevate what you already have. And
• 19:07
  the same goes for somebody in FP &A. You need
• 19:10
  to understand the basics of accounting and how
• 19:12
  the three core financial statements, P &L, balance
• 19:14
  sheet, cash flow comes together so you can know
• 19:17
  better how to model forecasts moving forward.
• 19:20
  But once you're in the CFO role, you are probably
• 19:22
  overseeing accounting. NFB &A. So regardless
• 19:25
  of which route you came through, you will have
• 19:27
  to manage at that level. So it's good to have
• 19:30
  that knowledge regardless. But the key again
• 19:33
  to remember here as we think about acceleration
• 19:36
  into the CFO role is that it's not the track
• 19:39
  itself. It's really how quickly you can rewire
• 19:43
  your instinct and show up as executive material.
• 19:46
  So don't forget to take a CFO readiness assessment.
• 19:49
  At the end, it will give you some recommendations
• 19:51
  on how you can improve the four pillars based
• 19:54
  on your score. Again, you can find it in the
• 19:56
  link in the show notes and all the podcast website
• 19:59
  at the diary of a CFO that comes slash resources.
• 20:02
  I do have a challenge for you today, and that
• 20:05
  is the next time you catch yourself reacting
• 20:07
  like a controller or an FB, I know in treasury,
• 20:10
  I want you to stop and ask. How would the CFO
• 20:13
  respond here? If you don't know, yes, there is
• 20:15
  charging PT, but the best way to do it is through
• 20:17
  networking. Do you have any CFO friends, even
• 20:21
  your current CFO? Watch how they react. Take
• 20:24
  notes. Because that's the rewiring that board
• 20:27
  CEOs and executive recruiters are really watching
• 20:30
  for, especially when they're trying to hire a
• 20:33
  first -time CFO. That was my case. I know for
• 20:35
  a fact. And that's what really is going to make
• 20:38
  you the obvious choice for top finance roles,
• 20:41
  no matter where you started. Thanks again for
• 20:43
  tuning in. I'm super, super grateful that we
• 20:47
  are almost one year into the podcast at the time
• 20:50
  of the recording. Celebrating my one year CFO
• 20:53
  -versary, if I can say, and incredibly grateful
• 20:55
  for the people I have in the podcast, how much
• 20:57
  I've learned and all the love you guys have been
• 20:59
  showing me, even though you can still show some
• 21:01
  more love in terms of subscribing, liking, and
• 21:05
  resharing the content. See you soon. And that's
• 21:10
  it for today's episode of the Diary of a CFO.
• 21:13
  Thank you so much for tuning in. If you enjoyed
• 21:16
  the show, don't forget to like, review, subscribe,
• 21:19
  and share with others. Our website is thediaryofacfo
• 21:23
  .com. That's where you can find all the episodes,
• 21:27
  access all the guest profiles, see their bios
• 21:29
  and the social media links. It is also the place
• 21:33
  where you can apply to be a guest on the podcast
• 21:35
  and have information about how you can sponsor
• 21:38
  the show. As always, if there is any topic you'd
• 21:41
  like me to cover in the future, just email me
• 21:45
  at ask at the diary of a CFO .com. Again, the
• 21:48
  email is ask at the diary of a CFO .com. See
• 21:52
  you soon.