Accounting vs FP&A: Which Path Gets You to CFO Faster?

[00:00:00] Which track gets you into the CFO seat? Faster Controllership or FPNA? I spent more than a decade in both roles. And now as A CFO, I can tell you this. The lip is hard no matter where you start. In this episode, I will share why the transition to CFO is so tough, what I learned in my own first year as A CFO, and what really positions you as the obvious choice for top corporate finance roles wherever you are in your career.

[00:00:32] Welcome back to the Diary of a CFO Podcast, a podcast where finance leaders share the lessons, challenges, and wins that shaped their careers as well as their organizations. I'm your host, CIA Kaman, and today I'm super delighted to have just me on this episode as I celebrating my first year as A CFO, I took some time to reflect.

[00:00:51] Over that year, I realized I had so, so much interactions with our CEO, our funders, the boards, investors, funders than I [00:01:00] ever did in my whole career. A few things became very clear to me. And that is first, there's a ton of content out there about how to be great in fp NA, how to be a strong controller, even what the ideal CFO looks like, should think like should be doing.

[00:01:16] But there's almost nothing about that transition to CFO. And that transition, I can tell you is brutal. I mean, brutal to you hear me. I knew it would be a challenge. Don't get me wrong, I thought I knew what to expect and I thought that my accounting and FBNA background will help me the most and I was wrong.

[00:01:37] And even though my schedule is crazy, that's why I'm still making time to make this podcast and create tools to help aspiring CFOs. 'cause I do believe with all the technology out there, all the knowledge out there, we should not be learning things like that the hard way. So that was the first thing that really clear to me how there is so much things about how you can become a great FPNA, how to be a strong controller, but not so [00:02:00] much about how you can make that transition from FPNL controllership into the CFO role.

[00:02:05] And the second thing that I also realized was that I could now see why I struggled for so long to first be seen as the obvious choice for the CFO to be seen as executive material. To have a seat at those stables where I, I, I felt like I could do where I belong, but for some reason I wasn't there. And that was despite my deep background in both accounting and FBNA and all the letters behind my name.

[00:02:31] I remember getting ready for my first in-person board meeting, and I barely slept the night before. I still barely sleep the night before board meeting anyway, but I was so stressed out the first time, and in my mind, I did everything I could to prepare. I had slick slides. I had reviewed every variance. I went into the accounting system myself to double check invoices, like he was full blown FPNA MIS controller mode, right?

[00:02:55] That VP of FPNA and controller was like. Fully came to the [00:03:00] surface as I was preparing for this board meeting, and then I got into the room. Um. Within minutes, it was clear that that wasn't what the board member cared about. They wanted judgment choices, risk, and I really felt like how you present a board meeting when you just fp and a is very different than when you're presenting, when you are the CFO.

[00:03:22] Because every time you open your mouth, it's a different expectations. Yes, I was prepared for this, but what it really did for me is really level set and made me realize that the transition was going to be somehow different than what I thought. When he came to that transition, and one thing I had to let go and I decided to let go after that meeting was this.

[00:03:48] I had to let go. I had to learn how to walk into a boardroom and let go of needing to prove I earned the seat. I [00:04:00] had to get comfortable in being in those boardrooms, in those rooms with these executives, these very talented, top notch board member, and let go of the need to be technically impressive because the need to be technically impressive, to be impressive in any way.

[00:04:18] Often gets in the way of actually being effective and focus on what matters most in those moments. So definitely letting go of that need to be impressive. Letting go of that need to show that I deserve to be there and really focus on what matters. And that's also when it clicked for me that the real challenge isn't choosing between accounting and fp and a or treasury or tax for that matter.

[00:04:44] The real challenge is rewiring how you think and how you operate. So you can successfully make that leap to finance executive leadership. And I wanna show you exactly what it looks like. So let me give you an example. [00:05:00] Let's say that sales comes in and wants to launch a new product with a different pricing structure, and as always sales and marketing, they're all excited and they say, we'll, unlock a new segment.

[00:05:09] Life will be great. After this, what will be the natural first reaction of a controller hearing that, oh Lord, these people again, how will we account for this? We probably need a new gl. What about revenue recognition? Ooh, that will break our spreadsheet. How about billing? We're already struggling to close month end, so.

[00:05:28] Mm-hmm. No, I'm not feeling this. That's how I thought actually when I was a controller, and sales and marketing will come in with this great idea about changing things. Now what about the head of fp NA? What about somebody in the fp NA role? When they hear the same scenario, what would they think? Hmm. Was this in the forecast already?

[00:05:48] Uh, if not, we probably need to update asap. Maybe it will help us close some of the variances we already have. I wonder what's the expecting margin? I probably need to talk to someone in the business so I can figure out what are the [00:06:00] things I need to include in my scenario and really update the model I have.

[00:06:04] Trying to find things like, when is it gonna break even? What would it mean for the next couple of quarters for the budget? So I'm on it now. What about the CFO? When they will hear something like this, they'll probably say, okay. Good idea, but what's the upside here? What are the risks? Did this move the company forward or are we just adding noise?

[00:06:25] How and where will we know if it's working? And how are we actually going to operationalize this so we can quickly pivot if we need to see the difference? And here's why. Controllers are trained and rewarded for compliance, accuracy, and internal controls. What my job was as a controller was to make sure that nothing breaks in the system, that the close was clean, so that FBNA treasury tax were happy and off my back.

[00:06:52] The auditors were satisfied at year end and any media review they had that the IRS and other regulators would not come knocking. [00:07:00] When I saw a new product, my reflex would be, what could go wrong? Is my accounting system ready? Is my Sage or QuickBooks or whatever system you're using, are the systems ready?

[00:07:12] And at the end of the day, can my team do this? Do we have the bandwidth to do this? 'cause we already feel so tight on time. And I can tell you as a controller when you think like that, it doesn't mean that it's a lack of ambition or strategic thinking, but the reality is for controllers, that's how their whole career has been built.

[00:07:34] And it was on making sure that the foundation of financial reporting is bulletproof for everyone else who depends on those numbers. Now, let's think about fp and a. FP and a. Leaders are measured on three things as well. Timeliness, forecast accuracy, and business partnering. So their credibility comes from understanding the business and having great financial models so that the management and board reporting are on point.

[00:07:58] So when they're hearing new [00:08:00] product, new pricing, what will be the instinct? Does it feel what we already share with management team, do I have the right information to update my forecast? Because their job is less about compliance and more about advisory. I lived in both of this. Like I said earlier, as a controller, I sat in a meeting and the only thing I could think about when product development was talking was like, we don't even have the system to do this.

[00:08:25] And then couple years later, I became finance manager at a larger pharmaceutical company now in A-F-P-N-A role. And I was like, Ooh, I wonder I can model this. I was excited. I was like, Ooh, maybe we can do this, we can do that. But now, as CFO, if I was CFO today at that company, my instinct will be completely different.

[00:08:44] And that is because in the CFO seat, you are forced to think differently. A CFO has to support the business, push for growth, but also think about how to protect from the bets that could sink the whole company long term. That means that [00:09:00] you are looking at the same product to the same, but the thinking changed.

[00:09:03] It's the same situation, but the thinking's going to change. You'll be wondering. Will this meaningfully change our trajectory or will they distract us from where we're trying to go? If it works, what is the upside? If it fails, how much downside are we exposed to and how can we limit that risk? Because the wiring here is really what shifts you from recorded or model it to how to serve and protect.

[00:09:31] How can you support the big moves that the company is doing? While shielding it, if those big moves do not work out. Ideally, that's the rewiring that needs to happen. So you can first be seen as executive material because the kind of questions, the kind of reactions you will have will be different. And that's really what will allow you to make the leap into executive leadership to VP director, C-F-O-C-A-O and up.

[00:09:57] And that wiring is [00:10:00] hard because a lot of. What we do are second nature. So you have to be very intentional and that's really what happened to me as well. So for years I thought that more credentials, more certifications were the answer. I even had, I was quoting the Wall Street Journal a couple years ago about how, you know, I was all about it and then realized that most of my superiors didn't even have all these others behind their name, but they were there.

[00:10:24] I was reporting to them. And so I had all these letters behind my name. It still wasn't enough to be seen as executive material, and that's what that wiring did. And for me, it started, the shift happened for me when I started hanging out with more CFOs, with more executives. I started asking myself, how would A CFO react here?

[00:10:45] By those interactions, I started to understand what are the things that they're concerned about, because as a controller, what you're concerned about is very different than the FPN Leader Treasury or marketing. It is really true for anywhere you are in the organization. And so when I [00:11:00] started pausing, when I would hear things like that and think, hmm.

[00:11:05] How would A CFO react here? Before I opened my mouth in any meeting, that's when people started seeing me differently. Once I started doing that, I noticed that I got pulled into bigger conversations and not just accounting cleanup or forecast updates. People began trusting me with judgment calls, and that's when I started being more comfortable around executives, more comfortable speaking up, and that's really what opened the door.

[00:11:29] For the CFO role when it finally opened for me. 'cause you have to show up that way in those interviews for the CEO and other people to want you on their team. So if you have spent your career proving the numbers, keeping the books clean and polishing models, I know it's second nature to stay there when something happens, even if you are A CFO, the business will probably need you to go left.

[00:11:50] But because of how you were wired to doing your former roles, you probably go right, because that's what you're used to. I'll give you another example. Let's say the month close and the [00:12:00] margins are down by 200 basis points, and it happens to be material in your company and nobody saw it coming. What will be the controller's first reaction?

[00:12:09] Oh no, we need to trace it back. Maybe we booked the, the overhead allocation wrong. Maybe. Oh, probably let's go through invoices or crawls and see where the culprit is. Because as a controller it's all about accuracy and control. The numbers look off. You instinctively go in the we to find out what happened, what invoice and all that, because you have been trained and rewarded.

[00:12:33] To make things that way, you are rewarded for certainty, for compliance, for no surprises. So the first thought that will come to you, where's the error? Where's the control gap? Did somebody break something in the policy or what happened? As a fp NA leader, when you hear the same thing, what would you think?

[00:12:51] Probably, okay, what drove this? Uh, let's rerun the model. Let's update the forecast and, and, and see how we can better explain this, because [00:13:00] that's not what we told people, and we should have been the one kind of predicting it could happen. Because in fp NA, their credibility comes from explaining results and forecasting the future.

[00:13:11] So the reflex is to diagnose the driver, talk to the business so they can be comfortable explaining why it happened. They're rewarded for those insight, for the models, for the storytelling, for the numbers. The first thought will be that because the anchor in analysis, because that's how they show value in influence budgets.

[00:13:32] A CFO may see the situation very differently because they'll probably wonder, Hmm, is this a one-time blip or is it a start of a trend? What levers do we have right now to protect the quarter? And if it's a trend, what is a structural change we need to do right now? Before it snowballs, and here is why.

[00:13:54] Again, CFO don't get rewarded for just explanation of explaining why. We have a [00:14:00] variance. They get judged on action. They need to decide quickly, okay, this happened. Okay. Is it noise or is it a signal? And if it's a signal, what do we need to do about it? What are the level we can immediately start looking at and preparing the company for the shift?

[00:14:15] And that's again, the rewiring I've been talking about, that needs to happen for that smoother transition to a CFO role. Because in the CFO seat, you can't just stop. When something like this happened to just find the error and get into the weeds of where is the invoice, who booked the allocation and all that, or think about the model.

[00:14:36] You'll likely have a team that can help you do that, but you have to think about what is a judgment call I need to do right now? Does this change a game? What do we need to do about it? Now? There's no time for modeling and all these things. You have to think decision wise. You have to be more decisive.

[00:14:55] You are not just an advisor to the business partner that owns a p and l, right? [00:15:00] Because maybe in your FPNA role, you are the business partner to the unit, division CEO, and. You don't really own the financials they do, but you help them out. As A CFO, you own the whole financial statement. So it's a different game and that's why the transition to CFO is just as hard, whether you have an fp and a background or an accounting background.

[00:15:20] So the question is, what fully prepares you for the CFO seat? Well, it isn't just being great at accounting or FPNA because these are stable stakes, right? So what really makes you the obvious choice is how fast you can rewire those instinct and be seen as executive material. That's why I built what I call the executive readiness framework.

[00:15:42] It is made of four pillars that boards and CEO and recruiters constantly look for executive substance, influence, brand, and network. And there are also two accelerators that accelerate that multiply all of it. And that is a rewiring we've been talking about [00:16:00] and. Alignment. So here's to give you a better overview of that framework, executive substance, that's the depth and the scope of your track record.

[00:16:09] What do you have to substantiate the level at which you want to operate your executive influence, your ability to shape decisions and drive outcomes? Your executive brand, how do you show up as an executive person, period in credible, whether it's online and offline, and then your network. Your executive network, the people who you know you trust, and it can open doors for you you didn't even know existed.

[00:16:37] And then you have the accelerators rewiring and the alignment, which we can cover later together. This is a package that takes you from technical expert to trusted finance executive. So I created an online assessment that you can take today to see how you score on the core pillars of this framework.

[00:16:56] It's called the CFO Readiness Scorecard. Don't worry. It's not [00:17:00] about testing whether you can reconcile the books or build a forecast, you already know how to do that. It's about showing whether you are being recognized at executive material. The score count is free and you can take it today. The link is in the show notes, or you can also access it at a diary of a CFO dot comes slash resources.

[00:17:19] Now, back to the question we started with, which track gets you to the CFO seat faster Controllership or FPNA. The truth is neither of them can give you speed on its own. If you come up your controllership to the accounting route, you have often seen as a safe payer of hands. You're technically strong.

[00:17:39] You are excellent at controls and compliance. The roadblock you will have to overcome is a perception of you not being strategic enough of you being too technical. Can you even think beyond month end close. Now, if you come to FBNA, you have a slight edge because you're often seen as more strategic because you're closer to the business and [00:18:00] you're probably being in those board meetings around executives.

[00:18:02] But the roadblock you'll need to overcome is your decisiveness and business acumen that are needed at that CFO level because again, you're no longer just advising and making recommendations. You have to own it because you own it. All you own the whole financial statements. Both paths build critical skills in the role, no doubt.

[00:18:23] Okay? So I do recommend if you can do a rotation in both functions if you early in your career, but you can always take some kind of course to help you understand the key concept in each. So for example, if you came to the accounting route, take a few courses to learn more about FB NA, trust some that are more practical and have case studies so you can learn.

[00:18:44] I am a guest. Faculty at the Wharton FPNA certificate will be biased to recommended, but there's also a lot of other courses out there like at CFI and other places. But the key here is that you do not need to quit your job and go take a [00:19:00] lower level job at different function to get that knowledge.

[00:19:03] There's. Plenty of resources for you to elevate what you already have. And the same goes for somebody in fp and a. You need to understand the basics of accounting and how the three core financial statement p and l balance sheet cash flow comes together so you can know better how to model forecast moving forward.

[00:19:20] But once you're in the CFO role. You are probably overseeing accounting and FPNA. So regardless of what, which route you came through, you'll have to manage at that level. So it's good to have that knowledge regardless. But the key, again, to remember here as we think about acceleration into the CFO role is that it's not the track itself.

[00:19:40] It's really how quickly you can rewire your instinct and show up as executive material. So don't forget to take the CFO Readiness assessment at the end. It will give you some recommendations on how you can improve the four pillars based on your score. Again, you can find it in the link in the show notes in all the podcast website at the [00:20:00] diary of a cfo.com/resources.

[00:20:02] I do have a challenge for you to today, and that is the next time you catch yourself reacting like a controller or an FBN or in treasury. I want you to stop and ask. How will the CFO respond here? If you don't know? Yes, there is charge GPT, but the best way to do it is through networking. Do you have any CFO friends?

[00:20:20] Even your current CFO? Watch how they react. Take notes. Because that's the rewiring that boards CEOs and executive recruiters are really watching for, especially when they're trying to hire a first time CFO. That was my case. I know for a fact. And that's what really is gonna make you the obvious choice for top finance roles, no matter where you started.

[00:20:42] Thanks again for tuning in. I'm super, super grateful that we are almost one year into the podcast at the time of the recording, celebrating my one year CFO Ary, if I can say, and incredibly grateful for the people I have in the podcast, how much I've learned and all the love you guys have been showing me, [00:21:00] even though you can still show, show some more love in terms of subscribing, liking, and resharing the content.

[00:21:07] See you soon. And that's it for today's episode of The Diary of a CFO. Thank you so much for tuning in. If you enjoy the show, don't forget to like, review, subscribe, and share with others. Our website is the diary of a cfo.com. That's where you can find all the episodes, access all the guest profiles, see their bios and their social media links.

[00:21:32] It is also the place where you can apply to be a guest. On the podcast and have information about how you can sponsor the show. As always, if there is any topic you would like me to cover in the future, just email me at ask at the diary of a cfo.com. Again, the email is ask at the diary of a cfo.com. See you soon.