How FP&A Professionals Can Bridge the Gap Between Finance and Operations with Kathy Svetina

What does great FP&A look like?

Great FP&A is someone who is business savvy but also has when you went.

From, you know, Fortune 500 to all of a sudden I'm helping small companies doing FP&A. What was the hardest adjustment?

The hardest adjustment truly was when you go on your own. Yes, you're good at doing finance, but you have never done sales. You have never done marketing. You truly have not won the business by itself.

So why is FP&A in such a great position to really impact the business and help it be healthier?

I cannot think of any other department that could easily have a conversation with a sales leader, with the cfo, with a customer rep. What is the number.

One technical skill FP and A professional.

Should master Excel and power Query as we've talked about, what's the number one soft skill? Oh, for sure. Communication.

Any parting advice you want to leave the audience being a better business partner.

Anything around FP and A We've talked a lot about of how you can be a better FP and a person and really is.

This week's title sponsor of FP&A tomorrow is Kpop. And now a message from our sponsor.

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Welcome to FP&A tomorrow where we delve into the world of financial planning and analysis, examining its current state and future prospects. I'm your host, Paul Barnhurst, AKA the FPA Guy, and I will be guiding you through the evolving landscape of spna. Each week we're joined by thought leaders, industry experts and practitioners who share their insights and experiences, helping us navigate today's complexities and tomorrow's uncertainties. This week, I'm thrilled to welcome to the show. Kathy. Kathy Civitino. Welcome to the show, Kathy.

Thanks so much for having me on, Paul. Super excited to be here.

I know it's been a while. What was it, two years ago?

Almost now it feels like yeah, it has been almost two years.

We're going to have to catch up more often. But let me give a little bit about Kathy's Background and then we'll jump into some questions. So Kathy shares a little bit about how many business owners that she works with find themselves in deep waters when it comes to their finances. That's a nice way of saying they probably hate them and don't want to deal with them. They've got the numbers, but connecting the dots to map out their business's future, that's where it gets tricky. But what if they could have someone that helps them navigate these unknown financial waters and give advice tailored for them? That's where Kathy comes in. She's the founder of Newcastle Finance, a company offering fractional CFO services to businesses with 10 million plus in annual revenue for nearly 14 years. She did senior level FPA for Fortune 500 companies and I feel her pain. I did quite a few years too with Fortune 500. So Kathy's seen how. How it should work, right? How the right insights can propel a company forward. She started Newcastle Finance because she wanted to bring that big league financial savvy to smaller companies. She's all about empowering business owners to make smart decisions about their financials and set their business on a path to not just survive, but thrive. Wow. I'm reading this. I might hire you. Yeah, I could use a cfo. All right. Her guiding principle is that a business should be both healthy and sustainable. So that's a little bit about Kathy. So after having read all that, when I ask you our first question, what does great FP and A look like in your mind? What is great FP&A?

In my mind, grade FP&A is someone who is business savvy but also has the experience in accounting and finance. I think of an FP and a person as almost an internal consultant in the business that has the financial and the accounting background. So essentially someone who's connecting dots from sales, marketing, operations and translating that into the financial impact of the company and really understanding the business so that it can help the business grow in a healthy, sustainable way. And I think the, the majority of where the FP and A can really provide value is to really, really, truly understand the business.

I think that's well said. It's really understanding the business. When you say understanding the business is understanding the operations, what does that mean to you? Understand the business.

So as I've said, you know the business. There's a lot of things that happen in the business and one of my mantras is that everything that happens in the business is eventually going to end up in finances. And what do I mean by that? We can Go down the list. For example, the way how you run the operations, if the operations are a mess, if there's a chaos, if there's no process, there's no systems, everyone's like, you know, no one knows what the, if the left hand's doing what the right hand's doing, that is going to impact the finances because you're going to have a lot of inefficiencies. You're going to have to probably be hiring more people than you need to cover for that. So that's on that side. In terms of the hr, of course, if the HR infrastructure is not built correctly or if you know the culture is not there in the business the way how it should be, you're going to have people leave the business and you're going to have a lot of recruiting costs. There's going to be again inefficiencies and sales and marketing. If your sales and marketing are not operating the way they should be, you're going to have a real revenue impact. So that's what I mean, that knowing all of these little and big things that affect the business and understanding it, how it affects the, the financials, the P and L, the balance sheet and truly, truly getting the understanding of it, it's so worth it to someone who is an FPA because not only it's going to be better for them to do the forecasting, the budgeting, but they're going to have a real seat in the business versus just creating reports and they go to Never Neverland because no one looks at them.

Come on. I always like when my reports went to the round by a basket.

Yeah, I did too. It was the best thing.

I still remember early in my career seeing reports that were like this thick and you're like, nobody reads that.

Yeah.

And if they do, you need to give them a real job because you're not getting much benefit if all they're doing is reading that. So I'm with. You know, I never wanted to be in like just a corporate role in finance because it's a lot of reporting and roll ups. I always wanted to be in the business unit, working with the business, understanding the business and trying to help them make better decisions. So what ultimately led to you starting your own business? Why, why did you want to go out on your own versus working for those Fortune 500 companies?

Well, as you have alluded to this, you know, FP&A and Fortune 500 companies is really, it's a lot of reporting. The places that I have been at, it was just didn't feel like the right place for me because it doesn't feel like you can really make an impact as much as you can in smaller companies because there's a lot of politics as well. And I am not a fan of corporate politics. And I have realized that after I left my last corporate job that I just cannot function in this type of environment anymore. And I'm also a builder and I, I really, really enjoy building something from scratch. Like when I was in one of my jobs in, in these big companies, they gave me this entire system to build from scratch. And I was the happiest. I was as happy as a clam building this thing from ground because I felt like I was really making an impact and I was making an impact. And that is something that I'm always thinking of, you know, what are some of the things that bring me quote unquote, joy while I'm working. And I realized I really like building things. And the best place where you can build things is in businesses that are smaller. They're not these multi billion dollar corporations. There are a couple of millions in, maybe even a hundred millions in when you are actually building things from scratch versus just maintaining status quo and you know, going through the budget cycle just because, just because we do that every single year.

So you have to help companies build because you haven't found someone to pay you to build Legos yet.

That exactly, you know, that would be my ideal job.

So you, you'll laugh at this. I don't know if you heard the episode, but I had a guy by the name of was, I believe it was Richard Tane by himself. I'm pretty sure it was Richard Tane. He said his dream job, he's looking for a job was to work for lego. He had applied before. He'd love to work in Denmark. And so he's like, if anyone out there is listening that can help me get a job at Lego, you know, reach out. And so there you go.

And you know, I would go back into the corporate if LEGO offers me a finance position 100% immediately.

So Lego, if you're listening, contact Kathy. If not, we'll have to keep going here.

And just for the listeners who don't understand this LEGO reference, like in the background I have a bunch of LEGO things. There's a Lego castle, there's LEGO flowers, Lego orchids. I'm a huge LEGO fan.

Yes. Kathy loves her Legos and so that's what she builds in her, in her spare time when she's not building business.

Exactly.

All right. So I'm curious, you've talked about how you love the building process. Obviously you had that assignment when you work for a big company, you're like, oh wow, this is really what I like. So can you share maybe one of your most rewarding experiences since starting your own business where you've really help someone build and saw something that you felt was really meaningful?

So I had a client that was with me for almost three years and I've since transitioned them into people who are now internally working for their FP&A finance function in their business. And when they first came to me, they really had nothing. Like they had a couple of spreadsheets. There was no budgeting, there was no forecasting. There was, they had an accountant, but the accountant really had no idea what they were doing. So really, when I come into a business like this, before I even pick up anything, I will do an assessment. So I call this the actual next gen finance blueprint. And I look at five things. I look at the booking and accounting, I look at the financial systems and processes, I look at, you know, what are they doing with this data? Do they have anything that remotely even resembles FP and A. And of course the fifth one, which is really important in businesses like this, is what do they have for internal controls. So as you can imagine, I come in, there's really, there's really nothing there. So I actually had to build this structure up from the ground. First we start with was the accounting. Then we started building the reports, reports that were actually actionable to the business owners versus just reports because, you know, we just have reports because someone told us to. We figure out what KPIs actually matter to them. And then also the systems and processes is an important one too because as I have said before, the operations really impacts the financial impact. At the end we had to look at the operations. So the operations was also all over the place. And one of the reasons why was because one, there was no SOPs. Everyone was doing what they just felt like doing. And there was no internal system where we could house all the data. And this was a remodeling company where they had the estimates and the change orders and all of these things in spreadsheets. So there was really no one source of truth. So we implemented a system specific for remodels and construction businesses that housed all that information. So once we did all of that, clean up the accounting, clean up the reporting, and actually, well, not even the reporting, but actually started the actual reporting, the business took off and it was. And it was such a rewarding experience because obviously, you know, I was with them for three years. It took time, but the business was completely different. More healthy, more sustainable by the time we end up working together.

Yeah, I know it sounds like a very rewarding situation. And generally in those type of situations where you help the business get much healthier in scale, you're also working yourself out of a job.

Yep.

Right. And as long as you have great relations, I imagine that can be extremely rewarding. And ultimately that's what you want, even though you don't necessarily want to lose the customer.

And my thing is always, every time when I go into the business, I'm always thinking, yes, I'm going to be out of a job and I want to be out of job, but also I don't ever want to be in a situation where, you know, God forbid I get hit by a bus tomorrow, that the business is completely left high and dry because now the person who had all that knowledge is gone. Like, I. The way how I operate is I want to create the systems and the process and the financial knowledge in the business so that they can fire me tomorrow and they still retain that knowledge.

I really appreciate that and I have to laugh. You gave the example of hit by a bus. I used to use that at work. And one lady said to me one day, she's like, paul, why is always hit by a bus? Why can't I win the lottery, not come to work tomorrow? I'm like, fine, win the lottery. Either way, I need to know this. And so there you go. They were. They didn't like me saying they hit by a bus because they felt I was being too negative. So when you said that, it just flashback to that moment.

I like. But I'm gonna start using win the.

Lottery and don't come to work tomorrow. So there you go. The positive twist on it versus the kind of downer of getting hit by a bus.

Yep.

Which none of us want to experience. But I totally get it. Right. You, from day one, you want to leave them in the position that if something happens, they can continue to operate relatively smoothly. There's always a transition if something happens, but the easier you can make it, the better you leave them.

Yeah, exactly. And also, as I, as I mentioned, the SOPs, they need to be SOPs on the financial procedures as well, because let's say, for example, that the accountant and the bookkeeper leaves. Now we have to go and train someone in whatever they were doing. We need to figure out how they were doing, why they were doing it. And having those sops, like, for example, a month end close. What happens on a month end close? Like, what are some of the reports that we put together? This is all valuable information, and you need to have that in the business again so that the business has that continuity. Because really, a truly good business should not be dependent on people. You should be dependent on systems and processes so that you can move people around based on, obviously, you know, what they like to do and what their strengths are, but that it's not reliable just on one person, because that is internal and external risk that you're posing for the business, and that is just not a good thing. And again, it ends up in finances as well, because if that person leaves, you can be left out.

Yeah, no, I hear what you say. We've all. We've all seen it. Where. All right, we got to get the knowledge out of that person's head.

Yeah.

How do we. Because if they leave tomorrow, we're in trouble. And I. I totally know you're talking about. I was going to jokingly say, so you're telling me I need to stop doing everything myself and hire more people. But, yeah, that's a little different. When you're a solopreneur, as you know.

It is a little bit different. But as you. As we have talked before we started recording, you are sort of doing that already with your podcast, so.

A little bit, yes. I definitely am growing a. And having others. It's how it. How it works, which is a good problem to have.

True.

I'm curious, when you went from, you know, Fortune 500 to all of a sudden, I'm helping small companies doing fpa, what was the hardest adjustment for you?

The hardest adjustment truly was obviously not in the work that you're doing. Finance. I mean, I could. I mean, I've been doing finance almost 20 years. It's in my blood. Like, I, Like, I'm. I'm good at what I do. But the hardest thing for me was when you go on your own. Yes, you're good at doing finance, but you have never done sales. You have never done marketing. You kind of have an idea of operations, but you truly have not run the business by itself. So I had to learn sales, I had to learn marketing. I had to learn how. How am I going to operate this business? Like, I have nothing. And again, you know, going back into building things, like, I have a podcast, and the podcast name has helped. My business is growing. We're almost at 100 episode at this point. But originally, when I started it, I had no SOPs. I was doing everything by myself. So now we're at the point, you know, almost three years later where all I have to do is just show up and talk to people and everything else is done by the team in the background. But I had to create that. So again, I had to create that from scratch. And if you're just thinking that when you start your own business that you're just going to be doing finance, it's. You have a huge reality check because you have to do all of the other pieces unless you hire people. But at the beginning, the thing is you don't have the funds to hire the people. So you have to do it yourself and you have to build that so that you're able to give it to the other person.

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That's K-E-P-I-O-N.com there's the scaling it to the point where one, you can afford to hire somebody. Two, there's enough work for them to do and you have something good enough that you can transfer it to them. That was a big adjustment for me was that first time I hired an assistant of transferring things and realizing man, so many of my processes stink because you're just surviving day to day and then you're like all right, I need to grow up a little bit. And I think that that's common. So that makes a lot of sense. So switching back to a little bit more finance, a little fun on the entrepreneurial side. And those challenges, they're very real, especially the sales one. I think everybody goes through that. I know I've dealt with some of those issues as well. You mentioned this earlier and I'd love to dig into it a little bit more that you have a five part framework you use and you talked about that for helping build out the finance function. So can we go through those, maybe just kind of walk through each of those again kind of step by step and we'll talk a little bit about that.

Yeah. So I like to equate this five part framework into a financially healthy house. And if you're imagining the house before you start building the house, what do you need to have? You need to have the foundation. So that is really your bookkeeping and accounting. That's all the data that comes in. And when, you know, when you're building this financial structure from scratch, you need to make sure that the bookkeeping and accounting is done correctly. And in smaller businesses that is, that can be anything, you know, so we really immediately have to make sure that the month end close is done, that the data is done correctly, that we actually have good software that can support all of this. So that is the foundation of this house.

And I'm curious how often when you come in, is the foundation have cracks and falling apart or when you first get there, do you usually find outside of maybe they're on cash basis instead of accrual that the counting's pretty decent or what does it typically look like when you get in there?

It's typically a challenge and typically it's also on the cash basis was accrual basis. And there, there's a, I would say there's level of accrual. So which is interesting because if you're comparing that to for example, you know, Fortune 500 companies, when you, when you have, you know, you're being audited and you have to really figure out that the accrual is done by actual gap and all of that in smaller businesses because you're not a publicly traded company, you can be a little bit more looser. So what I mean by that is, for example, if you are buying a software for the next two years, you might see it if it's, if it's let's say $5,000 or $10,000, you might actually expense it versus amortize it over, you know, the, in the next couple of years. So, so that's what I mean. So there's thing called the, I would call it more like an adjusted accrual. It's not really truly 100% there, but the things that really matter need to be on an accrual basis. Like for example, in an example that I put the remodeling business, one of the things with the remodeling construction really has is they have such a thing called the work in progress reporting.

Yep.

You don't do those adjustments. The financials, profit and loss statement is going to be really off because in that particular industry, you're taking a lot of cash up front, but the cost is coming down later. So what it looks like is that you have so much profit in, let's say, this month, but when the cost comes a couple of months later, you're going to be in a huge loss. So the gross profit, it just becomes really wonky and you have no idea what's happening. So that is what I mean by actually doing those accruals and in this particular scenario, doing the work in progress reporting. So with that client, they didn't have that. We had to do that.

Yeah, that makes a lot of sense that you have to have enough there to normalize it so you can get a good trend and understand what's going on. And in some businesses, it's on a cash basis. You just don't have that at all. Yeah, oh, we made 50,000 this month. Oh, we lost 30,000 this month. And it's up and down. You're looking at it overall going, okay, there's a decent amount of money here, but how do I match it all and understand what's generating that revenue against what expenses to say, oh, yeah, that, that seems like a proper margin or you're way out of whack here.

Yep. And if you don't have that, then it's really hard to do any sort of good financial analysis or any good financial planning because it's like, I have no idea what's going to happen, like when the cash is going to go. So it's, it's really, really important to have that. Also, on another side, it has real tax implications as well.

Sure. You know, as I've always said, an FPA person's best, a friend is a good accountant.

Yep.

Because we've all been there. You're closing the books and you're looking and you're calling me, this doesn't look right. There's no way. This is all the revenue. I know this and this and this was supposed to come in this month. And so those are the worst. And they have no idea. Versus. Oh, yeah, no, we're booking those entries now. We were waiting for some data, whatever it might be. And you have confidence in what's going on in the books. It makes a huge difference. And I would. Yeah. So that's step one. What was the second one?

So the second one is, now that you have all this data coming in, you also have to use it and use it in a way that is useful to your business and that is the financial analysis. So now we have the foundation of the house. Financial analysis are the walls of this particular house. The what's really also important is the stuff that you have to process all this data. So all the financial systems and processes that you have, you might. And we also alluded to that with this particular client, everything was in different buckets. So we had to centralize this data. We had to have the central repository. Because if you have a central repository of data, it is so much easier to do any analysis, to do any projections with it. Like for example, one of the things that I always say for the businesses is they need to have a CRM. We need to have a CRM, because if we have a CRM then we can go and figure out how the pipeline looks like. I always like to look at the pipeline before I do any sales projections. If you're just doing well, we're going to be at 5% more than what we are this month. It's like, is this really going to be true? I don't know. Let me look at the pipeline. What is actually happening in the pipeline?

Let me get some confidence around that number.

Yes, and I love to see the confidence. So for example, if I have a hundred thousand dollar deal come through and the confidence is less than 50%, I'm like, well, I might opt to just not have that in my forecast. But if it's something at 80% more, we're definitely going to put that in, adjust that obviously. So that's what I mean by financial systems and processes. And you know, it has to make sense for the business. And that is kind of like the internal design of this particular house and the way that, you know, you would not put a bathtub in the middle of the kitchen because that doesn't make any sense. Again, the systems and the processes that you have have to make sense for that particular business and the business that the industry that this business is in. And the fourth piece is the financial planning and strategy. So that's the roof of the house and that is something that is protecting everything that is below, obviously. And that I would, I would put FP and A in there. But as you have noticed, like for us to get to the roof of the house, we needed to build all the other things because if we just jump into the FP and A, it's going to be garbage in, garbage out.

Yeah, there's not. You, you can't make something great when there's nothing there to make something from. If you can't find good trends, you can't do analysis. You can't work miracles with garbage.

Yeah, exactly. Which is why I bothers me when there are FPA tools or forecasting or cash forecasting tools for smaller businesses. Because if the software is telling you a specific number, it doesn't mean that it's going to be true because that particular number is based on the assumptions that you're building in. And usually it's for the historical data. And if your accounting is not up to par, this is going to muddle the waters for the planning. And also the other thing too is that whatever planning tool you're using, they will not know what is happening in your operational data, what is happening in your sales pipeline. So just using the historical information to try to extrapolate things, yes, it's a good basis. But you need to know what is happening in the business to really be able to truly forecast up in the future.

Yep, makes sense. I, I would agree with you is the planning tools that may be planning off your data if your data isn't good for a small business, doesn't do any good. And often until somebody's come in and help look at the data. There are exceptions. There are some that from day one, maybe you know, especially those that finance experience or bookkeeping or whatever accounting may have better numbers, but many have no idea. They didn't, they didn't get into business to deal with finance. What was the last one you mentioned? Financial planning and strategy. What's the fifth one?

So the last one is the alarm of the house and that is the internal controls. And that is something that is truly, truly missing in the smaller businesses. And we all know how important that is. And I have had clients that have been stolen from. They're either by their employees or by their bookkeeper and people didn't know. And the only reason when people start really paying attention to this is if something has happened. So I want to be very proactive with that, that we putting internal controls in place. And it doesn't have to be anything, you know, completely complicated. It's like a simple thing like no one should be paying, paying and writing a check and then reconciling something. I mean these are three different touch points that you really need to have at least two people taken care of. I mean simple things like this, like you know, getting a list of all your vendors every couple of, every couple of months and looking at are these vendors legitimate? Do I, do I know what they are for? If anything looks like it's duplicated it. Start looking at and start questioning why is this vendor similar name to the other name? There's someone maybe like, create a fictitious vendor. I mean, that has happened too. So things like that, that really make an impact and they're proactively. You're proactively safeguarding the assets of the company.

Separation of duties, those basic things that not. Are not hard to implement, but protect you. Not asking for, you know, big, huge accounting memo for every little tiny thing you do, like you sometimes have to do in big companies where, you know, the rules themselves are almost too much to read.

Yeah, exactly. And the other thing, too, if there are any adjusting entries that are happening, there needs to be a support for it. I will. I will tell you how many times I go into someone's financial records and their accountant made like a $200,000 entry into equity, and there's no support behind it. I'm like, what was this for?

I. I can totally believe it. I mean. Yeah, that. That doesn't surprise me at all.

And you know, with the. With things you can. Because people, especially in smaller businesses, people understand profit and loss statement. You know, you have revenue, income and profit. But balance sheet. Balance sheet is a tough one. And for someone who knows how to hide things, you can easily hide things on the balance sheet and people will not like the business owner just wouldn't see it.

Well, I mean, even in big businesses, I. We. I'm sure you had months where you're surprised by a balance sheet adjustment.

Yeah.

Where it's like, oh, we found this on the balance sheet. We have to write it off. Are you kidding me? That's like $5 million. How did that sit there? Or whatever the number is where you're just, like, dumbfounded sometimes. Like, okay, was that accidental, or is the prior person just trying to make the numbers look better?

Yep. But you have the plugs going into places that they shouldn't be.

Yeah, whatever. We could all come up. We could probably do a. Yeah, that might be a fun podcast. Maybe I'll do one Accounting horror stories and I'll nothing but could call it unreconciled balance sheet.

Yep.

Right. I mean, we've all. We've all been there in small businesses. If it reconciles from day one, it's a small miracle, I'm guessing.

Yeah. And you know, as they say, the balance sheet is the place where everything goes to die.

So true. I remember we brought some stuff back in house when I worked for American Express, and the new team found $12 million between stuff that hadn't been billed and things stuck on balance Sheets that should have been recognized. And we've been getting so high. The head of the department's like, please, can you stop finding things till next year? You're going to make it impossible to grow over this year. Like, you know, so it was pretty funny. But she would always comment, she like, I don't want anyone, anyone to. Over the next three years, you can't complain about the cost of my team. We paid for ourselves. Leave us alone. That was like your position. It was pretty funny. And they're like, yeah, it's hard to argue with. We brought it out in one year and you found us $12 million that we didn't know about. About. Yeah, you, you paid for yourself.

Yeah, I mean that.

And that's what great finance people can do. That's an example. More around the books because you had poor processes. Let's talk now about how FPA is in such a great position to actually impact the business. The operation, you know, not so much getting the accounting right. Those are basic tackling and blocking, if you want to call that, that you have to do. But going beyond that, you mentioned, you know, financial planning and strategy. So why is FPA in such a great position to really impact the business and help it be healthier?

Because we have seats in a lot of different rooms. So. And, and I will tell you, like, if I'm looking back in my Fortune 500 career and being in finance there, I cannot think of any other department that could easily have a conversation with a sales leader, could easily have a conversation with the CFO and could go and have a conversation with a customer rep. I mean, you could. And I've actually had that happen to me within a span of like 6 hours. I had meetings with three different people in very different various levels of our organization. So there's really no other department that is able to do that, which, meaning that you're able to see, see all of these different aspects of the business and as I've said before, connect the dots. Because a lot of the business, once, once the business grows, unfortunately these departments get stuck in their silos so they don't talk to each other. And you as the finance, you're able to cross these almost like cross pollinate these departments and see, hey, the operations doing well. Let's say for example, that sales is going to bring in a huge deal. Like, you know, and yes, we're going to have a lot more revenue. It's super exciting. But the question is, are we going to be able to support that incoming business? How is that going to impact our operations. So in a regular world, unfortunately sales is not going to go and talk to the operations. So it's up to you to go from sales and say, hey, the pipeline here is saying you're going to bring in like a $5 million deal and then go to the operations and say the sales is going to there's a likelihood there's an 80% chance. Are we going to bring in a $5 million deal, go to the ops leader and say how is that going to impact our operations? Do we need to hire more people? Do we need to maybe get contractors to help us ramp up? What do we need to do to and unless you have finance to to facilitate those conversations, the chances are they're never going to happen until something starts.

Breaking FP and a Guy Here today I want to talk about the FP and a guy's ultimate FP and a course bundle. This bundle includes over 10 hours of content recorded by Ron Monteiro and myself, many templates and great lessons to make you a better FP and a professional. The content includes FP and a business partnership, how to manage tough conversations, build world class relationships and hold the business accountable. Includes Modern Excel, which is a real game changer for the way you'll work in Excel. Excel Tables, the gateway to Modern Excel Power Query, a game changer for transforming your manual processes and loading data and then dynamic arrays. Next we cover modeling design principles. In this course we talk about the importance of designing models in a certain way and how important it is that you think about design. And last but not least, driving value through smart analysis, how you can conduct data analysis to be a better FPA professional. Go ahead and sign up for this Bundle at the fpnaguy.com that's the FPEND a-n--aguy.com use the code podcast to save 25% get started learning today. Very, very true. Being able to really connect those silos. Like you said, there's a great image I've seen. I think it was Wilder Born who first shared it on LinkedIn and I shared some of my classes where you have FP and A in the middle and you have the spoke of all the rest of the business and as one CEO said he goes there's really only maybe three people that have a full view of the business. The CEO, the CFO and the FP and 18. And everybody else is yes, they talk to others but they're focused on their part of the business and their silo and that's what you need them to be focused on, but you need to be there to help make sure those conversations happen so you don't have those situations like, you know, sales assumes a big jump, and they don't tell the implementation team, well, we need to hire three people, and you know how long it takes to train them. And now you got a big, huge backlog and you got pissed off customers and cancellations and there goes the revenue plan for the year. And then everybody's mad at you because you don't. They don't get their bonus.

Yep.

That type of thing. Not. Not that I ever had that happen. I'm not sharing from experience now.

Probably not. Yeah, but this goes back into where we started.

What.

What is a good FPA person? How do they look like? That's why. I mean, when I say they need to be an internal consultant, I agree.

You know, that's why we're hearing more and more the term strategic finance. And sometimes you say that's fpa. Some people say it's a separate role. That's a whole different discussion. Like, where does rev ops it? Right. Everybody has a different opinion. There's a million different ways you can structure it, but you need your FPA to go beyond the numbers. If that's all you're getting, then you better be getting it somewhere else, because otherwise you have a big problem coming.

Exactly.

I totally agree with you. If somebody's listening and they're like, all I'm doing at my company is reporting and they want to have that seat at the table, they want to make an impact. Any advice to them? Anything you can say of how they could get started or what they should be doing?

Well, the question would be like, why aren't you having conversations with other people? And I will say this from the experience, too, that sometimes it might be hard. And, you know, we can be here and we can talk about, yes, you need to have more conversations outside of your department and you need to talk to people. But if you are at your desk and you're completely overwhelmed because your finance leader, whether it's a director or a cfo, whoever it is, it's constantly giving you these, I need this report. And everything is a fire drill and you can barely breathe, let alone actually talk to people, that is an issue. So you're never going to be able to have that impact because you're constantly chasing your own tail. So we kind of have to take a step back and say, hey, why is this happening? And is it happening because there's some interesting thing happening on the leadership level. And then we need to take a look at, you know, can we manage up in terms of, say, I'm able to bring in more value if I have more space to do that and have that conversation. And if the leadership is not receptive of that, then the question would be, you know, is this a place that you really want to be working at? And then the third thing it could be is maybe your job needs to be more. Can it something. Can you do something that you can create some sort of a system or a process or a template or an automation that you can make your job, whatever you're doing right now, more efficient so that you can carve that time, two hours, three hours a week to have those conversations with the business.

It's funny you mentioned automation because the next question is around your favorite automation tool. And I think last time we talked there was like a heavenly visitation, puppies and rainbows and angels or something. Remember what tool that was?

Yes, I absolutely remember. So for listeners who haven't listened to our conversations before, when Paul asked me, what is the one Excel tip that the tool that you like in Excel? And I told them, hands down, it's Power Query. And I said, I'm not even kidding. When I first started using it, like the angels came down and there were rainbows and puppies and like I had tears in my eyes. And I will tell you, I still feel the same about Power Query. And every single time that I use it, I'm absolutely amazed of the things that that thing can do. It is just, it is like I'm, I'm blown away and I love it. It is one of the greatest tools to be able to automate and streamline your financial data and reporting. And I, I love it. I, I cannot. Like, it's, it's amazing.

I, I am fully with you. It helped me get promoted. My question for you though, why do you think we have had such slow adoption? Most people don't know about it. I'm amazed how few people use Power Query. Any thoughts? Why? Because obviously when you started using it, it was a light bulb moment, right? It was a huge thing like, oh my goodness, why didn't I know about this five years earlier, 10 years or whatever it was? It was the same for me once you really started to learn it. Why didn't I learn this earlier? Any thoughts on why it seems to take so long for things like Power Query for people to learn and to be adopted? Because it is a game changer. It can save you a ton of time.

That's A great question and I think I'm going to put that on Microsoft and their marketing of this tool. I will say that they haven't done a good job on educating users of what the Power Query can do. Users that are not MVPs like you are, Paul, but regular users like the rest of us mortals who. I don't really completely know the tool.

I don't think I've ever been called immortal. I'll take it.

So I think the reason why it's because it's unknown and you either know it from. Because you're really trying to figure out, hey, how can I make this better? And you're doing everything that you can or you have heard it from someone or maybe a colleague has say, hey, this is like the best thing since sliced bread. Why don't you try this? So it's either a word of mouth type of situation or you have just kind of crawled there because you had to.

Yeah, I think you're probably, you're. There's definitely some truth to that. I know they've changed the name a lot. I think there's more that could be done in marketing. I also think there's. We're creatures of habit and just adoption in general in Excel is extremely slow for everything. So there's a combination in my, in my view of. But I, I definitely think Microsoft could do a better job marketing it. I don't disagree there. I'll make sure the mortals learn more about it.

Yes, please do.

Oh, man. All right, so we're gonna, we're gonna move into the FPA section where I have some standard questions I ask about fpa. Look at, you know, for relatively short answers here and then we'll go on to the get to know you section where I have some questions for you. Just some more personal things. So first one we'll ask here is what is the number one technical skill FPA professional should master in your opinion?

That's a good one. Technical skill, I would say really Excel in Power Query, as we've talked about, that will, that will do wonders for your career.

Yeah, that tends to be Excel. Financial models are probably the most common answer right here. So right, right along what we often hear. What's the number one soft skill?

Oh for sure. Communication in terms of actually presentation and learning how to communicate with people who are not in finance. And I will go back into that. You're able to do that if you are able to streamline and automate your processes with Power Query so that you go and have this extra time that you can spend in communication with people. So I think in terms of you have to know the technical skills, but you have to up level them so that you can get into that communication skill so that you can free up time to be more present with people and communicate with them.

It's kind of a catch 22. I saw a graph one time and I had finance, I think I said finance manager and it was referring, I think commercial finance, FP&A those type of roles. It had it listed as the farthest job to the right that had the highest combination requirement of softer human skills and technical skills together. I thought it was really interesting because to be great at it, yes, you got, you have to be able to do the technical stuff, but that's not what allows you to be great. That allows you to free up time to do the other stuff. The technical sometimes can really help with the analysis, but if you can't present the analysis, your great ideas are just going to die on the floor. I've been guilty of that was really bad at that. On some things I look back and go, I just thought, well it's a good idea so everybody will get on board. Well, you explained it poorly. You didn't influence, you didn't tell a story and you wonder why you fell.

And if I may, I mean there's a lot of resources out there on how to do better storytelling. One of them, and this is absolutely not sponsored at all. And Paul, you can cut that as well. But it's this deck called the pip decks. It's called the storytelling decks and essentially is like these couple of cards. I think they have like 54 cards or something in the deck. And if you pick up a card, it actually tells you like how you can tell a story in the most impactful level. So if you're really trying to figure out, you know, where do I get how does the storytelling really look like and how does it look like in real life? That is a really good place to start with. It's a storytelling pip decks I would highly recommend.

Yeah, definitely leave that in. You know, there's another great one if, if you haven't read this, this is a fabulous book. Effective Data Storytelling by Brett Dykes. Really, really good. He's a great follow on LinkedIn. I'm getting ready to release my advanced FPA course next month. First, first cohort. And we're right now working on one section that's about practical storytelling that's very hands on to help people practice. It's not really something you're born with. You have to learn to present. Yes, some people are more naturally better at talking to audiences, but I've never been a believer that you're either born with it or you're not. It's something you have to develop.

Yeah. And I think, you know, a lot of people get also intimidated with the storytelling because we think about, at least what I think about when someone tells me storytelling is writing novels and, you know, and it really isn't. What it is, is essentially, if you boil it down, is impacting other humans. Like, how do we impact other humans in a way that we are presenting the information and how they want to receive it? So it comes down into really knowing your audience, meaning the way how you talk to your CFO is going to be very different the way how you talk to your sales leader and understanding what is that person truly want to see, want to hear, and how do you present that information to them in a way that it's digestible to them for whatever level they are?

A hundred percent agree. I think sometimes we overcomplicate what storytelling is, and that's talked a lot about in that book of what it is and how it's more than just facts. And he talks about how it's, you know, at the core, if you're doing data storytelling, which I think is critical to finance, I'm sure you would agree with at its core is data. You know, like, he uses a great example where he shows a Venn diagram. And I know if you're listening, this does not make for good radio, but you can go watch the video. But he does three circles. He does one where he says, okay, here's your data down at the bottom. Then you have your visuals, which sometimes we're good at, sometimes we're not. And he goes, I think this area where we probably struggle the most in finance is narrative. And when you get all three right and bring them together, that's where change happens. As you're telling that story, it's not, you know, something needs to be super complex. But I think sometimes we, like you said, we think it is. You think of those great, you know, you think of someone like, it's a fabulous presenter, won't talk politics, but like a President Obama. He's a. He's a fabulous presenter. You think you need to be like that, and. No, you don't need to be that level. You can make an impact by just having. By bringing the three together and doing a good job of connecting with your audience at whatever level that. That you can.

And also, the more you do it, the better you get at it. It's just one of those things, like the repetition really makes you a better presenter, it makes you a better storyteller. But you have to start somewhere and accepting that, hey, if, if I've never done this, I'm going to be rubbish. That's fine. But every single time I'm doing it, I'm going to get better and better and better at it.

And if you want proof of that, just go listen to my first episode of FP&A today. I was thrilled. After I was done, I loved it, but I can't listen to it now. It's terrible.

I do the same thing for my podcast. It's like, oh, my goodness, this was, this, this was bad. But, you know, repetition really, and not stopping because you feel bad about it. It's really, you have to think of it as this is just going to be a part of the process. Just get through it, it'll get better.

Agreed. All right, so now we're going to move into the personal section. Get to know you. We talked a little bit about Legos earlier. We know that's a big love of yours. So what's your current LEGO project? What are you working on these days?

So, currently I'm working on and is the town hall for the castle that I have in the background so the listeners can see this. But in the background I have an actual castle because the name of the company is Newcastle Finance. So I wanted to have a castle in my office. So there's a LEGO castle. But this year LEGO released a little like, town between the castle and, and all the other stuff that they have. So I'm working on that and I've been working on this for the last couple of months, so I'm really, truly savoring it.

Nice. That's been a long project. Well, enjoy that. That sounds like fun. What other hobbies do you have other than Legos?

I used to do swing dancing and I, I love that because it is so, such a, such a joyful thing. And it was, it's great exercise. I used to run 5ks without ever training because all I would do is swing dancing and I would, I, I, I was always amazed, like, how am I able to do this? And then I realized if I'm doing a lot of swing dancing, like for hours and hours on end, that's really training. But it is, it's a, it's a great thing. And I love the 1940s, 1930s big bang type of music, so it was just a natural thing. That I started doing this as a hobby.

Fun. I like that. All right, next question. If you could recommend one book to our audience to read, what book are you going to give them?

Just one. Oh, my goodness.

Just one. I'm going to hold you to one. Sometimes I give two, but you get one Today. I'm in a one mood.

Very nice of you. I will say effortless by Greg McEwen. I think I kind of butchered his last name. But if you go on Amazon and search for Effortless, the book is there. And I love that book because, you know, we. We all kind of, at least in the U.S. we kind of grew up with the fact that, you know, work. You work hard. But what I like about this book is that shows you the other way, that work doesn't have to be hard. It can be effortless. And sometimes we make it hard because with the things that we really, truly are good at, it is so intrinsically easy for us that we feel like we're almost like we don't deserve it because it needs to be hard. So I really like this book because it goes into the philosophy of that, and it also shows you, like, what if you come with a problem and you try to analyze it and, you know, it's too complex, let's flip it on its head and say, what will we do so that it's easy? And I really like that philosophy. It's. It kind of opened my eyes to a lot of things. So Effortless. It's a great book. Great.

Thank you. Appreciate that. All right. If you could go on vacation, travel anywhere in the world tomorrow. Where are you going?

I have always wanted to go to the Bavarian mountains to see the Neuschwanstein Castle. It was actually the castle that Disney's castle was modeled after. And that has been my dream ever since I was a kid. And I always wanted to see that. And hopefully one of these days, I'm gonna go see it. But as you have probably noticed, I'm a huge fan of castles.

Yeah, I've kind of noticed the theme here of castles.

Yeah. And, you know, last year when I was back in 2023, I was in Europe, because I'm originally from there, and I actually made a whole series of financial tidbits from old castles. So there's a couple of videos that I made there. So I talk about the financial concepts, and I'm also showing the castles in the background, too. So that was such a joy and so fun to make. I. I love it. I. I need to do a series, too. For that. Yeah, you.

I think you need to do a podcast on Just Castles.

I should. Yeah.

Or, you know, how it would help your finance business, but it could be fun. All right. If you could have dinner with one person who's alive in the world today, outside of me, of course. Who are you taking to dinner?

That is not fair. I would actually. I was like. Like, you know, we've known each other for quite some time, but we've never had dinner, so I wanted to pick you up.

All right, well, there you go. We can. We can go to dinner, but who's going. Who's the third person you talked about?

Obama. So I would definitely want him there, too. That would be interesting to pick his brain.

Yeah. It would be fascinating to learn his. His story in more detail and kind of understand him. All right, we're just about done. Any parting advice? You want to leave the audience before we wrap up about being a better business partner? Anything around FPA or just something you're. You're dying to share that we haven't covered?

I mean, really, we've talked a lot about. Of how you can be a better FP and a person and really is. If you are intimidated by FP and a. If you're early in your career, you just got to take it day by day. You know, we. Paul and I have been doing this for decades now, and it's kind of just. It's stuff that we breathe. So don't be intimidated by it. Just start. Start somewhere. Power Query is a great way to start. And if you truly want to be a great communicator, I will say one of the things that impacted me so much in my career was taking an improv class. And I live in Chicago, and Chicago is very well known by their Second City improv classes. I mean, it's world known. There's. People have gone to, like, Saturday Night Live and all these other shows, but I took in classes there because. Not because I wanted to be a comedian or improv person, but I really wanted to figure out how I can be more. I was very shy as a kid, but I wanted to be more outspoken, and I wanted to be able to think on my feet really fast. And improv was such a great class to take. And I will tell you that I did it for about six months, and if I think about my communication skills before and after, it was a night and a difference. So if you want to accelerate your communication skills, improv class is a great, great way to do this.

What is it with all you Chicago people In improv class, talking to Carl tomorrow. And I'll probably hear about improv.

You know what? You should ask him that. He will probably say the same thing.

I know we've had that conversation. One of my first episodes for FBA tomorrow, we talked about communication and he talked about how he did Second City and others and how incredibly beneficial that was. And interesting enough, I talked to a guy this morning, we're talking about getting better at podcasting. And he goes, many podcasters won't hire a voice coach. They'll hire an improv coach to get better at just being able to adjust to the conversation. And so I'm not surprised to hear, to hear you say that at all. It really is a great way to learn because it forces you to be good at thinking on your feet, which is so important when you get a surprise question that you don't just have that deer in the headlights look that we've probably all done early in our career. But you can think of how to respond, and that's. That's a learned thing. You can get better at being quick on your feet, for sure.

And to get better there, you have to master the art of active listening. Active listening is really this. Like, Paul and I have had a lot of back and forth in this podcast, and the reason why we were able to do that is because we were feeding off of each other's, you know, content and we actively listened to each other. And that is a skill that you can develop if you don't have it.

100% agree. All right, well, we probably should wrap up. We've almost gone an hour, but this has been a great episode. I've really enjoyed catching up with you. We'll have to do it again sometime. If someone wants to learn more about you or get a hold of you, what's the best way for them to do that?

So the best way to do that is to find me on LinkedIn. Kathy Svetina. I'm the only one there. Or you could also go to my website, NewcastleFinance US.

So look up Kathy and Castles or go to LinkedIn. All right, thank you so much for joining us. It's been a real pleasure to chat with you today.

Thanks so much for having me on, Paul. A truly pleasure.

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