Why FP&A Needs a Chief Customer Happiness Officer with Charlie Liu

Sometimes for growth or profitability, satisfaction of customers gets forgotten. Let's be honest, sometimes your sales, you're going to have to push deals across just because you're trying to hit those targets.

Many digital transformations. Why do you think that is?

I think a lot of companies, CFOs, finance leaders, they don't do enough.

What were some of the takeaways from working for planning?

Software that didn't survive trading is not a strategy.

What is the number one technical skill FP and a professional should master?

You should definitely try to learn about data.

What's the number one softer human skill?

Being able to run a discovery session. Asking the whys behind things.

How do you see planning software changing going forward? With generative AI and everything going on, where do you think we're headed?

Even today I see finance being different. The way that I see in the future is I think.

This week's title sponsor of FPA 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 fpa. Each week we welcome industry thought leaders, practitioners and experts who share their insights and experiences, helping us navigate today's complexities and tomorrow's uncertainties. This week I'm thrilled to welcome my friend Charlie. Charlie Liu. Welcome to the show.

Super excited to be here. Thank you.

Yes, we're really excited to have you. So let me give a little bit of bit on his background and then we'll jump into things. So Charlie is the founder of Monte Carlos Consulting, a firm specializing in FPA systems and fractional CFO services. He has over 15 years of deep experience in the corporate performance management space, or as I like to call it, planning tools. Charlie has built his reputation for helping FP and A leaders across industries and company sizes find the best tools to optimize their fpa. His expertise spans consulting Product and sales, giving him a unique ability to bridge both the technical and strategic needs of clients. With his data driven background, he brings a fresh perspective to FP&A systems empowering teams to drive better insights and decisions. Charlie also advises F CFOs and startups on everything from pricing strategies to go to market plans for fun. Because he doesn't have enough to do with his full time business, he likes more. He's laughing already. All right, first question. What does great FPA look like to you, Charlie?

Great fpa. For me, I think the first piece is understanding the goal, what you're here for.

Right.

A lot of it is having good understanding of the business. The goal is, I think it's the. The best way to describe it is business partnering.

Right.

You're on accounting, Right. You are working with different department heads, right. Engineering, research, sales.

Right.

You are there to give them the data they need, but also working with them to give them the analysis as well as the budget so that they can do what they need.

Right.

For me, part of it is being directionally correct so that you can make better decisions. Understanding what happened in the past, Right. Sometimes a lot of businesses, especially the smaller ones, they kind of confuse between finance and accounting.

Right?

Two very different things. Accounting is a system of records. They are figuring out what happened in the past. But FPNA really takes that data, tells you the story so that you can figure out where you're profitable, where you're losing money, which direction you should go so that you can better drive the business through a combination of understanding the business holistically, partnering up with different department heads and leveraging. What data do you have? That's the main piece, the automation. Everything else I think is a second piece that comes after that.

I would agree with what you said. They're most important is the business partnering and helping the business leverage up. And it's important to separate. Accounting is backward looking and that's very important. FP and A can't do their job right without good financials. That's where it starts, is having a clean understanding, Tom, of what's happened. But as you said, FPA is all about the future. It's about where are you going, how are you going to best spend that next dollar. And sometimes that can be difficult to figure out for sure. I want to start. Right. You started your company, Monte Carlos Consulting. It's been about a year now, is that right?

Yeah, it was a year. Basically three weeks ago.

Year. Three weeks ago. Well, congratulations on the one year and I love on LinkedIn you have a unique title. You call yourself the Global Chief Customer Happiness Officer. How'd you come up with that title? Tell us the, tell us the story behind that.

It's. I think it's really simple.

Right.

So I love this space, but I've had issues with my roles over the years. Right. Sometimes for growth or profitability, the customer satisfaction of customers gets forgotten.

Right.

For me, I often found that caused friction in terms of my experience in the past.

Right.

Let's be honest. Sometimes your sales, you're going to have to push deals across just because you're trying to hit those targets services. So certain companies, they're measuring utilization.

Right.

They want to build the clients for.

Every hour here and there. Right.

So that never said well with me.

Right.

So when I started this journey, to be honest, a year ago, I didn't know this is what I was going to do. Part of it I was like, I love helping people, I love helping business. Back then I wasn't getting paid anyways. I figured, let me just help people for free. I'm not getting paid anyways. So surprise. I realized after a certain point, people want to pay you if you're doing good work. So for me, it was like I realized if I do good work, meaning if I help customers find the best tools, absolutely. That is the focus. So there's no churn, there's no dissatisfaction issues later. If we just give customer what they need on the other side, whether it's the fractional CFO work or soft implementation, sometimes you make a little bit less, but I find that it often pays dividends and it'll get back later.

Right.

So that's why I constantly talk to my co founders on my team. Customer first.

Right.

How do we have the 100% NPS of 10, the 100% customer satisfaction guaranteed. That is our North Star Cross organization.

Love it. And I love how you just sum that up.

Right.

At the end of the day, if you do everything you can to make sure you're doing what's best for the customer, you're going to end up with happy customers. You're, you're, there's always the risk you're going to end up one that's not happy. That's just part of life and business. But when you put the customer first, it just, it makes everything better in my mind versus how do I maximize revenue. Right. Or whatever that metric might be.

I think so.

Right.

I mean like Jeff Bezos talks about all the time.

Right.

It's like super cliche. But if, if you do right by the customer, everything will follow along.

Right?

Yeah. And I mean, and look at Amazon. They lost money forever.

Now look exactly right.

It created a frictionless process and made it easy for people to get whatever they wanted online for sure.

Right.

I want that to be my competitive advantage. I've seen other players, usually an array of different strategies.

Right.

For me, if we do phenomenal work, they're never going to leave you.

Right?

Yeah. You get a customer for life. If they know they can always rely on you. Every time they need that type of service, they're going to come back to you.

I love it. I love it. For me, it's also one of first. Typically when I start a project, one of my first questions, like, do you have something that you have the next day or two? What can I do to make you look good? Because the way I look is consulting. There's kind of three things. You help your customers make more money, you help customers lose money. Let's lose less money, as in cutting costs. And how do I make them look better?

Right.

Those are all I can do for a services business. There is nothing else, Right?

Yeah, no, I think that's, that's a good summary. It's either help them make more, help them lose less, or as you said, you know, help. Help make sure they're happy. Right. It's. There's not, there's not a lot to it in a services business. I would agree with that. So I want to do a little bit of a detour before. In a minute here, we're going to start talking about planning tools and some of your experience there and all you've done in the software space. You spent three years, kind of in the middle of your career working as a CFO of an e commerce company. How'd that come about? Tell us the story there.

So that happened randomly. What happened was my last year, togetic. Love the place, love the company. I learned a ton. Shout out to Alessio that runs the pre sales department over there. I learned a ton. But the issue was I did my data, my master's in data the same year while I was building demo assets, trying to close deals, traveling around as a pre sales engineer. Sure, now I recognize you need to have balance. Back then I was younger, I thought, I can do it. All right. What happened was after a year, I think working six, no, easily eighty, a hundred hours between school and work took a huge toll on me. What happened was I basically wanted a sabbatical. I wanted to leave everyone away for a little bit.

Right.

So I knew my time went to take it really well. And what happened was a friend of mine, he was starting an E commerce business, was doing really well.

Right.

But he was a marketing and product person. He knew how to market and btc, you know, design and create products really well. But he knew nothing about data, right? Knew nothing about data, nothing about finance, nothing about accounting. As a close friend, it's some free work for him. And then basically I was trying to figure out what I was going to do with my life. And I want to go travel for a bit for everyone out there. I used to be this hippie backpacker, kind of just living out of a van in Australia and Bali 14 years ago.

What I think of when I think of finance, hippies, backpacks.

Exactly. Right. So what happened was I wanted to run away from it for a bit. Oh, my camera. I wanted to run away for a bit and he offered me a free flight to Asia as long as I do a bit of work. I did not know that was his ticket to get in.

Right.

So flew over almost immediately I was absorbed into what he was doing.

Right.

And I started loving the other side.

Right.

Because before this, Paul, I was doing finance, I was doing consulting. I was never sitting on the other side. Right, sure. The operations, the inventory, planning. I personally set up a warehouse myself by hand, setting up the shelves three times when I was there. I got absolutely pulled into it. Right. So what was supposed to be a two year sabbatical became, I think a week of running around, just traveling and then just helping him out afterwards. And that's how I. And for startups, a lot of time, the CEO, cfo, kind of that title, you kind of just do everything, right?

Yeah.

Both you and I know, we're both operators, you just end up doing anything. Right. So I built a photography studio. I knew nothing about it. Learning from scratch, right. Inventory, operations, fulfillment, I learned all that. And then luckily I had a data and FPA background around him.

Right.

And one of the difficult things when I was there is when you're in China. So I built a whole thing. In China you don't have access to say Western tools because of the great firewall, but in your teams in China right now I was trying to figure out to use Western tools where also manager team over there did not work. Right. So I was so grateful that I have my background with Excel, Power Query, Power bi, Python. I basically built my own Frankenstein ERP system using those three things. It lasted about nine months before we fully switched to a Chinese ERP system. But that's how I got into it.

Right.

It was definitely. I did all the finances over the county, but I was also as much as an operator, an operational person as well.

Right.

So fulfillment, all that stuff. It was fascinating.

A little bit of everything, which is typical if you're working for a startup. You're doing everything right like you're doing today. I'm sure you've done sales, marketing, finance, you name it. Same thing here. Today I do a little bit of everything. It's how it works when you're either running your own thing or you have a very small team.

Yeah, it's. It's a crazy different. Paul, what was the hardest thing for you that you had to learn starting this business? The most challenging piece, probably the hardest.

Thing, at least in those first few months, was recognizing that some days you'd work on a project and not be making anything that you had to work on the business. I had worked for, you know, 20 years where I'd always been billed by the hour. And since I had an hourly wage, it was really hard to go, oh, I didn't make anything today, but I'll be okay. Like, I kept wanting to work on billable projects because that was just human nature thinking I got to bring in the money. And it's like, no, you got to work on the business to bring in the money. So that was probably the hardest adjustment for me.

I could see that. So I do coach a few fractional CFOs these days, and it's the same problem they're seeing when they get started. And I often tell them, try to find something that's not tied to an outcome, meaning revenue or closing deals.

Right.

I try to tell them, try to find something that you can measure that's process related. Like, for example, we were early trying to get clients.

Right.

The number of deals. Sorry, the number of contacts you make, the number of phone calls you make.

Right.

A lot of this you learn from sales. Just focus on the process to build the business and the output will follow.

Right.

Because even closing sales and deals, you can't control everything. There could be a deal where everything fits and then that person leaves the company.

Right.

You can't control that.

Right.

Yeah. And that's a great thing. And I think that's true, especially in a business, but almost in any role, right. We talk back to Finance or FP&A. Whatever that role may be, the more you can focus on process and doing your part and realizing you can't control the outcome. Right. Like there are going to be Months as a finance professional that you're going to have crappy numbers, they're going to be awful. Does that mean you did anything bad? No. It could be economics, could be business, could be a number of things. There's times that you may have forecasted wrong or you'll have to own some things, but typically it's business performance. I still remember there was an analyst at one of the companies I worked at and he came to my office and he was freaked out. He was just panicking. For the first time ever, the business had a negative EBITDA for the month. And he's like, I don't know what to do, Michael. First, like make sure all the entries are correct, make sure these are the real numbers and then put the story together of why it's not your fault. You don't do sells. You're not the one doing the expenses. You just need to be able to tell the story of what happened here and how do we make sure it doesn't happen again? What are the recommendations? Yeah, and got him. Calm down and work through it. Like you can't control sometimes the numbers.

I love that.

Right.

Part of it is you can't freak out. I sometimes I tell my team and I, because again, we're pretty new. A couple of months ago we weren't doing that great. Like buffalo in a storm, right? Just relax, chill. Buffalo is one of those animals that walk straight into a storm versus away from it.

Right?

Try to understand what is the situation.

Right?

That's the first piece. Understand what happened before you can figure out how to move forward, right? Like you said earlier, it is how to move forward. But to do that, first you need to understand why was the EBITDA negative? What happened? What was the decisions and the strategies were the marketplace that got us to where we are today. Once you have a fairly good. Understand once you have enough data, right? You hear people talk about this a lot in startups. Once you have enough data, then we can figure out how to move forward, right?

Totally agree. I mean, it's a process and you have to analyze and figure out how you move forward. So I want to shift gears to planning. You've done a lot of implementations. I'm curious, what is it you love about working in, you know, the cpm, epm, FP and A. People are probably like, cpm, epm, what are you talking about? But working in this planning software space, right? What is it that draws you to it planning?

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O N.com so it's the aha moments. It's a really cool intercession of data accounting, business understanding. That's why I always talk about business. Business first, understanding business first and then storytelling. Meaning how do we get actual insights or output from. From it, Right. So by combining all those and I had a luxury, I'm very grateful that I had experience that allows me to do this for. But combining those backgrounds, you get these aha moments.

Right.

I'll give you a few example. One was last year, not necessarily tied to planning. I was working with a gym equipment business, a chain of them.

Right.

And a little bit smaller.

Right.

So they don't have all the analytics house yet. And what they realized working with me was they were applying this account, these type of discounts across all products. What I came to show him was applying discounts on core products like we're talking about Jimmy equipments, right? So your barbells, your kettlebells, they're not going to change your sales volumes, but then your accessories, your supplementary products, that's where they made the biggest improvements on sales. Right. So through the analysis, what we came to realize was they needed to price things differently.

Right.

So that's what I meant by combining the accounting. So we can see historically it didn't make any difference. The financial data that we showed that the aptitude to actually purchase only made a difference in terms of discounts on more of your secondary products. They never needed to actually discount their primary products.

Right.

So with the understanding, right. The operators, then the founders were then able to build these models with me.

Right.

What business could look like, right. If we never discounted our primary products, but our secondary products and allow them to actually discount their supplementary products heavier so they can increase sales even more. Right. So part of it was data analytics, part is planning. Right. So that we can actually help Them increase their sales, decrease the losses, potential losses on the cutting margins on their barbells, kettlebells, but increase profitability and sales overall.

Right.

That's an example. Another one for me is being a data guy and being lazy. I love helping clients get lazier. Right? So example project, earlier this year I was helping a client that had multitude of different systems and they had to do different reporting, right? RS gaap and they used to take days just compiling the reports, the templates for RS versus gaap. If we have to add numbers back in, if we have to allocate things, it was a multi day process and often that's a lot of manual copy and pasting. A lot of times you have to do manual data entry, right? What happened was for me, by the end of it, it was minutes to run the report.

Right?

That is immediate cost saving media because it's also the work that no one wants to do, right. It's not the fun stuff, right. So those aha moments, the controller's smile when, when I saw her, like how much easier it was to run these reports afterwards. That's why I do them, right? That's why it goes back to the question, right? Chief Global Chief Customer Happiness Officer.

Right?

Those are, that's the reason why I do it, right?

So those moments when you see somebody saving hours or improving their business, as you call them, the aha moments.

Yes.

I love when I see those, when I get a note from someone, hey, you helped me with this. Or you go through training. Eyes get big when they realize, oh, if I learn that I can save like six hours of time. Yeah, you can, you could, you could automate that. And they get really excited because we've all been there with manual processes and.

Yeah, for sure. Paul, especially with your training around Power Query, Power bi, talking about systems. For me, I think it's really important for FP and A folks to start thinking like almost programmers. Your formulas in Excel are kind of like your codes. That's how I look at it. You can improve efficiency, automation significantly. You don't have to be a proper backend developer.

Right.

Your code is typically your Excel formulas or Power Query. These are off the shelf tools, right?

No, I mean the reality is spreadsheets and particularly Excel, but Google Sheets and others, it's the original low code, no code tool. Yes, you are coding, but it's not like you need to learn a formal programming language. Nobody needs to learn object oriented programming or whatever language it may be. But you do have to learn a language. But it's very simple. So I I 100 with you. It really is the first kind of low code, no code automation tool. All right. You worked for On Plan for several years. Unfortunately they didn't survive. I know they, they ended up closing shop. What did you learn from that experience? What were some of the takeaways from working for a planning software that didn't survive?

It was. I'm really grateful I had the experience to work at OnPlan. Right. So that was another opportunity where I was number two.

Right.

So the first nine inch hire and especially working at tech VC backed company, it was eye opening. There's a few areas that I learned that I take to my business today. I think one is just velocity.

Right.

Challenging your pre existing beliefs on how long things take to do.

Right.

And it's something I challenge my team all the time.

Right.

Often things does not require months to prepare. Of course there's that there's definitely tasks that does. But it's important to start I think to start executing immediately and make some mistakes. If you take that comparison, if you have to wait too much, do a data, do a research. I personally think for a startup, especially in my skill it's better to start now. And made a ton of mistakes by the two months mark. But you're much more comfortable.

Right.

So that's one piece. Another two I think is prioritization. Being a C based company, you don't have all the resources in the world and I mean time, I mean money, I mean people. So you have to be very, very good with prioritizing your tasks and how you invest your your resources. Again that could be a headcount, that could be money, that could be time. Right. And it's not all cases but I think for the vast majority of your decisions they need to be tied to metrics. That's important for the business.

Right.

And for most decisions. I think this framework I learned back at On Plan while doing product management was like what are the benefits if we invest in it? What are the negatives if we do nothing.

Right.

And just let it be. And sometimes not doing anything is a decision that's okay with it.

Right.

So really prioritization because if everything's important, nothing's important.

Right.

And my final one is praying is not a strategy. Praying sales will come, praying that your prices will go up, praying of the capacity. None of this. It's not a strategy. And we saw this firsthand really bad in On Plan we had a fairly large, proportionally large team in Ukraine. So when the war started that that took a Hit that hit us really hard.

Right.

One piece is you can just believe that you can wait it out.

Right.

That back then, we did not make that decision. I'm glad we did. We did whatever we could have to help the team. We even tried helping moving some of them.

Right.

But it also forced us to make a decision to start building teams elsewhere.

Right.

Trying to mitigate our risks.

Right.

Those are things I really learned. Those. Those are fond memories, me being online. But those are. Those are the areas I take to heart today.

Thank you for sharing. I appreciate that. And I love the prayer is not a strategy. Right. Hope you want to have hope. You all want to be an optimist, but you have to roll up your sleeves and go to work. You know, anyone who's religious. One of my favorite quotes is praise if everything depends upon God and then work if everything depends upon you.

I love that.

Right. You have to do the work.

I love that. I have one called. It's in Latin. It's Amor fatty. Just like love fate.

Right.

Things will happen, but you have to. You have to make it happen.

Right.

You got to work for it.

Right.

Things are bad things will happen. Good things will happen. You got to have faith.

Right.

You got to have hope, but you have to put in the work.

Right? Yep.

And the other one I really like when it comes to strategy, and I think this is especially true in fp and as we're helping the business figure things out is I had a boss who told me once he goes, strategy is about closing doors. And I've realized that so much as a business owner, you're gonna have more opportunities than you know what to do with in most cases, should I go in this direction, that direction, should I start implementing this tool or that tool? And part of strategy is knowing when to say no and focusing on what's important versus trying to be all things to all people. Right? No business that doesn't work, especially in the early days.

I agree that. I think I saw the exact quote from Julio a couple weeks ago. I. I firmly believe that. So I had a problem, especially when I started this business. You can't. You don't have that stability. You're trying to do everything right. So I was doing advisory, I was doing coaching, I was doing modeling. I even did data entry. Try to survive.

Right.

At some point, I realized we have something good. We have an inkling what this business is going to be. And it was time. And I'm really glad I brought in Peter, my co founder. And because he was really good at Closing doors. He made me sit down and list out everything we've done since we started and then just start crossing things that we don't do. And that is not part of our business for the foreseeable future.

Right.

Focus is really critical.

Yeah. And having the right founder is huge. I mean, you need that optimist visionary and you need the operator in a business. And when you have those two, so much more productive. If you have just the operator, you got a problem. Or if you have just the visionary. There's a reason most successful businesses have co founders, not a foundry. Now, there are exceptions. There's always exceptions, but. Right. Most big businesses tended to have co founders. There is a team so they could balance each other out.

I completely agree that. Have you heard of something called the EOS Entrepreneur Operating system?

I haven't.

It's a very, very unique framework. They have a few books about it. Right. So typically a lot of businesses thinks in there's a person for marketing and sales, there's a person for product, and there's a person for finances or whatever.

Right.

But their framework is exactly what you described you. It's not sales or marketing because those can even be hired and trained and built later.

Right.

But when you're starting off, you need a vision.

Right.

That's basically going all over the places.

Right.

I want to go here. I want to create this partnership, I want to sell this.

Right.

But nothing gets done. You need someone that can pull that person back. Like you said, the operator. So I really like that framework. It's how we're trying to run it today. They have another one where. Sorry, not els. There's another framework for professional services business. One is kind of your strategic, kind of over the place. One's an operator and one that really defines the product offerings, trying to take it to the next level.

Right.

Because an operator that connects everything during accounting, doing your finance, doing hr, during your strategic meetings, they're not going to have the dedication to really refine the offering for your clients.

Right, Got it. All right. We're going to jump a little bit more into transformations, or I might call this the FP and a episode for entrepreneurs. Right. But great conversation. I think all this relates. But I want to ask you a question. We've been hearing the term digital transformation, it feels like for 20 years and many digital transformations fail. Why do you think that is? Why do you think so many companies struggle with that, with that process of trying to transform themselves? And I use that word kind of loosely, but why do you think that.

Is, I mean, that's a big part of what I do, right? My big part is to try to make sure the business don't fail when they go through this process.

Right?

I think there's two sides. One is pre investment, one's post investment.

Right.

I think a lot of companies, CFOs, finance leaders, they don't do enough preparation or homework before they start this process. They know there's a pain point that triggered them to decide, okay, we need to go find a tool, we need to go through this process, this transformation process.

Right?

But they haven't documented enough what they're really trying to do, right? And that's why where I help a lot of business, like why are we here?

Right?

What is the definition of success? This is something I learned from mental health coaching. What are your non negotiables and what are your negotiables? There is no perfect tool. Like, you know this better than me, right? I learned from you that there's 150 tools out there. There's a tool, there's a time and place for all of these tools, right? But none of them is perfect for everyone, right? So you got to make sure you know exactly what you're trying to solve. And what are the next two halves, right. Once you have that, then we can start figuring out what are the areas you have to see during a sales cycle, what are the things you have to learn or what are the things you have to research internally. You also have to get in alignment of buying across the board. I've seen a ton of times where the analyst might have wanted, but it's seen that the executives did not, or vice versa.

Right.

And that can lead to disaster.

Right?

So I think part of is that doing your homework and priming yourself properly so you can make decision. And this is investment and embrace it. The second part is after you implement, there's also different reasons after you purchase doing the onboarding. There's a number of different issues as well, right. A lot of companies don't realize everything's driven off data, right? If your accounting data isn't the greatest, if you're starting a CRM, data is not greatest. That is a part of the process. You have to clean that data up, right. A lot of customers, companies talk to me, they think I'm going to solve everything for them and I'll be honest and I'll tell them I can't.

Right?

These are certain things we can fix, but you also have to fix these other issues to really give value out of this process.

Right.

You might have to do some cleaning up your accounting, your charter account. You might have to invest some resources in terms of cleaning up and changing how you set up your CRM system.

Right.

And then another piece I see is I see this across the board, both companies and other implementation shops. There's just not enough great documentation. No one wants to do them, no one wants to read them. And what happens is people leave. Churn is going to happen on both sides.

Right? Right.

And if you don't have great documentation, you don't have longevity. And the beautiful part about 2024, I find, is it removes the barrier to documentation. What used to be really painful about is the. The actual process of documenting it, but also the process of getting the stuff out. No one wants to read a guide, but with ChatGPT and AI and all these LLM models these days, there is no better place.

Right.

They can help you write the documentation and they can help you get you the answers you need.

Right.

Those are kind of the areas I see and the benefits and things we try to strive to improve. Right. We're not doing today or we're doing a little bit today, but part of it is we want to, definitely want to get better next year is how do we leverage these LLM models and how do we give clients great documentation training so that even if the whole team switches, right, someone can still carry and adopt and maintain these processes later.

Right.

P and a guy here today I want to Talk about the FPA Guys Ultimate FP and a course bundle. This bundle includes over 10 hours of content recorded by Ron Montero and myself, many templates and great lessons to make you a better FPA professional. The content includes FPA Business partnering, 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 FP and a professional. Go ahead and sign up for this bundle@the fpnaguy.com that's the FPEND a n d a guy.com use the code podcast to save 25%. Get started learning today. Yeah, and I hear you. Great documentation is huge. I really liked how you said spending more time up front in that pre sales process, really understanding what you're wanting to accomplish and being realistic. And that's where you as professional services help, have to help them realize. Like you said, hey, these are some things you're gonna have to fix. I can't fix these for you. The tool is not a magic bullet. It's not gonna change your your life. I always like to say it's really more about making yourself more effective. When you have the right people, the right processes, you bring in technology, thoughtful technology, that's when the magic happens because it allows everybody to be more efficient. Great example is generative AI. Right. If you're using generative AI, you can be more efficient, you can get more done, but you have to think about how you're going to use it. And you might have to do some work up front. Like companies can't use generative AI and get good results on crappy data.

Absolutely.

A lot of that's true with the bringing in a planning tool. If your chart of accounts is a mess, your planning's still going to be a real challenge. Just because you moved it from Excel to a tool doesn't mean you fixed that problem. You're still going to have it.

I completely agree with it. Things are just much easier if you fix it upstream.

Right.

This is why sometimes I have those difficult conversations that I wasn't allowed to have back when I was on a sales team for some of these vendors.

Right.

I will look at a data and tell them we're going to have to fix a chart account or else we're just migrating this awful mess into another tool.

Right.

For certain projects we have, if they're okay with it.

Right.

Part of our process, before we even touch the tool is we'll review our data, figure out the process, what do we have to clean. If it's a charter account restructure, I'll work with you that as part of our professional services offering so that you're set up properly once we start a tool.

Right.

Totally agree. So where do you start when your advising customer comes to you and they're like, hey, I want to implement a planning tool, I need to make my life easier. What's the process you take them through? Is there a framework you use or how do you get started with them?

There is a structure and framework of questions I go through, but I often say is I put on with my fractional CIFO hat on.

Right.

I really want to understand your business, which is why for a lot of my, my own customers, I'll put in days before I even recommend a tool for them.

Right.

Really figure out their business, their pain point. Sometimes they don't need a tool. I'll tell them like you don't need a tool, Right? It's a process situation. You're not going to fix this by bringing a tool in. There's a client right now, for example. I've spent probably close to a week with them at this point. We've finally agreed that they just need to upgrade their ERP system. An FPA system is not going to fix the issue they have. We can probably do it, but it's not going to be a great experience. They're not going to be able to maintain it. No one's going to have a great time. When I told them, I told them you should Upgrade instead of 60 something odd QuickBooks instances, QuickBooks Desktop instances, let's get you onto Sage or something else or Campfire, one of these tools that's going to help you manage that or even nest free if you're big enough. And then we'll apply that planning reporting layer around it.

Right.

It's not meant to solve your accounting issue.

Right.

But in terms of framework, what I often ask is, my first question is what is this externally or internally motivated? Externally, as in you have to produce reports for RFS reporting, regulatory reporting for your VCs, your boards.

Right.

Is it that was internal management, Right. Is it to get forecast BVA so that you can better manage the company? So that's my first question.

Right.

And based on that, right. Then we can start defining your criteria. Success, your definition of success. Right. And that's why I really start questioning them what is really important, what is not.

Right.

And then armed with that knowledge, plus my understanding of their business, their data, that's when I can start putting together a checklist they should check or a checklist they should look for during demos and a sales cycle in terms of looking for these tools.

Right.

And that's why I keep saying that Customer Happiness Officer. That's just really important. Just typically when I was working as a part of these vendors, we didn't have the luxury to spend that much time to really understand a prospect.

Right.

Because CAC is insane. If you listen to what I'm talking about, the CAC is just not realistic for a larger business, but for us. We're really grateful that I can do that today.

Yeah, I know. I appreciate you sharing that. Well, next question I want to ask. Everybody has to try to figure out when do they implement a planning tool? Any advice there? Is there a size you typically think a complexity? What's that sign that, hey, maybe we need to look at a different way of doing things. Maybe we need to consider bringing in a planning software. Where do you think that point is for most businesses? Obviously there's no perfect answer here for sure.

No, absolutely. It depends on the circumstance. I look at as two categories. I think for the smaller, sophisticated, less sophisticated businesses. So I'm talking about your startups, your mom and pop, your seed companies. I don't think they need to invest in a bigger tool. What they need to have is enough data so they know how their business is doing and they, they're able to build some sort of plan, budget, forecast so they are directionally correct. I think that's the key here. Don't invest too much time or resources building a very accurate system. Because you're small. You should put all your time into product sales.

Right.

Not investing in fpa. Right. So in that scenario, it really depends if the founders or if you have someone has some decent enough experience to be able to build a back of the napkin kind of model. I don't think you need a tool. On the flip of the coin. You also have founders that are purely sales, purely engineers. They don't have that background. It's not enough for you to go hire someone. I don't think that is enough for you to go hire someone. In those cases, there's a bunch of tools that ranges from 50 to $300 a month. I think those are really helpful. It gets you directionally correct. You know how your business is performing on a departmental basis. You can kind of see your profitability. So you're not ignoring your numbers. So that's how I see the first category, the larger ones.

Right.

The tools I work with. Now the question for that is, the way I look at it is do you have the budget to spend, I usually say 40 to 50,000 on the tool.

Right.

That's typically a company that's doing 30, 50 million or above. And I think that's usually when it starts to make sense. You have the budget, so that means you have the time and the resources to do a project like this. You're also big enough where these kind of insights, these tools are. The ROI is high enough.

Right.

And that's where I think of it because there is a breakdown of the tooling and professional services. Right. I'm definitely a little bit biased because I run a PS firm in the space, but I do think FP&A is just so free. You're coming from Excel, right. Which is the most free tool out there.

Right.

If you don't have a good guidance, a good design, how to implement these tools, oftentimes you can have a bad time.

Right.

So that's how I kind of break it down. You got it big enough that you have a budget for this or small enough that you just need something directionally correct. In those cases, if you know how to build a decent back of the napkin calculation model, you don't need a tool. But if you don't, it's really important that you have that visibility. And it's probably cheaper to get a tool than to get an actual hire.

Right, Got it.

Thank you. I appreciate you sharing that and totally agree. It's very different for a startup or a fractional CFO looking for a tool to manage multiple companies. Or as you said, the 30, 50 million or 100 million or whatever. I had a friend that it contributed to him leaving. It wasn't the only reason. But he worked at a company that was a billion plus and it was all in Excel. It was just a nightmare. Right? Yeah. That's a big global, multi entity, billion plus business and I know of a few that have done that and sure. Can you do it? Yes. You can do almost any size of business in Excel with enough discipline. Should you? Is the question with just Excel without the database or something around it? I would argue no, you're just asking for pain. But you know, everybody has to choose what works for them.

Yeah, absolutely.

Right.

You can get pretty far and it is a problem that you can throw enough manpower at it, just throw enough heads to solve. But it comes to a point, especially for a larger business to question not just the cost. Right. Because I've, I have advised international corporations where they have resources in South America, Indira, Philippines were to tell me I can get a resource for 25k that is cheaper than a tool.

Right.

So I agree. I tell them I agree it's monetary wise, it's a cheaper investment. But I asked them what about the accuracy and the time.

Right.

If it takes you a week and a half to get a report, that's a week and a half the lay that you have in terms. Of course. Correct. Or managing the current month. It's not just a monetary investment. I see companies that take three weeks to get a report. So what this, this month is done, right. If you don't know how you're doing until three months in, right?

Yeah. If you basically don't know how you're doing till the next month is pretty much over. It's really hard to course correct. So there is definitely a time component beyond just the dollars you spend. Totally agree. Want to talk future a little bit? You know, we're FPA tomorrow after all. How do you see planning software changing going forward? With generative AI and everything going on, where do you think we're headed?

I'm really excited for it. I use ChatGPT on a daily basis, right. So even today I see finance being different. A couple years ago I had to write a ton of dba, Python, SQL, Power query for everyone out there. You don't have to do that anymore, right? You can get power. You can ChatGPT or any of these other LLM tools to do most of that heavy lifting for you, right? So the way that I see in the future is I think things are gonna change drastically. I think for a vendor out there, you have to really embrace AI. There's three sides, three aspects I think that's gonna play the biggest influence. One is data cleansing and mapping. I've always believed half of the value that these tools offer is just creating a really strong data warehouse. I don't like to use that tool because if you compare to a product based or engineer based data warehouse, they're much more sophisticated, much more complicated. So for me it's a data warehouse light for a finance person, but you're still talking about 3, 5, 15 different systems that you can connect to. And I think AI is going to make a big difference in terms of helping you clean that data, map the data so that you have one source of truth, right. That you can act quickly, rely on, get the information that you need. The second piece is I think the modeling and the reports, I think a couple years from now on it's, you don't, you should not be really building these reports, these models yourself, right? These models should definitely be strong enough that you should really be business first. Which is why I often tell FP and folks really focus on understanding the business, right? The economics around that and then you can build a good model afterwards. But the fun thing, I think what's going to happen is that building up the model, that's largely going to disappear, right? You just, you should just be able to interface with the system, tell it how the business work, tell the strategies you want to implement next year. And I think these tools should be able to build the models for you, right?

Be exciting to see how, how they do on that. You know, lots of different opinions. On one of my shows, Financial Modelers corner. I ask, you know, will AI build the model for us? And most people say yes. And you still need the human judgment, so no doubt it will help us. It'll be really interesting to watch how much it does versus what we have to do in the sense of that human judgment or, you know, some technical. But I agree with you, it's going to change. It's. It is changing and it will continue to change the way we want.

I think the judgment, the designs never go. I give an example. So I haven't built for everyone out there the models you've gotten for me. I haven't built the formulas from those in a while. But however, I'm the one that's talking to you, understanding your business, your strategy, your drivers. What happens is I boil that down to a design and then I have a team that can do it.

Right.

The way I see a couple of years, that first part, that's not going anywhere, right? But that building the model, the formulas, I think that's what's going to be replaced fairly quick. I'm really excited for that because it's just so much faster, so much more accurate.

Right, Makes sense. All right, we're going to move on to kind of our, some of our standard sections. I have a couple FPA questions we'd like to ask all our guests and then some more personal get to know you. So, number one, what is the number one technical skill FPA professionals should master?

I think you should definitely try to learn about data, about data a little bit. Try to dabble with SQL and power query, things like that. The reason why is you need some foundation. For example, if you want to leverage ChatGPT or LLM models to build a formulas for you, you need to at least understand how they work. Right? So I think by learning that you're going to get better prompt engineering, you're going to be able to build models faster. But the other piece I think is because in today's world, we're working with so much data, you need to understand what data sources you're pulling. One of the key parts I do as an architect for a lot of projects is trying to understand going backwards from the client's requirements, what are the actual data sources we need.

Right.

So understanding that you're going to be able to build better models, better reports, better insights, but also if you understand data and structure and tables, you can start building Excel or Google sheet models almost software. Like, you have data storage tabs, you have drivers, you have calculation tabs that allows you to build More scalable solutions that are also simpler and easier to maintain.

Got it. All right. What's the number one softer human skill we should master?

If you asked me a year or two ago, I probably would have said storytelling. I still think it's really important. I think being able to ask questions now, being able to run a discovery session, asking the whys behind things, is more important than anything. I'll give you an example. A year ago, I was building. I was helping this CFO build a very large real estate model, and I noticed that he was modeling the phone expenses per person. It was pulling teeth, trying to convince him. I'm like, why are we doing this? I had to actually go get the data and show him it was a rounding error before he realized, you're right, we should not be even modeling this. The level of detail and time they were putting in just was not worth it. Right. So I think it's all about roi. The time put in to get the outputs that we need, but also to build a model that's useful. I often say this. I can build you the largest, most accurate model, but if no one's using it, it's not useful.

Right.

So you have a balance between how much work you have put to put in versus the usefulness. And I think to do that well, you have to get really good at asking the whys.

Got it. So we'll call it acting the wise. I like it. We're going to move on to the get to know you section. When you're not working, what's your favorite hobby? Passion. What do you like to do in your free time outside of being a hippie and travel all over the world?

That is kind of the main thing, Paul.

I figured as much.

I. I love traveling, and I love. I don't know what it's called. I call it deep traveling. So I love going to a new place and spending weeks, if not months in that place. I usually try to avoid places that are a little bit too touristy. I try to pick up a little bit of language and really expense the culture. So right now, that's really it for me. For the last year, especially probably the next year or two, it's building the business on the basically traveling part. So I believe already someone else has already branded himself as the nomadic cfo. Right. So I need to come up with a better term.

Right.

But for me, it's the traveling. The. The experiences that come with it. Yeah.

Speaking of traveling, if you go anywhere in the world tomorrow, where are you traveling?

My favorite places on this Planet is Greece and Bogota. But I really want to see Argentina and Chile. My dad actually spent a couple of Years in the 70s in Buenos Aires and he tells me how beautiful it is down there. And seeing some of the photos down in South Argentina or Chile, it looks like a different planet. I want to go. I want to go there soon.

Got it.

That'd be fun. Haven't been there. I've been to Greece. Greece is fabulous.

Greece is fabulous. Absolutely. Love the food and the water. It's beautiful.

Love the food. I agree with you. Great place. What is one book? If you could only recommend one book to our audience to read. What book recommended?

So recently I've been fascinated and this is not my old time, this is recently I'm fascinated with the book the Boutique, because I'm building a boutique PS company.

Right?

I. I love it. It's so actionable. The author basically took his research from. I can't quote hundreds of PS companies that boil down to basically action items. I kid you not. I basically follow that book like a bible. How do we hire? How do we sell? How do we market? I don't think I'm doing anything extravagant or revolutionary. A lot of times I'm literally just following that book. I love that book. For anyone out there that's thinking building a PS company, highly recommend that book.

All right, so gonna wrap up here with the last question. Can you tell our audience what are the services you offer and if they want to learn more about you, what's the best way for them to do that?

Yeah, so I think we've talked about a couple times, right? So we focus FP and A systems of software as well as fractional CFO service for smaller clients.

Right.

So if you need a model built out, if you need a fundraiser, we.

Can help with that.

In terms of the fractional, in terms of the FPA systems, right? That's procurement and implementation. Will help with both sides. Be happy to help a lot of our customers as I get to understand their needs. It might not be a tool that I partner with and that's okay.

Right.

I hope we'll make you those. This. I hope you make those decisions. I hope you better educate so you can make better decisions.

Right.

The easiest way to find me is probably my LinkedIn, right? So just look me up, Charlie XWL. You'll be able to find me. And that's the easiest way. I think the funny thing is, now is for a lot of businesses, especially smaller ones, your LinkedIn is actually better than your website.

There is some truth to that. As I'm rebuilding my website, I'm like, I get more out of LinkedIn than I do out of my website. So I, I totally get what you're saying. Well, Charlie, thank you so much for joining us. I've had a great time chatting with you and talking a little bit about entrepreneurship, FP&A and planning software. It's been a great time. So thank you for carving it out of your time to chat.

Thank you so much, Paul. I was grateful. I'm super grateful for having me for being here and it's been a lot of fun. Thank you.

All right, thanks. Thanks for listening to FPA tomorrow. If you enjoyed the show, please leave us a five star rating and a review on your podcast platform of choice. This allows us to continue to bring you great guests from around the globe. As a reminder, you can earn CPE credit by going to earmark cpe.com, downloading the app, taking a short quiz, and getting your CPD certificate to earn continuing education credits for the FPAC certification. Take the quiz on earmark and contact me, the show host, for further details.