Why I’m passionate about guiding the next generation?

The more I see polls on people’s views of what accounting and finance professionals need to focus on the more concerned I get. 

The gap between companies desperately wanting to hire talented accounting and finance professionals and those looking for a job grows ever wider. 

People learning to code yet not focusing on understanding the fundamental basics of accounting and business is a big concern. 

People build complex data models and advanced calculations but are not able to clearly communicate and visualize the outputs.

I wonder how long it’s going to take to correct this trend and hopefully, this article is a start.

What’s so bad about coding and what’s it based on? 

Learning SQL, Python, R or some other data science or engineering coding language is not the answer! 

It simply takes you further away from the real action with business decision-makers. 

Besides ChatGPT can do coding faster than you can learn it! 

This purely comes down to my own experience to date and it’s not what most people would have guessed.

I am not a coder and never was, but I do know how to apply code to fix stuff.

I was fortunate enough to be surrounded by technology early in my life and career. What would surprise most people is that my exposure to tech was more related to hardware, TCP/IP advanced settings and parameters for dial-up modems (yes for those that remember) and general troubleshooting printers that didn’t connect or software that didn’t load properly or had bugs. 

 I would often dig into and resolve these issues with the support team. Over the past decade, I have given feedback and enhanced other people’s software (for free!)  whilst also learning how to use it better and enhance my problem-solving skills. 

A very small portion of this actually required any form of hard-core coding per se, but it certainly involved research, calling up help desks, managing an IT help desk myself at PwC and many other facets of tech problem-solving. At times it did require me to apply some coding scripts written by someone else. Often the problems I was solving had already been solved by someone else and in most cases, I was right, especially thanks to Google! This is only going to get better and easier with ChatGPT.

It wasn’t until I audited an actuary’s financial models that made 1 + 1  =3 that I realised this world of technology, and financial modelling all came back to a skill that I loved and developed the most and that was lateral thinking and problem-solving. Maybe there is another article on how you make 1+1=3.

Most of this was very little hard-core coding but more a way of thinking and solving business problems with a financial wide-angle lens, not those really narrow ones. 

Fast forward to today and had I just followed the traditional accounting pathway and stuck to it, I would never have started Model Citizn nor would I be hiring other actuaries and working with data engineers all of whom can code way better than I ever could. 

I would not have hired myself as a recently qualified accountant out of Big 4 because I had never built a financial model and only focused on the basics of accounting theory and application and not expanded my skills to lateral thinking tech problem solving and modelling. 

A highly underrated skill in financial modelling is problem-solving. A skill you can only develop by actually attempting to solve complex problems!

I’m hoping this article will help the many professionals looking to enter the exciting and ever-changing field of accounting and finance and will find a path towards success in both financial modelling and data analytics.  

Forget hard-core coding, learn the language of business 

Learning to code doesn’t necessarily in itself gives you lateral thinking and problem-solving skill. You are learning a language but how you apply that language is what’s important not the fact that you can merely write it. 

I can read and speak Afrikaans, broken Hebrew and say a few words in Zulu but that doesn’t mean I can suddenly negotiate and influence business decisions in those languages and apply them in complex situations.

So, if you are wondering what skills to develop today to be hired, it’s certainly not learning a bunch of advanced data coding languages. Our best language to learn is business and how to apply and design great questions that lead to finding insight and foresight.

However, I have 1 exception to this and I would say to learn deeply the coding within the best tool for business and finance and that’s Excel and its powerful sibling Power BI. 

Business data is being modelled, visualised and communicated using these two tools more than any other on the planet, so go deep and broad in how best to apply this tool to your toolkit. 

The benefit of these tools is that if you learn how to apply the coding languages of Modern Excel (MScript and DAX) they work for both tools. Learning to apply, doesn’t mean being a hard-core coder writing from scratch but learning how to copy others and apply or tweak them in solving business data problems.

BUT! When I say learn them I mean learn how to apply them not get caught down a deep rabbit hole of endless possibilities and complex code design for the sake of it. 

Stay shallow in real business problems. If you need to go deep, research or get an expert, in my case hire one. 

The superpower of knowing how to apply tools and coding is far more valuable and important in business than reciting lines of code or writing it yourself from scratch. Nobody cares how you got the answer whether it was your code or someone else’s, they just need the answer, insight or advice on what to do next. 

What would I suggest you do today? 

Focus on the skills that best align with developing your understanding of business drivers and having conversations with key business leaders that make decisions and will support your growth and trust your counsel. 

Remember whilst you are astute at accounting concepts don’t let this be your only focus (remember that wide-angle lens)  and practice your language of business not accounting. 

If you are new to a role or the company and looking to make an impact on decision-making both strategically and operationally follow these steps for maximum impact. 

1. Understand what drivers the business unit economics

2. Understand clearly the financial statements’ linkages 

3. Focus on the business strategy

4. Build a basic Excel model

5. Make sure you test and visualize your model through time

6. Build your tech stack

7. Monitor, track and openly collaborate

8. Focus on those economic  drivers (lead indicators not just lag)

9. Rinse, repeat and update a change

I’ve used this as an effective method for CFO, Finance Partnering and FP&A roles I’ve done in the past. 

This approach can be applied to almost any role for any company with regards to finding ways as an accounting and finance professional to add value to the business. 

This would include FP&A, Finance Business Partners, Commercial Finance and wannabe CFOs. 

1. Start by understanding what drivers the business unit economics (what are the driver that are leading vs lagging indicators). This may require you to extract, transform and load data from core systems into either Excel or PowerBI for analysis. Validation of these drivers is essential as it’s the core element many forget and assume incorrectly what actually drives business.

2. Understand clearly how these economic drivers find their way into the financial statements and are linked to the relevant accounting implications eg revenue recognition or Opex vs Capex to name a few. 

3. Focus on the business strategy and what are the short-term and long goals and connect these to the business unit economics and financials primarily the actuals, budget and hopefully forecasts. 

4. Build a basic Excel model that connects 1,2 & 3 and be prepared to build some scenarios on those drivers and understand the sensitivities of the key unit economics. If you are adventurous and it’s required perhaps consider a 3-way model especially if you have to consider Capex and deferred revenue. Remember simplicity over complexity wins every day of the week and more data doesn’t always mean more accuracy. If you are looking to develop strong technical or “coding” knowledge then focus on Excels languages and formulas ie Excel formula syntax, MScript, DAX and now also Dynamic Arrays and Lambda.

5. Make sure you test and visualize your model through time ie it needs to be rolling and updating with actuals, not just a once-off. Validate your logic and stress test the correlation between drivers and outcomes. Clearly document these relationships and visualize the outcomes through clean dashboards that display the story accurately and succinctly.

6. Build your tech stack with automated reporting and self-service BI on those key drivers and relationships to help business users clearly understand the impact and enable them to make better decisions without you. Keep them focused on the things that matter the most based on your modelled scenarios and monitoring.

7. Monitor, track and openly collaborate and discuss performance against strategic goals, annual budgets and run rate forecasts. This is the time that you need to walk away from your screen, spreadsheets and BI reports and have frank conversations with business leaders. 

8. Focus on those economic drivers (lead indicators not just lag) that have the greatest impact and squeeze that value out like it’s liquid gold! More specifically focus on the leading indicators that will drive performance, not those lag indicators that tell you things are crap after the fact! That’s not that helpful or valuable. Most people will have a gut feeling and know when things are good and not without you telling them.

9. Rinse, repeat and update for a change. How do you know whether the strategy is actually a good one or not? Maybe you need to revisit or tweak it. Time will tell! Is it a vanity strategy or a real economical and achievable one? This equally applies to changes in technology and keeping abreast of the innovation that Microsoft is deploying along with the Add-in/App source tech that is ever-growing. 

Note: None of the above absolutely needs you to be a hard-core coder (especially not SQL). Often the most value can be extracted without needing to write any code yourself but by listening deeply and clearly communicating to codes that you need! Perhaps checking their code and outputs if you feel the urge.

Where can you learn more?

Financial Modelling 

If you haven’t already built a financial model then perhaps now is the time to start. 

Here is a recent online learning episode I recorded with CCH with an assumptions book, manual and final financial model solution.

If you simply want to get a solid foundation in financial modelling then perhaps explore the CA ANZ Financial Modelling elective. I wrote a large portion of the study guide along with other experts. 

If you are ready to step it up attempt the Advanced Financial Modeler exams by the Financial Modeling Institute. 

Analytics 

If you have never used Power Query or ventured into Power BI then perhaps now is a time to start. 

Here is a recent online learning episode I recorded with CCH with an assumptions book, manual and final data model solution for those getting started.

If you want to take it a little further with an intermediate level of focus on visualisations and other App Source applications then the intermediate workshop is valuable.

Fundamentals of technical accounting and modelling

If you lack the fundamentals of how you approach 3-way modelling then stay tuned for more.

I’m excited to develop targeted learning on accounts receivable modelling and look forward to explaining how the fundamentals of working capital can be modelled correctly right down to starting principles and debits and credits. 

If you want to find out more and follow the rest of the article series be sure to download the Financial Modelling App

If you want to find more information on financial modelling and content visit the Model Citizn website.

Image credit: Matt Noble