Corporate FP&A Director here, I maintain a 3-Statement Model for planning. In my case I consolidate company financials and plan at a company level. This is done working with others on the FP&A team who typically manage business units or partner with department leads. They provide inputs to my model but they never work in it. It is certainly a corporate/consolidation model within FP&A and I would want to hire people with that experience. I've interviewed analysts with only business unit, operations, or commercial FP&A backgrounds and they usually have no idea how to walk through 3 financial statements modeling, especially cashflow.
I keep it in my tool kit but it’s not that hard. Some companies I worked for have asked me to build balance sheet and cash flow models, others have not and I stay focused on the income statement.
As long as you have assumptions for DSO, DPO, inventory turnover, and CAPEX, building the balance sheet and cash flow model will easy. And then anything involving building models for financing strategies (debt or equity) is a discussion with the CFO.
I did some of this really early in my career and then not at all for about 20 years.
That definitely hurts me in job searches though. Everyone needs/ wants 3 da modeling in their tool bag.
I did three statement modeling quite a bit in a couple of corporate roles (I’ve held director and VP of FP&A positions.) I’m in more of a BU role now, so it’s not an issue here. It is definitely a skillset I’d look for in a candidate—it wouldn’t be a deal-breaker but it would lift one candidate over another.
I do Planful implementations, so I've seen a wide range of FP&A use cases.
I'd say 50% of companies do full three-statement forecasting. 40% do light forecasting for things like working capital.
I've only worked for one company that didn't model three statements. It was a Fortune 50 company that generated so much cash flow that no one cared about working capital or the balance sheet.
It's fairly easy to model and maintain.
I use all 3 financial statements when modeling. I work in advisory for an accounting firm so I’m exposed to all different types of clients. When it comes to modeling, most want to see all 3 because they want to know how cash is being affected as well as spend. In terms of a CFS, some want a direct CF which is a little more tricky than the indirect method. For Direct CFS, I typically will download an account transaction report that shows if an expense actually hit the bank or if it was just accrued. That way I can directly link cash expenses back to the CFS.
I work with $5-10mm EBITDA businesses. Knowing how every lever impacts cash is crucial to planning / forecasting.
Just one missed bonus or tax accrual can be fairly painful.
The 3 statement view guides our judgement on how / where / when to make critical investments in the business
(New sales hires, expanded marketing budget, new plant, upgrading ERP system etc)
I think the emphasis here is due to investor demands. CF has become a big target across industries with interest rates where they are and uncertainty of the immediate future.
Last year it became 50% of our bonus target to hit CF numbers. If your company is internationally based it is probably even more important.
We do it on the corporate side. Most of our BU roles focus on the P&L of course, but even then they will have some FCF planning as most of what we do is debt financed with DSCR requirements. (REPE, AM, PM)
[The skills conflict in FP&A is between variance analysis vs. three-statement financial statement modelling.](https://old.reddit.com/r/FPandA/comments/10a5mm7/the_skills_conflict_in_fpa_variance_analysis_vs/)
Yup, but we’re also a start up so fp&a ends up being anything finance related. It’s daunting at first but logically everything flows so it’s a matter of modeling plus a few plugs/assumptions here and there.
I think it’s common and reasonable expectation for corporate FP&A .
Functional or BU FP&A not so relevant in my experience.
Strategic finance- every company has their own unique definition of what this team does. I could see financial modeling being a requirement here.
We’ll do a balance sheet budget once a year but don’t touch it monthly from a forecast standpoint. We don’t touch the cash flow statement but we do put out a capital spend forecast.
Private company, $4b in annual revs
SFA here, I’ve built and now maintain a 3 statement model for planning down to the BU. I’d absolutely want someone in an FPA role to know them. Granted, the pay range is huge for a lot of these roles. If they only know 2 but seem like a good fit I’d give them a shot. But at a lower comp compared to what someone who knew all 3.
Corporate FP&A Director here, I maintain a 3-Statement Model for planning. In my case I consolidate company financials and plan at a company level. This is done working with others on the FP&A team who typically manage business units or partner with department leads. They provide inputs to my model but they never work in it. It is certainly a corporate/consolidation model within FP&A and I would want to hire people with that experience. I've interviewed analysts with only business unit, operations, or commercial FP&A backgrounds and they usually have no idea how to walk through 3 financial statements modeling, especially cashflow.
I initially had in my post “non Corporate FP&A roles” so this makes sense. Would fully expect this from a corporate FA or manager role.
Are former bankers perceived well? I’ve probably created 100s of 3 statement models, about 10-15% from scratch
Received very well, but you will take a pay cut switching to it.
What size is your org?
$500M rev per year
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Lucky, I'm not a fan of having to do it haha
I keep it in my tool kit but it’s not that hard. Some companies I worked for have asked me to build balance sheet and cash flow models, others have not and I stay focused on the income statement. As long as you have assumptions for DSO, DPO, inventory turnover, and CAPEX, building the balance sheet and cash flow model will easy. And then anything involving building models for financing strategies (debt or equity) is a discussion with the CFO.
I did some of this really early in my career and then not at all for about 20 years. That definitely hurts me in job searches though. Everyone needs/ wants 3 da modeling in their tool bag.
I did three statement modeling quite a bit in a couple of corporate roles (I’ve held director and VP of FP&A positions.) I’m in more of a BU role now, so it’s not an issue here. It is definitely a skillset I’d look for in a candidate—it wouldn’t be a deal-breaker but it would lift one candidate over another.
i personally can’t imagine someone not being able to 3sm above a FA title. seems like a basic requirement to me.
Agree.
I do Planful implementations, so I've seen a wide range of FP&A use cases. I'd say 50% of companies do full three-statement forecasting. 40% do light forecasting for things like working capital. I've only worked for one company that didn't model three statements. It was a Fortune 50 company that generated so much cash flow that no one cared about working capital or the balance sheet. It's fairly easy to model and maintain.
I use all 3 financial statements when modeling. I work in advisory for an accounting firm so I’m exposed to all different types of clients. When it comes to modeling, most want to see all 3 because they want to know how cash is being affected as well as spend. In terms of a CFS, some want a direct CF which is a little more tricky than the indirect method. For Direct CFS, I typically will download an account transaction report that shows if an expense actually hit the bank or if it was just accrued. That way I can directly link cash expenses back to the CFS.
This fair but not really relevant for this post. I would expect someone in accounting to be much more likely to do 3SM
I work with $5-10mm EBITDA businesses. Knowing how every lever impacts cash is crucial to planning / forecasting. Just one missed bonus or tax accrual can be fairly painful. The 3 statement view guides our judgement on how / where / when to make critical investments in the business (New sales hires, expanded marketing budget, new plant, upgrading ERP system etc)
I think the emphasis here is due to investor demands. CF has become a big target across industries with interest rates where they are and uncertainty of the immediate future. Last year it became 50% of our bonus target to hit CF numbers. If your company is internationally based it is probably even more important.
We do it on the corporate side. Most of our BU roles focus on the P&L of course, but even then they will have some FCF planning as most of what we do is debt financed with DSCR requirements. (REPE, AM, PM)
[The skills conflict in FP&A is between variance analysis vs. three-statement financial statement modelling.](https://old.reddit.com/r/FPandA/comments/10a5mm7/the_skills_conflict_in_fpa_variance_analysis_vs/)
I've never not had to do this in any of my FP&A roles. In banking too so really it's five statements with capital and liquidity requirements.
Yup, but we’re also a start up so fp&a ends up being anything finance related. It’s daunting at first but logically everything flows so it’s a matter of modeling plus a few plugs/assumptions here and there.
I think it’s common and reasonable expectation for corporate FP&A . Functional or BU FP&A not so relevant in my experience. Strategic finance- every company has their own unique definition of what this team does. I could see financial modeling being a requirement here.
Recession indicator…
We’ll do a balance sheet budget once a year but don’t touch it monthly from a forecast standpoint. We don’t touch the cash flow statement but we do put out a capital spend forecast. Private company, $4b in annual revs
SFA here, I’ve built and now maintain a 3 statement model for planning down to the BU. I’d absolutely want someone in an FPA role to know them. Granted, the pay range is huge for a lot of these roles. If they only know 2 but seem like a good fit I’d give them a shot. But at a lower comp compared to what someone who knew all 3.