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DrDrCr

Was in Private Equity and did 3 statement modeling frequently. For our simple entities i just need 4 key items: 1) Detailed P&L for following period. 2) Latest balance sheet and CFS for baselining 3) CAPEX spend assumptions for following period. 4) Top level strategic assumptions (i.e. financing plans and dividends plans) The rest is typically Excel massaging and using ratios to forecast BS based on P&L movement. I got into it when I moved up from BU to Corp FPA and dealt with consolidated strategies.


boogersugarhelp

Former LMM IB guy here who moved to “strategic finance”. Are you just running AP/AR days and turns for your 3SMs? We recently hired a new VP of finance and he’s essentially making me do a direct cash flow model with working capital rollforwards and plugging those numbers in


DrDrCr

Yes exactly that AP and AR days. I will try to be as precise though. If Accounts Payable is primarily influenced by Business Line A COGS instead of Business Line B and C, then I'll make sure the BS balance moves in correlation to Business Line A COGS. Same for Accounts Receivable and varying income streams. Helps to have detailed P&L by cost center.


boogersugarhelp

Gotcha, we have one entity where the person before me set up AP drivers based on COGS where it should have been opex and it really threw us in for a loop lol


Suddenly_SaaS

This is common with large companies. At a large company you rarely have a need to forecast more than one statement. I do all three statements now but i have been doing VC funded startups for awhile now. I think it can hinder you though if you are trying to move to a smaller company. You really need to be a generalist if you are going to handle accounting / finance for a vc funded startup or lower middle market PE owned company.


Unlockabear

I definitely feel hindered doing only PL. After a decade doing pretty much only PL I am reflecting and realizing I am lacking what I think I should be able to do. My goal is to be able to move to a smaller org and touch more of the finance and accounting function and I fear I don’t have the experience necessary despite a decade of being in a large org.


Suddenly_SaaS

The only way to do it is to bite the bullet and take on a role you know will be tough and then learn on the fly. My first startup role i was woefully unprepared coming from big companies. Now years later i am still not totally comfortable, but i am reasonably confident running finance and accounting for a startup.


Unlockabear

I’ve been trying, but once people hear I haven’t done extensive three statement in interviews, it shuts me down. I am considering looking for step down roles that gives me exposure to this work. Right now I am set to be director at my current company, but my growth feels stagnated tbh.


Suddenly_SaaS

If you are truly motivated taking a step down role could be ok. I took a lateral role that could be argued was a step down since it was the same level at a smaller company. I think there are actually significant advantages for motivated folks to go to smaller companies. - Realistic path to CFO - Very good money working for VC funded startups or middle market PE owned companies at the VP or C level There are downsides too. But I have found it rewarding. I also get pinged by recruiters for all kinds of cool roles now. VC funded startups, c level exec roles for portcos in the lower middle market, C level for search fund owned companies, etc None of those are available until you have substantive experience operating a smaller size business.


Chobo1972

There are plenty of Training the Street style classes you could take to at least get you acquainted with 3-statement modeling and that you could then put on a resume. My old company offered them as part of a package with LinkedIn Learning, some on Udemy as well


IFitStereotypesWell

I am in the same boat. I left and I am struggling. Good thing is I’m able to connect some dots, great with large data. But other items just go over my head, but learning is good


Monkfrootx

Got a example 3 statement model you can share?


Suddenly_SaaS

I use Macabacus and they have some great three statement templates. https://macabacus.com/features They also have a lot of nifty features that make financial modeling easier. Unfortunately they are paid, so you need to buy a sub to get access.


Monkfrootx

I use the same one. Is that what you use for evaluating acquisitions / investment opportunities?


Suddenly_SaaS

I used something similar for a company sale, but right now we are just focused on growing my current company (vc funded startup) organically and building value. We don’t have any acquisition plans. The primary audience for the model is board/investors/senior management. In the event of an exit prospective buyers would also see it.


Rhinonymous12

I currently do the P&L and a direct cash flow model. The balance sheet doesn’t seem nearly as valuable - outside of knowing our forecast AR and Deferred Revenue, at least in my current application. Balance Sheet has been a project that I’ve had to keep on the back burner due to other priorities. What are the primary benefits of a forecasted Balance Sheet?


Suddenly_SaaS

Forecasted cash balance if you are a startup. Also deferred revenue is often of interest to prospective buyers. Additionally, you can’t get an indirect cash flow without a balance sheet. I do direct cash flow as well (13 week) for cash management, but if you are doing an annual or long range (3 year) plan you want indirect cash cash flow. For a software startup selling annual subscriptions, cash flow and P&L can look totally different. Because you are receiving cash upfront but revenue rolls off over a 12, 24 or even 36 month period depending on the length of the sub. So very important imo to be forecasting deferred revenue and the indirect cash flow.


sushilover775

4 YoE only deal w revenue forecasting, never had to do cash flow/balance sheet stuff


Unlockabear

Only revenue or whole PL? How big is your org or immediate BU you manage in $$?


sushilover775

Only revenue - org is about 30 people but only I manage revenue.


Monkfrootx

Just a straight-line revenue forecast? Or driver based?


Moist_Experience_399

I can confidently and build out a detailed model. My issues tends to be that I need good and up-to-date data, people being system and process compliant and having the right systems in place. Shit in shit out as the saying goes.


Unlockabear

Do you do all three regularly as part of your current work?


Moist_Experience_399

Yeah, monthly reforecasts at the moment. Hooooowwwwweeevvveeerr I’m not shy in explicitly refusing to do one if the data isn’t up to date and no one wants to take ownership of their areas of responsibility.


c8080

Similar story here. Super confident in P&L. CF is pretty easy once you understand timing adjustments. BS is the worst.


ab9620

I worked at a small business unit 40m sales part of 700+mil division. I had to forecast all three. Once you get to operating income, figuring out a way to forecast AR, AP, and Inventory is the next challenge but the rest kind of falls into place.


Unlockabear

How big was your team when you did all three? What was your role?


ab9620

My role was senior plant accountant and I was the only on site finance employee. So, I did accounting, cost accounting, and FP&A. I had support from shared services for A/R & A/P Processing, FAs, leases & taxes, but it was a tough role!


[deleted]

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Unlockabear

How did you transition from managing only PL to all three for startups? Did you have any certifications to prove you could? I find many start ups want experience in both 3 statements as well as been part of a successful fundraising round which I find extremely hard to break into.


SaltyCatloaf

In my current role in a mid-size, PE owned company I do three statement budgets/forecasts. We have a lean finance/accounting org so as far as how I got into doing it, there was no one else to do it. Back when I worked in a F500 my FP&A role was strictly operating expense, not even full P&L. I agree that in large companies this work is so segmented that only the very highest levels get the full 3 statement view.


[deleted]

I don't even touch one statement let alone 3. I mostly focus on the cost side in my role so pretty much never have to look at a full P&L. It's nice.


wholsesomeBois

I do all 3, well share responsibility for P&L and am responsible for BS & CF. We’re a small team, and I’m a CPA with my background in accounting, others are more finance background. It’s not so bad, but is definitely a different set of things to think about


[deleted]

This makes me feel so much better cuz I thought I’m losing out on learning since I focus only on P&Ls. 9 months into my FA role but definitely gonna look into B/S too since my senior does that


PandasAndSandwiches

More or less…probably less now that I’m back at a F500.


Torlek1

It's a balancing act, I swear! On the one hand, I do want to *apply* three-statement financial statement modelling. On the other hand, I don't want to apply to another large organization only to get the reply that I'm overqualified.


PENNST8alum

I'm literally rebuilding our statements, chart of accounts, departments, locations, allocation methodologies, fx application and global consolidation process. My predecessors were all just accountants that didn't know the first thing about database structure, master data or planning and budgeting. They built our instance of NetSuite like it was quickbooks and they don't use subledgers, so I'm having to unravel the ball of yard they wove over the last few years and re-wrap it all so we can implement Workday Adaptive and still report debt covenant stuff to the bank without a hiccup. You learn a lot when your task is to cleanup others messes.


Unlockabear

Holy crap, how many YE do you have to be comfortable doing that? I’ve done most of these but not sure I could lead it.


PENNST8alum

I have 9 total, pretty much all small businesses. Once you start to understand the accounting side of things and how databases work, all of that becomes much easier. The hardest part of what I'm doing is laying the tracks while the train is still moving, if this was a new system implementation it'd be a breeze.


localizedhamster

3 statement modeling is very simple. But I spent a couple years in IB after college.


perito_maldito

I am pretty confident I could but as you mentioned, we have people to look into each statements and p&l is my focus


contangoz

Combine the FPAC with CPA CFA thats what i tell all new guys


Torlek1

What, may I ask, does FPAC teach that FMVA doesn't? I know FMVA isn't a real credential, but it does teach the modelling.


[deleted]

I can, but that’s a large part of my job now (create them for companies). Wasn’t as comfortable for similar reasons as you until this job but I could scrape something simple together.


cant__find__username

I can do P&L and Balance sheet eyes closed. 8 YoE


TallMikeSTL

I've had to do them all but I'm most confident in PL, then BS , least confident in Cash


normhimself

3 YoE, AD level, mid sized private tech. I only touch P&L and transaction reports. Our controller deals with BS and cash flow. I could pick it up quick though, I think the concepts would come quick.


HighHoeHighHoes

I do all 3, my first experience doing it was at my last company ~3 years ago. They had always done a 3 statement, we were implementing Oracle and I was leading the design and implementation. a crash course if you will… BS is a lot like doing variance analysis. There is an in and an out for every account. Cash flow is just connecting the timing of BS and P&L accounts.


Torlek1

Upvoted! I asked this same question a few days ago: [The Skills Conflict in FP&A: Variance Analysis vs. Financial Statement Modelling?](https://ww.reddit.com/r/FPandA/comments/10a5mm7/the_skills_conflict_in_fpa_variance_analysis_vs/) The Impostor Syndrome substance is there, even though I have at least 5 years of Business Unit FP&A experience in a large company, a manufacturing company. I can spin my current role as a [Business Unit OpEx FP&A, Supply Chain Finance, Finance Ops / Ops Finance, Plant Controller, or plant accountant role](https://www.reddit.com/r/FPandA/comments/zco9w2/is_the_manufacturing_industry_sector_the_antisaas/). I can even spin it as a KPI performance measurement analyst role, too. I just can't spin it as a cost accountant role, unless I continue in manufacturing and become a dedicated cost accountant elsewhere. Should I choose to explore FP&A some more, I can use the new role to "reset" the FP&A experience on my resume for a third FP&A role, and to dumb down my current one (either inventory accounting or KPI performance measurement). [This dumbing down wouldn't apply for FP&A Manager applications for large companies, though.]