The Budget Isn't the Goal. Building a Better Business Is with Zach & Chris

In this episode of FP&A Unlocked, host Paul Barnhurst is joined by Zach Rial and Chris Ortega, alongside co-host Glenn Snyder, to discuss budgeting and forecasting best practices. The conversation explores how finance teams should think about the purpose of budgeting, balancing control with agility, involving the business in the planning process, and using forecasting as a tool for better decision-making.

Zach Rial is a finance leader at AskElephant, a startup focused on revenue and conversation intelligence. He brings experience as an operator who uses finance, FP&A, and business insights to help companies grow and improve decision-making. Chris Ortega is the CEO of Fresh FP&A, a global fractional CFO and advisory firm supporting small and medium-sized businesses. Chris has over 20 years of experience in accounting, finance, and leadership roles, helping organizations build, scale, and prepare for growth.

Expect to Learn:

• The real purpose of budgeting and forecasting

• How to create a business-focused planning process

• Why trust and partnership are essential for FP&A teams

• How to balance budget discipline with flexibility

• Best practices for managing AI costs and governance

Here are a few relevant quotes from the episode:

• “A budget is the direction of where you want to go, but things change so much in a business.” - Chris Ortega

• “The budget process should not be a finance exercise. It’s an organizational exercise.” - Glenn Snyder

Effective budgeting is not about predicting the future perfectly, it is about creating alignment, understanding business drivers, and enabling better decisions. The strongest FP&A teams use budgets and forecasts as tools to guide the business, build trust, and help leaders navigate uncertainty. 

Follow Zach:

• LinkedIn: https://www.linkedin.com/in/zacharyrial/

Follow Chris:

• LinkedIn: https://www.linkedin.com/in/freshcfo/

Disclosure: Portions of this episode (such as the introduction or promotional segments) use AI-generated voice narration produced under human editorial review.

Earn Your CPE CreditFor CPE credit, please go toearmarkcpe.com, listen to the episode, download the app, answer a few questions, and earn your CPE certification. To earn education credits for the FPAC Certificate, take the quiz on earmark and contact Paul Barnhurst for further details.

In Today's Episode:

[00:00] - Introduction

[06:20] - The Purpose of Budgeting

[12:26] - Making Budgeting a Business Process

[17:24] - Building a Better Planning Approach

[26:51] - Practical Budgeting and Forecasting Tips

[37:44] - Building Trust With Business Partners

[44:35] - Managing AI Costs and Governance

[54:18] - Balancing Budget Control and Agility

[58:35] - Final Advice

Full Show Transcript: Guest 2: Zach Rial (00:00:00):

And so one of the things that I use, I don't want to plug any one tool specifically, but Ramp has a feature where you can connect all of your different AI platforms and they're adding more and more platforms to that. And you can see which API, which model, all that stuff. And so I connected our cursor to that. And then I saw that we had one person that was just blowing up our cursor bill. I could have gone into Christian and done it, but I had a nice, easy ramp. I'm in ramp every day. And so I popped that up and I'm like, oh my gosh, this one person's doing it and they're using the most expensive model. And so I just went and said, "Hey, I can see this. I see it every day." I went and talked to the engineering manager. I said, "Let's have a chat with them.

(00:00:35):

Let's not tell them they can't use this model, but let's see if they can use this model for one part of what they're doing and the rest of the parts they're doing, they can use a cheaper model."

Host: Paul Barnhurst (00:00:42):

All right. Welcome everybody. We'll get started here in a few minutes, but if you're out there and you can hear us, let us know. Tell us your name and where you're coming from. So go ahead and let us know. We'll get started here in just one moment. Give it a minute here. Let's see. Anyone have a good joke while we're letting everybody get settled in?

Co-Host: Glenn snyder (00:01:01):

I got one for you. All

Host: Paul Barnhurst (00:01:03):

Right. How

Co-Host: Glenn snyder (00:01:03):

Do you introduce a hamburger? Meet Patty.

Host: Paul Barnhurst (00:01:06):

Well done. Chris, you got one for us while we're waiting?

Guest 1: Chris Ortega (00:01:10):

What is the two plus two? Five. Yes. That shows you're a FP&A and you're a finance person. If you would've said four, I'd have been like, Paul's an accountant, man. He's a CPA. Dude, two plus two unequivalent equals four. That's a true FP&A finance person right there, Paul.

Host: Paul Barnhurst (00:01:25):

No, I had a roommate that had a shirt that said two plus two equals five for larger values of two. He was total nerd. So I always say five. All right. We'll give it one more minute. Wait till we see kind of a few comments. Hopefully people can hear us, but we'll start here in just one more minute. Let's do one more joke. Does anyone know what the V lookup put on their online dating profile? I

Guest 1: Chris Ortega (00:01:48):

Don't know.

Host: Paul Barnhurst (00:01:50):

Seeking an approximate match, it's true.

Co-Host: Glenn snyder (00:01:55):

Yeah. I was thinking along the same lines. I was thinking looking for an exact match or something like that.

Guest 1: Chris Ortega (00:02:02):

Yeah.

Host: Paul Barnhurst (00:02:03):

Yeah. Right? I got

Guest 2: Zach Rial (00:02:06):

One. Would be look up years ago and I'm all XLOOKUP now. I couldn't even think. Yeah,

Host: Paul Barnhurst (00:02:09):

I know you're cool. The rest of us are old school.

Guest 2: Zach Rial (00:02:12):

Just wanted a little self-plug out there.

Host: Paul Barnhurst (00:02:14):

All right. Well, why don't we go ahead and get started and do introductions. Bill, let us know he can hear us. Great. We're just going to start now. So I'll say it again. If you're out there and you can hear us, please let us know where you're coming from. Put that in the chat. Let us know your name. You're welcome to ask questions throughout. We're going to be doing budgeting and forecasting, some best practise tips and some advice. We got an expert panel here with us today, but let's start with my co-host, Glen. How are you doing, Glen?

Co-Host: Glenn snyder (00:02:42):

Doing great, Paul. This is going to be fun. I'm looking forward to it. Doing it live.

Host: Paul Barnhurst (00:02:45):

No, I'm looking forward to it. We don't get to do live very often, so we'll look forward to your questions. All right. Well, so I have Glenn, co-host here with me, and I'll do a quick introduction of Zach. So I have Zachary Ryle here with me or Zach. He works for Ask Elephant, if I remember correctly. That's the company today, right? So why don't you take a minute and just tell us a little bit about yourself, Zach?

Guest 2: Zach Rial (00:03:07):

So as Paul said, I work for a company called Ask Elephant, which is here in Salt Lake City, Utah. We're a startup taking on the revenue and conversation intelligence space. A little about me personally, I might be putting my own foot in my mouth here for a little bit, but I don't consider myself as a pure finance guy. I consider myself more as an athlete who's very fluent in finance and speaks it well. But I love just helping to run businesses, plugging in wherever the need is greatest and using my skillset that I've developed and growing up in the finance and FP&A world as an operator just to make businesses better. On the more personal side, I have four kids, oldest is seven, youngest is about five months old, so got our hands full. It's pretty crazy. Love to be outdoors when possible, whether that's skiing, golfing, playing, watching rugby, you name it.

(00:03:53):

That's me really

Host: Paul Barnhurst (00:03:54):

Briefly. Thanks. Appreciate it, Zach. Glenn, do you want to introduce Chris for us?

Co-Host: Glenn snyder (00:03:58):

Yeah, so I'm very excited. It has been, I'm thinking, Chris, about two, three years since you and I were on a podcast together.

Guest 1: Chris Ortega (00:04:05):

Yay, it's been a minute.

Co-Host: Glenn snyder (00:04:07):

We did a bunch. So my favourite guy is to chat about with FP&A, Chris Ortega, who owns and runs Fresh FP&A. But Chris, I'll turn it over to you to do a quick

Guest 1: Chris Ortega (00:04:17):

Introduction. Yeah. Glen, you're always the man, bro. That's how we always end it. You're the man, right? But nice to see everyone. I hope everyone's having a good day. My name is Chris Ortega. I'm the CEO of Fresh FP&A, which is a global fractional CFO and advisor service company. We work with small to medium-sized businesses, typically between one and about $50 million in revenue. And including me, I have four other fractional CFOs across the globe. We're going to be based in the Americas, in London, and also Sydney. There's probably about 35 people at Fresh FP&A serving 30 clients across the globe, and that's what I do. And prior to starting Fresh FP&A, I spent most of my career in accounting, finance, and financial leadership, 20 plus years. Most of my background was coming into organisations, helping build, shape, scale, and exit those companies. I've had the fortunate opportunity of taking three companies through acquisition, which has been awesome.

(00:05:06):

And I'm based in Indiana. Fun fact about myself, if you guys can't see, I'm a huge Dragon Ball Z fan. Vejita is life, so I got Vajita everywhere and in Indiana. So shout out to the Boogiers as we won our national championship and looking forward to repeating this year. But yeah, that's a little bit about me and looking forward to this conversation.

Host: Paul Barnhurst (00:05:25):

So any of you, if you want to address Chris, you can just address him as LB or Larry Bird.

Guest 1: Chris Ortega (00:05:30):

Yep.

Host: Paul Barnhurst (00:05:31):

Larry

Guest 1: Chris Ortega (00:05:31):

Bird. Yep.

Host: Paul Barnhurst (00:05:32):

Before I introduce the topic, we've had several people let us know where we're coming from. So just some of the locations, Rwanda, Huntington Beach, California, Brazil, say Bay Area, India, Puerto Rico. So we've got a pretty global audience. I'm sure we'll see more of those coming in. Keep them coming. Love to hear where you're coming from today. And to introduce our topic, we're going to talk budgeting. Everybody knows budgeting season's just around the corner. Going to be coming up here real quick. So we're going to talk annual budget, share some thoughts, some advice, both from kind of an executional leadership standpoint, how to think about it, some tips. You're welcome to ask your questions throughout. And I want to start with just kind of a real basic question, and I think we'll get a little bit of the different answer from everybody. That's what I find interesting about this.

(00:06:20):

So maybe we'll start with Zach here. Zach, if I was to ask you, what's the purpose of the budgeting process? How do you think about it?

Guest 2: Zach Rial (00:06:28):

It's changed a lot over my career, especially as I've moved down into smaller. But I think the way I would put it most simply is an annual budget is the plan that you're putting together for what you believe is going to be true and going to happen over the course of the next 12 months and what you need to do to execute and make that work. And so that's the simplest way I'd put it. Obviously, there's far more intricacies and details involved in that and how firm and how well you hold that really depends on your leadership team and your board and things like that. But at its core, it's your belief about what the next 12 months looks like and how you're going to make that happen.

Host: Paul Barnhurst (00:07:03):

Yeah, I kind of laughed when you said belief. Sometimes it's the wish of the leadership board, but that's another story. Everybody got - There are

Guest 2: Zach Rial (00:07:11):

Always elements of that, right? So you got to play that game.

Host: Paul Barnhurst (00:07:15):

You do. Well, just locations. We had Brandon join us from Planet Earth, so excited for that.

Guest 1: Chris Ortega (00:07:21):

And we

Host: Paul Barnhurst (00:07:22):

Have someone from Washington. Chris, how would you answer that question?

Guest 1: Chris Ortega (00:07:25):

I think budgeting for our clients is, it's a checklist and it's a false sense of confidence. We work with a lot of smaller S&B companies. So I always say the budget is the direction of where you want to go, but things change so much in a business. There's acquisitions, there's new verticals you invest into, there's people that leave. So I think a budget is for a lot of companies at the S&B kind of space is really just that checklist of like, "Hey, here directionally we want to go." And it also gives, I always say, don't spend a whole lot of time in budgeting. There's no sense in making all this time. And when I worked at enterprise level companies, we would take months. It'd be September to December before we did anything and then the budget's done and all that information just played out. So for me, I think budgeting is for the S&B space, compliance checklist, here's where we're going to go.

(00:08:21):

And it's just a placeholder to look and see where you want to go with it. But I always say, and I know we'll get to this topic as well too, budgeting is just, it's a nice where we want to directionally go. Forecasting, rolling forecasting is gold standard. All

Host: Paul Barnhurst (00:08:36):

Right, Glen.

Co-Host: Glenn snyder (00:08:36):

I'm going to take a little different view on this. And part of it is because I have worked for a lot of large companies in my career, although now I'm working a lot more small companies, but I see the budget as two different things. Number one, it's a guide. It's a guide for where the organisation is telling each business leader where they want them to go and how they want them to spend money. The second thing is it's a control. It's a control for the CFO. If you are a public company, you can't have business leaders going out and just hiring a whole bunch of people who aren't in the budget, spending a bunch of money. It's a way that the CFO could control how the company's actually spending to make sure that they can hit their earnings goals. So to me, that's the big reason that budgeting exists is to one, guide the business on where the board is telling them they want to be, and two, to allow the CFO to have the control over the rest of the business from a financial perspective.

Guest 2: Zach Rial (00:09:28):

I really like that. And I think that's why I kind of hit on the believe thing is when businesses inevitably start to deviate from their budget, which is going to happen, the biggest thing I ask people when they say, "Hey, I want to do this. It's not part of the budget." As I say, "Well, what changed? Why did you believe this was true three months ago? And now you do not, and you believe that something different needs to happen." And I think that it becomes that natural mechanism to have that conversation and it gives us the ability as the stewards of capital that we are in finance to really ask the questions that need to be asked and feel that we have done our duty to preserve and try to follow that as best as possible.

Co-Host: Glenn snyder (00:10:06):

Zach, I like that. In fact, it made me think one other thing is it allows for accountability throughout the organisation. When you go over and say, "Hey, this is where I think my business is going to be," and you are not there, it's the board, executives, whoever it happens to be, could come back and say, "Wait, why were you offs by that much?" And it's a way that they can also evaluate how well do you know the business and how well are you managing that business? So I think that that also comes into

Host: Paul Barnhurst (00:10:32):

Play. Yeah. I mean, I think you're seeing a little bit different opinions. I think control, definitely bigger the company and just in general CEO, hey, is it in a budget? It's a way to have those conversations and to limit the cost that I need money for this or that or that. It's like, well is it? Well, no. Okay, well, let's talk about why we need it then. And so I definitely think there's a control estimate. I think the second biggest thing is it's really, it's just part of that planning process. It's preparing. The reality, have any of you exactly hit your budget down to the dollar? No, I once had a forecast where across the whole business, we came in within $100 or something. It was like millions dollars. A bunch were off. And everybody's like, wow, you're a genius forecasting. I was like, no, if I could actually forecast like that, I would be going to Vegas.

(00:11:17):

I wouldn't be working. I got lucky.

Guest 2: Zach Rial (00:11:19):

And there was also a little part of you that didn't believe it. You're like, ah, I did something wrong. This can't be true.

Host: Paul Barnhurst (00:11:23):

It

Guest 2: Zach Rial (00:11:24):

Wasn't the way I got this right.

Host: Paul Barnhurst (00:11:25):

I knew all the ins and outs. I came in close in total, but I could see this business was off by 300,000, but the other one was positive by 298. So I knew the insides and outs, but when someone looked at the total, they're like, "What happened?" It's like, "Yeah, got lucky." So that's why I always say a big part of the planning.

Co-Host: Glenn snyder (00:11:41):

Paul, it's funny because the budget is not about right or wrong. It's not about hit your number or not. It's about the direction you're going and how you manage. And that's really it.

Host: Paul Barnhurst (00:11:52):

Well, that's why it's so important that you've set out your strategic plan and your financial plan should help make that strategic happen. And then your operational needs to tie in. We've all worked for companies who've been in situations where the financial plan is disconnected from everything.

Guest 1: Chris Ortega (00:12:09):

And

Host: Paul Barnhurst (00:12:09):

It's just a mess because then everybody's like, "I don't know where that number came from. I'm just focused on this." No. I mean, if you don't have people all rowing the same direction, why even have a financial plan if they're not aligned? It's just a waste of time.

Guest 1: Chris Ortega (00:12:24):

Thanks.

Host: Paul Barnhurst (00:12:26):

And I think we've probably all been there where we've been through the budgets for like, that was a waste of time.

Guest 1: Chris Ortega (00:12:32):

Literally an example of that, man, having a client and it's like we worked through the budgeting process with them and they is like, "It's September and we got to kick these things off." And I'm like, "Do you understand? We work in bigger companies and smaller is a little bit different, but smaller companies, there's so much things that move around that. So spending two, three months to do a budget and you're happy, you do your report, you do your presentation, and then immediately that information is completely outdated. Now, enterprise level companies, and this is where I love the balance of Glenn because he has that enterprise globally company experience, and I do as well too. It is different. And it comes down to what I look at as agility. Agility and precision. Agility is saying, yep, I'm directionally accurate. I'm 60, 70, 80% confident in where this is going to go.

(00:13:20):

That's where you should have on your budgeting. Once you start to get to precision, that is like, I'm 95% confident in where these things are going to go. So budgets, that's always kind of how I've looked at it. And as we work with our clients that are more SMB focused, it's like, yeah, this is a placeholder, this is where we want to go. But it also shouldn't be like, this is not the precision of confidently interval we want to have with it. So I think that is that balance. And I love Glenn's point and Zach's point where they mentioned around the control. I think that is a great element of it because kind of sets that sandbox and guardrail where you want the business to go.

Host: Paul Barnhurst (00:13:55):

Although I think there's a lot of value in some of these beyond budgeting and other ideas. The budget production should really be about target setting, whether you do portfolio. You don't have to do the formal budget process, but you need some kind of plan, roadmap of where you're going targets. The budget process often becomes political. So I get why some people like, I don't know if anyone saw this, Bear, their new CEO did away with the budget process altogether. He said in first of corporate America and he went to a quarterly planning sprints that they do and they allocate things every quarter. And look, if it works, great. Are there problems with that? Yes. The key is not that you have a calendar and a very tight rigid process, although you do need the controls. It's really about making sure you're able to help guide the business of where it needs to go when you're on the same page.

Co-Host: Glenn snyder (00:14:42):

Paul, it's kind of funny because you guys talked about the strategy side of things, and I think that's very important. And we think back, what is FP&A really doing? If you're a finance business partner, your goals are to help the business achieve their strategic goals whilst staying within the budget constraints that the CFO is setting for the organisation. And it's the combination of those two things. It's how do we go over and get the company to where it needs to be without going crazy on how you're going to spend the money? And that's oftentimes what FP&A is doing is having that conversation to solve that problem. How do I get the business to do all of these great things, but keeping them within a cost perspective that the CFO wants or the board want?

Host: Paul Barnhurst (00:15:24):

Glen, why don't you lead this next discussion? We want to talk a little bit core differences in the process depending on the company you're at, size-wise.

Co-Host: Glenn snyder (00:15:33):

Yeah, absolutely. So obviously Chris has already talked a little bit about the difference in his background from my background, and we love having this debate because I think there's insight into both and there's no right or wrong answer here. But certainly when you go over and you think about a budget process, and I saw Brandon had some comments about when budget should start, and Chris has talked about multiple months process and so on. Certainly at large companies, oftentimes you start with a strategic plan and sometimes if you're on a calendar year, you're doing that in May, June, you're forecasting revenue in July, you're putting expense targets together in August so that you could roll out and figure out all your detailed budget in September, October. You do anything else that polishing it up in November so that in December the board can approve and you hit the ground running in January and you're like, oh my God, I could spend eight months out of the year doing this thing and in a few more months I got to go back to doing it again.

Guest 1: Chris Ortega (00:16:32):

That's like the hamster rice, dude. That's like.

Co-Host: Glenn snyder (00:16:35):

Right. Now don't get me wrong, sometimes there's value in going through that.

(00:16:41):

But the thing is you don't go through a process for the sake of doing a process. You got to recognise what the value is you're trying to take out of it. And I've also been at small companies where you're trying to go over and just do a rolling forecast or a budget and you're like, okay, you know what? We're going to do something every single month because the business is constantly changing. But then at the same time, all you're doing is you're just updating your models and you're not really engaging with the business either. So it's how do you find the right balance through that? So I'm going to turn up. So Zach, I'm going to flip this over to you. Give your perspective on approaches to putting a budget together, timelines. How do you do it? Who do you engage? How often? Those types of things.

(00:17:22):

And then we'll roll it over to Chris as well.

Guest 2: Zach Rial (00:17:24):

Yeah, it's a great question. And to start out, the big thing is identifying who your key players are and what people want out of this budget and going from there. I remember I joined an organisation and it drove me wild. For the first two months I was there, everybody was like, we do our monthly reporting and I'd say, "Okay, sales was supposed to this number." And the CFO would go, "Oh, that's the finance number. Nevermind. Yeah, yeah, it's fine, whatever." And then we just move on. I'd be like, "What? What? That's your number." He's like, "No, that's the finance number." And so what I did when I got full control over the budget and reforecasting the business was I just sat down with the CRO and was like, "What do you wish the forecast in the budget told you about your team?" And we built the budget and the forecast in that way.

(00:18:13):

Because I'm going to have to spend time building it anyway, so I might as well build it in a way that the CRO gets some value out of it and I get value out of it.Because at the end of the day, it's time spent. And so we just blew up the process, started from scratch, and I just asked Ciara, "What do you wish you knew about your team? When we got to the end of the month and you have a number and you beat it or you missed it, what would you like to know automatically so that you can go explain this? Because ultimately you're going to have to explain it. I'm going to tell them you missed or you beat, but you got to explain it." And that's how we started the process, is just identifying what's the most important elements of the business.

(00:18:46):

At that point in time, we were in that growth at all costs era. And so revenue and new revenue was what mattered most. And so I spent the bulk of my time with the CRO talking about sales. And then I spent the next little bit talking about retention. And then there is very tiny bit talking about OpEx and the rest of the business because that was what was most important to the business at the time. And so I think it's very interesting. At all

Guest 1: Chris Ortega (00:19:08):

Cost.

Guest 2: Zach Rial (00:19:09):

Yeah. Money was free back then, so it was a fever dream. So I think that's it, is first identify what is most important to the business. What are we trying to accomplish? Tying into that strategic plan, then identifying the players, and then sitting down and saying, "What do you wish this did for you? Let's make this..." Because it's going to suck. They're not going to want to do it. But if you can make it beneficial to them, suddenly they're leaning in and saying, "Well, if I get input, here's how I'd actually like to do that."

Host: Paul Barnhurst (00:19:35):

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Co-Host: Glenn snyder (00:20:32):

I like that. I mean, Zach, I think you hit on something that's absolutely key. It's not an exercise that's just for finance. It's about the business. And especially if you want to go over and hold people accountable, they got to be part of the process. They have to understand what went into the budget. How do you hold somebody accountable if they don't understand how it was put together? So I think going out, making sure you're talking and just being upfront and opening it up to the business and saying, "Hey, we're going to do this together. It's not a finance exercise. It's an organisational exercise."

Guest 2: Zach Rial (00:21:04):

It was crazy to us because we just broke down so simply. I remember sitting there and we said, "Well, let's look at what does this imply that each sales rep is going to be able to close in ARR?" And then we looked at that and we said, "That feels like a good number." And then we compared it to the prior year and we were like, "Okay, this doesn't feel like a good number anymore. We need to change this because this is not telling the story that we want to go defend and tell to the CEO and say, oh, our reps are going to be 50% less productive than last year, and we don't have a good defence for why. And so I think when you get it to that level, then it really actually helps you be accurate because now you can say, well, what real results do I have to anchor us to?

(00:21:46):

And who is the person that's actually driving those results? And do they believe that? And if they believe it, then at least I've got that going.

Co-Host: Glenn snyder (00:21:52):

Yeah, absolutely. Chris, what do you think? What's your take?

Guest 1: Chris Ortega (00:21:55):

I have a client portfolio of six clients on my portfolio where I'm their CFO. And this may be a wild take on this, but I don't even start with the numbers. Don't even start. The conversations that we have and to kick everything off is conversational about the business. And specifically, we're focused on sales, marketing, operations, people. Those are the four drivers in any business. Revenue you're bringing in, how you getting those customers, how are you fulfilling it, and the people that are doing the work. So when we kick off right now for my portfolio, as we kick off that process, we're having conversations about the business. What's going good? Let's just have a, what's going good in the business? What's going good in sales? What's going good in marketing? What's going good in operations? What's going good for our people? What are things that we need to improve?

(00:22:42):

What do we think's going bad? So that conversation, that alignment, that viewpoint, before you even talk about a number is probably for me and what I find is the most valuable aspect of that process. The budget, the forecast, the P&L, the cashflow forecast, all that other stuff is the outcome of that. But having those discussions, challenging those points, what are people seeing? What are we seeing in the market? That time spent as they, and Glenn, you talked about this, that time we spend and what we do and what I tell my CFOs do, go spend that time with your client. I'm literally going to sit in a meeting with them on site. I'm going to New York. I'm going to Denver. I'm going to where my clients are. We're going to spend a day. And none of that outcome is going to be, oh yeah, I'm going to work on your plan.

(00:23:33):

My FP&A team will go do that. I'm spending that time to realign on the business. Where are we going? What opportunities we see? What challenges? That conversation is much more important and fruitful because now you can take that and you can say, "Hey, sales is feeling really good. Here's an opportunity that they have. Here's some opportunities we can make some investments in." Now you start to put a plan together from the direct insight and feedback that you got from that leadership team. Right now where a lot of people. And I failed in this, guys, I'm going to raise my hand and say I failed in this. Both my hand. Paul race is up. I don't

Guest 2: Zach Rial (00:24:13):

Even know what you're going to say, but I know I failed. I give up.

Host: Paul Barnhurst (00:24:16):

Bring on where to fail, I just raised both hands.

Guest 1: Chris Ortega (00:24:19):

Drop in the chat if you failed at this too, because I'm like, "I failed at this." You start the budgeting process and here's where the failure happens. You're like, "All right, let me get the business this run rate plan and say, I look at the last eight months, and if we run this out, let me just give them a baseline to operate from." So the entire conversation, that first time you're talking with sales, marketing, operations people is from a financial lens. It's like, "I gave them this baseline because I wanted to get started on it. I've done this." And now the conversation is less about, it's quantitative than the qualitative aspect of it. So that's where we start. That's where I'm in ongoing conversations with my six portfolio clients where it's like I'm done in the room. We're going to spend a day. We're going to talk about the business.

(00:25:02):

First hour, we're going to talk about sales. Second hour, we're going to talk about marketing. Third hour, we're going to talk about operations. Fourth hour, talk about people. We go have a break, we go have lunch. And then we have the plan around that. That's been super insightful. And it shows you're connected. It's like, yes, that's our CFO in it. His outcome is going to give us these plans and stuff, but you're learning the business. You're getting that direct pulse. That is so important.

Co-Host: Glenn snyder (00:25:27):

You're right, Chris, because at the end of the day, if you're putting together a budget and it doesn't connect to the business, it doesn't matter. It's not about the numbers, it's about what's going on with the business. And again, if you're a sales leader, if you're an operations leader, if you're the HR leader, your budget's supposed to be guiding you to where you're supposed to be taking the business. And if it does not connect because you started off in the wrong place or you're ending in a place that doesn't make any sense to the business, your budget's not going to be any good. It's not an exercise in numbers, it's an exercise in understanding.

Guest 1: Chris Ortega (00:25:58):

That's a gym, that's a fire. Paul, we should do a fire emoji on that one. That's a fire emoji. I

Host: Paul Barnhurst (00:26:03):

Will keep that in mind. Well, it's an exercise in something. I'm just kidding. I'm kidding. All right. So I think we've had a good conversation around purpose, how to think about it. I want to get a little practical and just kind of get thouhts. When you get into a budget, the key starting is you have to end on understanding. You have to get tight to plan. You got to have operational and think about what the business needs. It shouldn't be a finance exercise. Now you're into the budget and you're doing it. I'd love any thoughts you have of how should you think about that process? We all hear top down, bottom up, lots of different methods. Any advice on how to think about that forecasting and things that have worked well for you? And I think company size, a lot of different things make a difference here, but any kind of thoughts you'd like to add to that?

(00:26:50):

We'll start with you, Chris.

Guest 1: Chris Ortega (00:26:51):

For me, I think top down, bottoms up, driver bay, all those things. For me, it's very simple. What are the four most important KPIs in that entire business? For us, what it comes down to, cash burn, cash runway, revenue growth, and profitability. That's it. That's it. So all these extra. Now, everything in the business feeds to that. So when I'm sitting down with my clients, we're focusing on those. And also, it's not the first time for my portfolio clients or FreshUp P&A that we do, this is the first time hearing this stuff. We're constantly reporting these things. So when you walk into that budgeting process, they already have an idea. I know Chris, he's going to want to talk about cash, he's going to want to talk about burn, he's going to want to talk about revenue growth, he's going to want to talk about profitability.

(00:27:38):

So for me in that, I'd like to keep it on what drives the business. What should drive a decision in the business? Sometimes too many people measure stuff, and it's like you got 20 different things you're measuring. Take a step back. If you're measuring 20 different things in a budget, if you break that down over a quarter, that's like, what? My math is like that's like four or five of those you have to be successful every quarter to do. It's unrealistic. So for me, getting that practical sign when we sit down with clients is like, you already know the things we're going to talk about. So now let's align the business, the operations, the investments, the strategies we want to have it around that. To me, it's a very clear funnel. Strategy, tactics, metrics, milestone, execution. That's it. That's what you got to do. And that's where we kind of bring into, because agility is in.

(00:28:30):

I'm working with S&B companies, one to $50 million, rapidly growing, expanding, buying new businesses. They're constantly moving. So agility is really important. And when you anchor it on those four things to be agile about, it makes it more where the business can understand that and I know how this ties out. I know if we invest in this salesperson, this is going to hurt our burn, but it's also going to help the revenue. They automatically start to see how those levers move. So that's where I've seen it be real successful from a practical execution perspective.

Host: Paul Barnhurst (00:29:02):

FP&A guy here. I want to take a minute and share something I've been working on. I've spent several months adding new affiliate programmes to my website, probably wondering why affiliate programmes? Well, I can't train you on everything, but I can show you and give you trusted resources with exclusive FP&A guide discounts in many cases on my website. I have several of the top FP&A AI people in the world. I have the top certificate programmes. I also have other programmes like Excel, Power BI. I'm bringing you some of the top people that train in the world. There's Nicholas Boucher with exclusive discounts, David 14. I'm adding Carl Seideman with exclusive discount. The top programmes, FPAC, FMI, and more. So go ahead and check it out on my website. Sign up. And if you have a question on what programme is right For you, go ahead and message me.

(00:30:01):

I'll get back to you, LinkedIn, or you can email me. So go to thefpnaguy.com and check out my trusted list of resources for you to upskill yourself.

Co-Host: Glenn snyder (00:30:13):

Chris, it's funny because again, I think you and I are going to come from a different angle. I think everything that you talked about from a small company perspective is spot on because of all the movement and the uncertainty that you have in that type of business. You go from a large company and Paul, tying it back to it, I think it's a combination of both top down and bottom up. And the reason is that you got to start with, first you do your strategic plan, you got to align to that. Then you got to be looking at your revenue. Once you have your revenue, if you're a public company, the next thing is, hey CFO, if you agree to this revenue, what do you need earnings to be? Because you got to hit those earnings targets. And then it's, okay, now I have my bottom line and I have my top line.

(00:30:54):

How do I back into those expenses? And you build the expenses bottoms up saying, what have we already committed to in people, in contracts that we signed and so on? And then how much money is left over? And you start filling it in. And so that's kind of FP&A before you go out to business units with, hey, here's your budget target or whatever. You got to have that perspective. So you start top down with the revenue and then the CFO from the earnings, and then you got to go bottoms up really on the spend side of the business and connect all the dots. So I think it's kind of that combination. Now, of course, if you're somewhere between that large enterprise and that small business, you're probably going to land somewhere in between that too. And my guess is Zach, that's probably where you're going to be sitting.

Guest 2: Zach Rial (00:31:36):

Yeah. I mean -

Host: Paul Barnhurst (00:31:36):

I'm going to share a thought before you go, Zach, real quick, if I can. So I think one thing I was going to say, I did an interview with a guest and I really liked the way he though of this. It wasn't so much top down, bottom up, but he said, look, get your revenue plan right. Start with your revenue in almost everything else because kind of to what Glenn said, you have an earnings you want to hit or you have a number. The rest of it's math. Where do the expenses need to be based on where I want to go, how much cash I need, whatever the outcome may be, what profitability I need to hit. So you figure out that revenue, make sure you have that really, really good. And then expense is kind of a natural outtake of that unless you have a business like I did.

(00:32:17):

I supported travellers check. Then all that mattered was reducing expenses. What do we have on the balance sheet that nobody's in cash yet? Very unique business to support, but that's another story. So I mean, it's not so much about the method. You can land in between. Sometimes you need to be really detailed, sometimes you need to be bottom up, but what's most important? How do you start with that? And then what needs to be built to support that? Okay, go ahead, Zach.

Guest 2: Zach Rial (00:32:44):

Listen, I don't think I'm going to add massively anything new to what anybody said here. It's all true. And where you land is a combination of what you are comfortable with, with business, with what works for the business. One of the fun things that I've done recently is I've just let people ask whatever the heck they want. And I'm like, sure, yeah, go for it. Ask for that. Ask for that. Put it all in. Let's put full. You get whatever you want and we put it into a budget and then I show them what happens. I'm just like, all right, well, sales asked for this and you asked for this. We put it all together. We are out of business in three months. All right.

Host: Paul Barnhurst (00:33:17):

Yes.

Guest 2: Zach Rial (00:33:19):

Any questions before. And then people are like, oh, right? And so then the conversation turns into like, hey sales, you're asking for more than really you should get. Why do you believe that you are more important than CS? Why should I tell CS they actually have to do less and they get less money than you do? Give me a reason to go and have that conversation with CS and not feel like I'm just being a total jerk to them. In fact, I'm going to have you join that conversation with me and you get to tell them that you get to take some of their money. And they're like, oh, well, I don't want to do that. It's just really like you got to know your people, you got to know what drives them. I don't think of it too dissimilar from creating a commission plan for a sales rep.

(00:34:00):

When you create a commission plan, you know roughly how much money you want to pay out for a specific deal, and you then know a behaviour and an outcome that you want to drive. And so you write a commission plan if you write a good one that drives to that behaviour and makes that happen while making sure that you're not paying out more than you're comfortable paying out. It's the same concept. So however you're designing your budget process, you have an outcome in mind, you have a goal of someplace you want to land. And now you want to design your process that incentivizes and encourages people to align to a behaviour set that's going to keep that outcome.

Host: Paul Barnhurst (00:34:37):

I like that. I like the way you said it there. I think that makes a lot of sense. And we'll let anyone know, feel free to put any comments, questions you have in the chat. We've seen several there, so appreciate that. We'll address any of the questions we can. So we talked a little bit about method and more than the approach is what are you trying to accomplish? I think Zach got too, what are your goals and what will best help you get there? And it's going to be different in different businesses. There is no one right way.

(00:35:05):

Usually it's a mix of bottoms up and top down. And if you start with bottom up, like Zach said, you pull it all together and it's never anywhere close to what management's thinking, especially if you take the approach of put in everything you want. You start with the wishlist. Then the conversation and the fun begins. Glen's nodding his head. Everybody's like, "Yeah, we've all been there." And if you do with that approach, that's really where the budget process starts is when you have to start negotiating and figuring out how you get a cohesive plan that everybody can get behind that management can accept. And it's a combination of

Co-Host: Glenn snyder (00:35:42):

Both. I agree. And it's about the trade-offs oftentimes. I like the idea, yes, start with a wishlist. But go in, make sure if you're going to go to your business partner and say, "Hey, give me your wishlist. Let's see what we can do." Make sure they understand they're not getting everything on their wishlist. Just because you're asking for it doesn't mean it's going to be in the budget. But you start with it and then you go over and say, okay, how do we solve for as much of this as possible given that you can't spend more than five million bucks in this team or whatever it is. So now you got to say, well, where's the trade-offs going to be? Maybe you shouldn't go over and do that team offsite in Hawaii, and instead that will allow you to go over and do this other thing that you want to do.

(00:36:24):

And so that's the trade-off and that's the discussion. And it's where it's really more about that connection with the business partner, understanding what their goals are that they're trying to achieve. And again, saying, how do we get you there without going nuts on how you're going to be spending money? Because it's not a money tree. You don't just get to go over and keep on picking dollars off the branches. You got to go over and make sure that you stay within that constraint that finance puts on you, which is that budget. But you got to say, all right, here's how I'm going to achieve those goals. And it's that trade-off, that connection with the business.

Guest 2: Zach Rial (00:36:59):

That's exactly right. I mean, finance has this betterrap of being the people that say no, because we're tipping the people that have to say no. But I think as you go, what makes a good budget process work is that you've spent the year before building trust and showing that you are trying to make that, not just say no. You're trying to say, what are you trying to accomplish? What are your goals? Let me use the budget as a tool to help you accomplish those goals throughout the year. And then when it comes to budget season and actually creating this budget, putting it all together, suddenly there's a lot more trust. They're a lot more willing to say, I don't know for sure that I need another headcount, but I know that I would like to have that because it's a tool I can use later this year to help us accomplish our goals.

(00:37:44):

And now you have more information, you have, there's more trust, you have greater buy-in. Because they know that if I say five heads and we end up only hiring four, I might be able to use that fifth head's money for something else. And Zach will let me. He will let me do that because he knows I will accomplish the business needs so I don't have to be as fighting tooth and nail for everything to be perfectly in the right

Co-Host: Glenn snyder (00:38:05):

Spot. Yeah. And in fact, Ashley, the thing is when you are building out that trust, you're not doing this budget exercise at one point in the year or one time. You're doing it throughout the year. You're having those conversations. It is an ongoing conversation that you're building out there. And I always like to say that if you go over, you have that though partner status with your business partner where they're coming to you proactively and talking about what they're doing. That to me, that's kind of that FP&A nirvana part where it's like they think of FP&A as part of their business and they trust you as you are that trusted advisor. I had a person who I was supporting and she went over and just as feedback to my boss as she was saying about me, she said, "I wantGlennat the table with me whenever I'm making a decision." And I'm like, "That's it." I'm like, "I'm done.

(00:38:58):

I can't go any further because that's where you want to be." And having that when you are going through a budget process, when you're at that point, it's not adversarial. It's not about you want this and I want this and I'm going to force you into these different situations. It's about, hey, you know what? We're in this together. And that's really what. If you do your budget the right way, it's not about finance of pushing this on me. It's about, no, no, no, we're all moving in the same direction trying to achieve the same goals.

Guest 2: Zach Rial (00:39:28):

I always tell my analysts and my team members, I'm assigning you to this person, go make yourself indispensable. And if your FP&A work suffers a little bit from that, that's fine. And they're like, "What do you mean?" I'm like, "I mean, if they have some stupid spreadsheet that's broken, it takes them forever to update, and it doesn't have anything to do with FP&A, you're really good at spreadsheets. Go fix their spreadsheet and make it automatic. Us do that." And they're like, "Oh." And I'm like, "And if that takes away from your FP&A time a little bit, so what? You've built trust. You've become invaluable so that when they say, Hey, I need to make a decision, they're going to call you into the room. And now I have eyes and ears in that room that I might not have been a part of, and I have trust in that process and you can come and share that

Co-Host: Glenn snyder (00:40:07):

With me. In fact, the one thing I would caution you on, and I had a senior VP I rolled up to who warned me, he said, Glen, I think you're a little too close to the business. And what he meant by that was sometimes the business wants you to do things that takes you away from where the finance organisation wants you to be. And I've always told her, I said, look, when you do it right, you have one foot on each side. It's a balancing act. You have to go over and say, I recognise what is needed by the corporation overall and what my role is in that, but I'm also out there to make sure that each business I'm supporting that I'm working with is going to be successful. And that's when sometimes you got to be that good business partner and you got to say no to the business.

(00:40:48):

And it's not about just, hey, no, you can't do it. It's, no, you can't do it like that, but let's talk about how we can get you there. And that conversation so you make sure you're maintaining that financial discipline while helping the business achieve it.

Guest 1: Chris Ortega (00:41:01):

If I add to that too, Fresh FP&A is my company's name, but FP&A for us is not financial planning and analysis. We are financial partners and advisors. And I think this is what we're talking about. It's important first. I like it. Yeah. I mean, literally, I created this five years ago and I was like, what? I wasn't just great at financial planning and analysis. And honestly, if we're being 100, around the table, technology should be doing your financial planning analysis. The true value-add, and kind of what we're talking about in all this, and I think this is the value that our clients see with us is like, no, Chris is our finance partner and advisor.That's exactly what you want to be looked at. And that's what Glenn talked about. You don't want them to look at you and be like, yeah, Chris's team and deep.

(00:41:52):

No, financial partner and advisor first. Then the outcome is going to be the financial planning and analysis.That's the goal. That's where you should be striving for because in Glen's situation, now you're in both of them. I'm giving my finance, the financial planning analysis, and I give the business the financial partnership and advise me. And that's been my philosophy in how I approach the conversation, how I tell my team to approach it. Go be that person for them. If they come to you and like, man, Chris, I don't know how to. Like you said, Zach, if you can make their job, if you can turn them from paying to productivity, you created value. That's simply it. It's like, I know the business is paying. I can turn it into productivity. I created value. And as a business owner, for me, it's my job to monetize that.

(00:42:45):

So that's the whole piece of it.

(00:42:50):

It's less of a skillset thing. It's more of how do you approach that conversation and be like, I want to be this sales, this marketing, this operations. For me, I want to be that CEO, owner or founder. I want to be their financial partner and advisor. And that's exactly how they look at my team as their CFOs. Yes, that's not the people that's doing our budgeting and our forecasting. That's the people helping guide the business. They're helping us with international expansion. They're helping us with raising our safe note. They're helping us with this acquisition. That's what they do. And I think that's an important point to highlight is that's truly where you want to be.

Co-Host: Glenn snyder (00:43:27):

And Chris, what you just described is the exact same whether you're in a small business, a medium-sized business, it's a large business, global business, regardless of industry, it's the approach that you take that matters, and that goes across everything.

Host: Paul Barnhurst (00:43:41):

You have to be a partner regardless of all the other stuff that goes with it. So when you were talking about sometimes saying no, one of the best ways I've heard it is don't say no, but say it's more of a no end. This way doesn't work, but here are the opportunities. You need to make

Guest 2: Zach Rial (00:43:59):

Sure -

Host: Paul Barnhurst (00:43:59):

Here's

Guest 2: Zach Rial (00:43:59):

What has to

Host: Paul Barnhurst (00:44:00):

Be true. Here's what we can do. Here's what has to be true for that to work. And they'll come to their own conclusion of, oh, so you mean it's not a good idea to spend that much money for a really bad return? Yeah, it's not. Whatever it might be. But I want to get a little tactical for a minute, and I want to touch one area that I know you've dealt with, Zach, and I imagine you have as well, Chris, supporting some tech companies. Tokens, AI. I think everybody's going to get season. So let's be a little more tactical. How do you think about forecasting this area? Any advice you'd offer people? Because it's

Guest 2: Zach Rial (00:44:35):

New. Any of you watch Yellowstone at all?

Host: Paul Barnhurst (00:44:38):

No.

Guest 2: Zach Rial (00:44:39):

No. I haven't watched it, but I've seen the clips. There's this clip where they're talking about how to get the cattle into corral and it's always messy. And the owner comes out, he's like, "Hey, have we figured out a better way to do this so people aren't getting beat up and just listening?" He goes, "Nah, best we got is F it, just go." And he's like, "All right, well F it, let's just go." That's kind of how I feel about tokens right now. But we're all figuring it out. I don't think anybody could tell you that they know it. I think we all think Uber's a great company. We're all like, eh, what a smart, awesome, incredible company. They blew their entire token budget before the end of April for the full year. They blew it, all but gone, poof. So we're all figuring this out.

(00:45:21):

And it's crazy because the experience we had here is our margins were not where they needed to be. I started pushing the team on margins and costs and what models are we using? Why are we using this model? Is the best model? What value is it creating? And then the next day, ChatGPT was like, "Hey, we're cutting Luna prices by 80%." And I was like, "Okay. I guess a huge portion of my problem just got solved. Push everything to Luna." And it's like, I can't even control that. I had no idea that was coming. I had no way to prepare for that. So AI is this like, I'm glad we're talking about it. I'm going to do my best to tell you how I think about it and how I do it. But at the end of the day, man, when we talk about a changing market, a changing environment, AI is changing every week, every day, every month.

(00:46:06):

It's just constantly different.

Host: Paul Barnhurst (00:46:07):

So basically no darts at the wall.

Co-Host: Glenn snyder (00:46:12):

With your eye quote.

Guest 2: Zach Rial (00:46:13):

You might have bullseye. You don't

Guest 1: Chris Ortega (00:46:15):

Know. Our X asks Gemini where to throw the door. It's like, Gemini, where should I throw this door? And you ask Gemini and they'll be like, "That's a great idea, Chris. I'm on board to help you do this." No, but the AI piece of it, we have a client, their token usage. So where it all came down to is a philosophy. So 10,000, not in the tokens. You have this strategy of shadow AI. And what we found with this client was they had people using Copilot. They had licences they were paying with Copilot. They had the shadow people using Gemini and ChatGPT and Claude. And they were just like, it was everywhere and it was on credit cards everywhere. So don't even get me in the spin side of this stuff, but it was everywhere. Oh, it got this Amex card and it got this.

(00:47:05):

And it was over the course of three months, that element, 10, 15X. And I was like, "Something's wrong here." And what we found out was this shadow IT is, here's the thing, as CFOs, finance professionals, you have shadow IT running rampant in your organisation. No doubt about it. And the first place we started to solve this for that client and for this business was we needed to have governance around just AI. We need to come in. And it was a partnership. They didn't have a CTO at the time or a chief information officer. So it was a partner that we worked with, worked alongside me, worked alongside the client, and we developed an AI governance framework. Here's how it's going to be used. Here's the tools we're going to use. Here's how we're going to monitor this. So the first step in that is you have to identify and know Shadow AI is running rampant in your organisation.

(00:48:01):

How do you partner with your technology, your information? Sometimes maybe the CEO to say, we need to set governance and guard. We need to set the sandbox that people can operate in. And a lot of it was just people were using Claude tokens. They're using Quad, they're using the highest algorithm and version of it, and it's costing the business so much money. So a lot of it is just you have to address Shadow IT, work in setting a governance framework and that sandbox of tools that operate and monitor that because that is going to balloon. And that's what these AI companies want you to do. That's why it's like they want you to prompt as much as possible because they want you to use this stuff so you have to buy the additional cloud. And we've all been there. I've been there in claud usage and I hit my limit and I'm like, I can't wait.

(00:48:50):

I can't wait till tomorrow. I need to drop this 25 bucks right now to do this. You know what I mean? So that's a critical area. And also, here's the other for CFOs out there to monitor this, move that to cost of goods. So move that to your gross margin. Right now it's sitting in your OpEx. You don't see it. You're doing your run rate forecasting on it. Move that to your cogs. Move that to gross profit. Then you're going to have a lot more inspection on that.

Guest 2: Zach Rial (00:49:19):

I think the other thing too is just that I think you're hitting on this, it's visibility. And so one of the things that I've used, I don't want to plug any one tool specifically, but Ramp has a feature where you can connect all of your different AI platforms and they're adding more and more platforms to that. And you can see which API, which model, all that stuff. And so I connected our cursor to that. And then I saw that we had one person that was just blowing up our cursor bill. I could have gone into Cursor and done it, but I had a nice, easy ramp. I'm in Ramp every day. And so I pop that up and I'm like, "Oh my gosh, this one person's doing it and they're using the most expensive model." And so I just went and said, "Hey, I can see this.

(00:49:55):

I see it every day." I went and talked to the engineering manager. I said, "Let's have a chat with them. Let's not tell them they can't use this model, but let's see if they can use this model for one part of what they're doing and the rest of the parts they're doing, they can use a cheaper model. I want you to know cost cut in half just overnight just because we made a quick tweak, quick change." So visibility is a huge part of this. I think you need to have that visibility so you're not surprised. You can see these things on a daily basis. Most of them will let you see usage on a daily. You can API in, you can connect through other tools you might already be using. But the best thing you can do is get it all in one place so you can look at it, you can see what's happening because ours constantly changes.

(00:50:33):

One month that OpenAI will be the most expensive bill, the next month Anthropic's the most expensive bill. And so I'm just myopically looking at Anthropic and saying, "Oh, it went down. We're good. I might be missing that. It didn't go down. It just moved over to OpenAI."

Host: Paul Barnhurst (00:50:44):

I'll say just a couple brief thoughts here. Then we have a question and then I want to cover a little more and we'll wrap up. So Chris, you nailed it on the whole governance thing. You have to have good governance. You have to recognise there's going to be shadow. If you don't put those policies in place, people are going to doing whatever they want. They pry a little bit. We talk about bottoms down, top up. AI has been a lot of bottoms up. People are going to use it. So if you don't get in front of it, it's going to be a problem. Tracking is huge. I was talking to a guy and I'm going to have him on a future episode just last night. He had to develop the entire process of how they monitored it, allocated it, managed it for all of Instagram and threads that made it.

(00:51:23):

And it all sits in OpEx, Chris. So you can imagine the fun of a company like that of managing it all. They don't put any of it in cogs. So I'm excited for that conversation, but everybody's struggling with it. And so the advice I give is, like you said, the more you can understand what's going on, you can have conversations. Because like anything, there's probably an 80 / 20. 20% of the people are driving 80% of the cost. Start there, but make sure you have a holistic picture. One model, one little thing isn't good enough. And that's true of many expenses, but I think that's what I'll say on AI. Next -

Guest 2: Zach Rial (00:52:00):

And find your community. That's the other thing is none of us know, we all have little pieces. Find your community, talk to them. One thing I love about finance people is we know so much about what's going on. We're so willing to talk to each other and be so open about it. We just don't do it enough and we should be doing it.

Host: Paul Barnhurst (00:52:16):

Pick up the phone and talk to someone at another company. Find

Guest 2: Zach Rial (00:52:19):

Your community. Find your Slack group, find your network, whatever it is. Go find that place and just talk to people. I've learned so much through that.

Guest 1: Chris Ortega (00:52:27):

Zach, I'd be quick. Zach, you talked about a really great area, and I don't want to discount that. It was really important. A lot of it for these rising costs, we found it, same thing with our client when we dealt with that. They just don't know how to actually use these tools. So it's like the prompting knowledge, it's like one thing that we did is we taught them, we did a session, and this isn't in our wheelhouse, but this is being a partner to them. We had the office partner we worked with, the IT person. We had them just come do a one-hour session to teach this organisation how to effectively do prompts. Because a lot of it is just like people don't know what they don't know, and they're using the highest version of any one of these models that's draining these tokens. And a lot of it starts with awareness of it.

(00:53:09):

So it's not only just the governance policy, the sandbox to operate in, but it's also that way to take it a step further and teach people how to do it. Teach people how to leverage it. Here's where you need to use this. So you did that, and that's what led to that person saying, "Oh, I have more awareness. I shouldn't be using this." And then it's a direct driver. And Zach, what I love that you did, you didn't go to that person and say, "We need to stop them from using this." You like, "Help me understand." You came from a place of curiosity. I just want to understand how you're doing this. Seek first to understand in finance, then be understood. You crushed it, bro.

Host: Paul Barnhurst (00:53:44):

I'm going to switch gears here. So there's a question that was asked, and I'm going to send this to you, Glenn, and then it'll wrap up with one or two hidden tips to just help with the budget process as takeaways. So be thinking about that. So Julio here asked, he says, "In terms of execution, how do you strike the right balance between maintaining rigorous budget governance, preserving the agility to rapidly reallocate capital during market shifts or emerging opportunities?" So that balance of the budget is often obsolete by day one and you need to shift.

Co-Host: Glenn snyder (00:54:18):

Yeah. So you got to look at it two ways. So first of all, recognise that your budget is approved by your board of directors. So you and the business might be thinking, "Oh, this thing's obsolete." But the CFO was thinking every single quarter when I'm in front of the board, I am held accountable to that number. So you can't really get rid of that budget. The CFO and the CEO still have to answer to it. But that's what forecasting is for. That's where you go over and you forecast throughout the year. And it's a balance between whether or not you're managing to the budget or the forecast. And I think a really great example is COVID. When you went over and the end of 2019, you did your budget for 2020. Nobody had COVID in their budget. And all of a sudden by April, May, everything, I mean, if you're a retail shop, if you're a restaurant, if you're a service organisation that's interacting with people, you have a big office full of people that come in every single day, your entire business model is shot.

(00:55:17):

Thanks. Going over and holding people accountable to that budget would be moronic. And you got to recognise, hey, you know what? We're in a different environment now. You got to re-forecast. And so really what you need to do is understand, yes, there is a budget and the budget has a role to play, and you still always have to be accountable to the board, but there are times when the forecast has greater value, and that's when you need to pivot. At other times, if you happen to be, here you are in 2026 and you're working at Procter & Gamble, chances are their budget's still going to be pretty good because Procter & Gamble could probably budget everything down to 1% because overall company revenues are probably going to be moving within a single digit number and you could forecast. It's not like you're one of Chris's clients where they're looking at anywhere from 30 to 70% revenue growth and where they land that's going to drastically change what's going to happen throughout the year.

(00:56:11):

So understand the company, where you're at, the value that the budget still holds, even if the company has changed or the environment has changed, but when to go over and apply that forecast and say, you know what? At this point in time, it makes more sense to measure people against a forecast because of these external events. One other thing I'll say about this is when I worked at a company and every single quarter we were doing reforecasts and they only wanted to hold people accountable to the forecast. And that was a horrible approach, in my opinion. It was a large public company because all that did is to let people make mistakes in their forecast and then they got to reset every quarter and they didn't have to own those mistakes. And so you never got better at forecasting and you never had the accountability because every three months got to reset.

(00:56:56):

So that's the value of sometimes having that budget if you're more of a stable company and holding people accountable. So Julio, I hope that answered your question because I think there's value on both sides and you just have to evaluate where is there greater value to the company? Is it in the forecast or in the budget?

Host: Paul Barnhurst (00:57:12):

Great answer. Appreciate that. When you mentioned how everybody's budget blew up, one of my good friends, my training partner, he was corporate managing a toilet paper company. His blew up the other way. He's like, why don't we spend six months on this budget?

Guest 1: Chris Ortega (00:57:26):

Paul, that was fire, Paul. I love that dude. That was good. That was good, Paul. That was so great. You like

Host: Paul Barnhurst (00:57:32):

That? All right. Well, I got to have a little fun here. And we're going to wrap up now, but first we probably need a joke. Let's see. Since we talked about toilet paper and blow up, does anyone know why the spreadsheet was constipated? Chris?

Guest 1: Chris Ortega (00:57:49):

Because it had too much formula.

Host: Paul Barnhurst (00:57:52):

No. Zach, any guesses?

Guest 2: Zach Rial (00:57:54):

I was going to say something about the formula spill. I be thinking that's probably I'm not on the right track.

Host: Paul Barnhurst (00:57:59):

Well done, but no. Glen?

Co-Host: Glenn snyder (00:58:00):

My first thought was they ate lettuce at Taco Bell, but

Guest 2: Zach Rial (00:58:05):

Taco Bell's not the problem. We have Taco Bell.

Guest 1: Chris Ortega (00:58:08):

Yeah, Taco Bell's clunch. It couldn't, but

Host: Paul Barnhurst (00:58:10):

I figured it was appropriate for the session. The last thoughts wrap up. What's one key thing more from an execution kind of hidden gem in the forecast process, managing the calendar, whatever, that's really helped you in your career that you wish you would've known earlier? So think about that one piece of advice you give that's really helped you. Why don't we go Zach, Chris, Glen?

Guest 2: Zach Rial (00:58:35):

Be wrong more often. It's more so be willing to be wrong because you're smart. I'm smart. I like to think that smart anyway. And I have these preconceived ideas of here's the best way to do this, here's the best way to do that. But I find that when I just go in with this attitude of, I think Christie said about curiosity and humbleness and saying, I'm willing to change the way I do things. If your way makes more sense and it's better, it just improves everything so much more. And I think in the era of AI as well, getting an idea to 80% now is so much easier and so much faster than it was two, three years ago. So why not experiment? Why not be wrong more often? Why not be open to that?

Host: Paul Barnhurst (00:59:16):

Great advice. One of the best lessons I learned when I was 20, someone said to me, "I've never had a failure in my life. I've only had a learning experience." Had a similar idea. Be willing to be wrong, be curious, be willing to fail. It will help you along the way. Chris - Dave,

Co-Host: Glenn snyder (00:59:29):

By the way, own the fact that you are wrong. Don't point a finger at somebody else.

Host: Paul Barnhurst (00:59:33):

100%. Accountability is key.

Guest 1: Chris Ortega (00:59:35):

There you go. For me, quick spectrum. Low, this is high. Time, energy, effort, resource is low. Time, energy, effort, resource is high. Budgeting should be here. Balance of the year forecasting. We call them boy forecasting should be here. That's it.

Co-Host: Glenn snyder (00:59:48):

So I'm going to go a little more tactical. I'm going to throw out a concept that I know Chris heard me say a couple years ago, but still a lot of people don't use it, which is around vacancy. Understand that companies have turnover If you have, let's say a group that has a hundred employees, but on average they only have 95 there because of turnover, don't give them a budget for a hundred people. You're wasting company resources in that budget. It's being tied up in compensation for that department that's not going to be used. Understand that gap, how long it takes when somebody leaves to get that position refilled. If people have open positions, when do they actually hire? If they have a position scheduled to be, they budgeted position for July one, they don't open the rec until June 30th, they're not hiring somebody on July one.

(01:00:32):

Don't lock up that extra budget. I have been at companies where we have saved 20 to $30 million in the budget process just by recognising the turnover that's going to be there and not budgeting it. And that was money the company was able to use for new hires, other initiatives and types of things. So you give the company a lot greater flexibility when you budget vacancy. The one thing I'll say is don't go nuts. Be very conservative because you don't want to overshoot and make the company spend more money and now you've hurt earnings, but find the right balance.

Host: Paul Barnhurst (01:01:04):

Great one there. I will just share this real quick. When you're building your calendar, build in time. Don't give yourself no time to review things. Don't think, "Well, they have to get it to me by this day and I'll get it to the person the next day." Build yourself some time knowing things will slip. And so just give yourself that flexibility throughout the process. All right, we're a little bit over, so we're going to wrap there. Thank you so much for joining us. Great conversation, everybody. Thanks. Glen, Chris, Zach, appreciate it. Thank you everyone.

Guest 1: Chris Ortega (01:01:34):

Glen, you're the man, Glen.

Co-Host: Glenn snyder (01:01:36):

It

Host: Paul Barnhurst (01:01:36):

Lives

Guest 1: Chris Ortega (01:01:36):

On.

Host: Paul Barnhurst (01:01:36):

Glen's the man. Chris is Larry.

Guest 1: Chris Ortega (01:01:40):

Yeah, you're Larry.

Host: Paul Barnhurst (01:01:41):

Zach is an athlete. I'm just here for a good

Co-Host: Glenn snyder (01:01:45):

Time. I'm going to be curlier mow in the situation if Chris is

Guest 1: Chris Ortega (01:01:48):

Going. Zach's Drake because he's here for a good time, not a long time.

Host: Paul Barnhurst (01:01:53):

Alrighty. See you guys.

Guest 1: Chris Ortega (01:01:55):

Bye.

Host: Paul Barnhurst (01:01:57):

That's it for today's episode of FP&A Unlocked. If you enjoy FP&A Unlocked, please take a moment to leave a five-star rating and review. It's the best way to support the FP&A guy and help more FP&A professionals discover the show. Remember, you can earn CPE credit for this episode by visiting earmarkcpe.com, downloading the app and completing the quiz. If you need continuing education credits for the FPAC certification, complete the quiz and reach out to me directly. Thanks for listening. I'm Paul Barnhurst, the FP&A guy, and I'll see you next time.