What is Strategic Finance?
Breaking down the role of strategic finance in tech
I often get asked — what does strategic finance actually do? While I’ve only worked in strategic finance at one company — DoorDash — I wanted to share the core tenets of what we do on a daily basis in the hopes of making the job more visible and understandable.
The focus of my job is in three main areas:
1/ Define and track key metrics
2/ Lead planning and forecasting
3/ Work with accounting to close the books
I’ll break each of them down into a little more detail.
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1/ Define and track key metrics
Strategic finance defines and tracks the company’s key metrics, creates the internal reporting cadence, and helps operators achieve top-line goals cost-effectively.
What this means for me is that my week starts with looking at dashboards (Chartio, Tableau), pulling operational and financial metrics from the database (SQL to Google Sheets), then use that information to create a story of what happened in the past week across our existing customer ordering, new customer acquisition, and unit economics.
This story creation leads directly into a business update where we use recent performance, actuals vs. plan, and read-outs on experiments to suggest new actions for the business.
It’s pretty fun — you get to be in the thick of what is happening in the business, then use that information to generate, size, and recommend new actions. As an example, you may see from the data that new customer payback periods have increased due to a new promotion… you might use that information to suggest the team modify the promotion to one that drives similar volume at lower cost.
Actions: Identify/define relevant business metrics, monitor and contextualize performance (dashboards, SQL, python), recommend initiatives based on analysis.
2/ Lead planning and forecasting
The planning process is the finance team’s show. We lead financial planning, build the infrastructure for the plan (full models and drivers), and work with business partners to set high but achievable goals.
As part of this process the finance team evaluates the ROI of new and existing investments, be they headcount, marketing, or sales spend. When done right, funded investments in the plan will align with the company’s key goals and priorities.
The planning process never ends… many companies also keep a “live forecast” that represents the continually updated version of the quarterly plan as actuals come in. That way they can see the impact of recent performance and newly approved investments on the P&L as they happen or are approved.
Actions: Decompose business into core drivers (revenue and cost), use drivers to project future performance, assess ROI on new projects, work with large datasets (e.g., cohorts in excel or Google Sheets).
3/ Work with accounting to close the books
As soon as the month ends, there is a big push to close the books, identify accounting adjustments, and assist the accounting team in understanding deviations. It’s not the sexiest part of the job, but it is one of the most important as the results ultimately end up in published accounting statements.
As a strategic finance professional you’ll work hand in hand with your accounting partners to make sure they have the information they need to book the right adjustments, and have the required business context to understand changes in results from month to month.
Actions: Suggest adjustments based on accounting rules (e.g., accruals, allocations, capitalizations), navigate software tools to get information (e.g., Netsuite, Workday), decompose drivers of month to month changes.
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Hope this was helpful! Please see link to other articles here that go over strategic finance recruiting, interview questions, and more!
