by Brian DeChesare Comments (6)

The Corporate Finance Analyst: Promising Career Path, or “Plan B” if Investment Banking Doesn’t Work Out?

Corporate Finance Analyst

We’ve received scattered questions about corporate finance analyst roles over the years, but the question volume spikes whenever there’s an economic or financial crisis.

Call it the “flight to stability” or the “eternal search for a ‘stable’ finance job.”

Depending on your personality, skill set, and career goals, corporate finance jobs could be great…

…or they could be so monotonous that you want to jump into a volcano when you arrive at work each day.

To explain the disparity, we’ll start with a quick overview of the industry:

What is “Corporate Finance”?

“Corporate finance” is such a vague term that it could refer to any job related to money at a bank, investment firm, or normal company.

For example, sometimes professionals who work in groups like M&A investment banking say that they “work in corporate finance.”

And within normal companies, those in strategy or corporate development roles might also say they’re “in corporate finance.”

For purposes of this article, however, we define it like this:

In corporate finance, professionals at large companies manage accounting, budgeting/planning, and liquidity, including cash management; they do not work on “deals,” but are instead responsible for ongoing operations and reporting.

The three main areas at most companies are Financial Planning & Analysis (FP&A), Controllership, and Treasury.

In FP&A, you create forecasts for the company or division’s Income Statement (“P&L”), analyze performance against forecasts, and explain why departments did or did not meet their targets (“variance analysis”).

In Controllership, you work with auditors and check the company’s internal accounting and compliance to ensure accuracy while also making sure the CFO is happy.

And in Treasury, you manage the company’s cash flow and cash balance to ensure the company has enough to survive – and that it also doesn’t let too much cash sit idle.

For more detailed descriptions, see our article on the corporate finance career path.

Some companies also put groups like investor relations, corporate development, corporate strategy, pricing, tax, and internal audit/risk within “corporate finance.”

To limit the scope of this article, though, we’re going to focus on the three main roles.

The Corporate Finance Analyst Job Description

As a corporate finance analyst in one of these teams, you create monthly reports, scoreboards, and dashboards, and you work with other departments and outside parties such as auditors (in Controllership) and bankers (in Treasury).

You create these reports and dashboards in Excel and analytics platforms like Spotfire, Tableau, and Power BI, and possibly even programming languages like Python, depending on the company and industry.

Overall, you’ll spend 60-80% of your time working in Excel and other programs to analyze and consolidate data, create reports, and automate processes.

You’ll spend the remaining 20-40% working with people in other divisions at the company, often on calls or in meetings.

The “average day” varies widely: you might be on calls for an entire day, while you might spend 90% of another day adjusting journal entries for the close of a quarter.

Work tasks vary based on your group and whether you’re working in a business unit of a company or the “central division.”

For example, you’ll spend a lot of time on variance analysis and budgets in FP&A.

But in Controllership, you spend more time reviewing historical records, closing months and quarters, and working with external auditors.

The Best Companies for Corporate Finance Jobs

The best companies for entry-level corporate finance jobs tend to be Fortune 500 firms with global presences and many different divisions.

For example, tech companies like Apple, Microsoft, and Amazon all offer solid rotational programs for new graduates (often called “Financial Leadership Development Programs” or FLDP).

Large companies in other sectors, like industrials/manufacturing, healthcare, commercial banks, and energy, offer similar programs as well.

It’s not in your best interest to start in corporate finance at a startup or smaller company because they tend to lack structured training/rotational programs.

Corporate Finance Analyst Hours and Lifestyle

At the entry-level, you’ll usually work between 40 and 50 hours per week.

However, that varies based on the group and the time of year.

For example, FP&A Analysts might work more like 50-60 hours per week because the role tends to be more strategic and involves more interaction with management.

In Treasury, the hours vary widely and could spike to a much higher level (60-70 per week) if your company is in “crisis mode,” and you need to get cash ASAP to survive.

One commonality is that hours always get worse when you’re closing quarters and years.

For example, you might go from 40-50 hours per week up to 60-70 in the week just before the end of the quarter.

Aside from those weeks, however, you follow a regular schedule where you create reports and complete set tasks.

Corporate Finance Analyst Salaries

The rules of thumb are:

  • Entry Level (Analyst): The “average” base salary is ~$70K USD at most large companies. But you might earn less than this in Controllership (more like $50K), and more than this at large tech companies (see below).
  • Next Level (Senior Analyst): After 4-5 years on the job, you’ll advance to the $100K+ range, and possibly even go beyond that depending on the company and industry.
  • Next Level (Manager): And then after another 4-5 years, you can reach the $200K level.

Past that, advancement slows down, and you need to wait for a promotion to Director or switch companies to advance.

Divisional CFOs can earn into the mid-six-figures each year, and top executives such as the CFO of an entire large company can earn millions per year.

But reaching that level may take decades, so you’re in for a long and drawn-out path.

One Final Note: Some big tech companies, such as Microsoft, are known for paying well above the figures quoted above.

For example, they might offer $85K base salaries to Analysts, bonuses worth 20% of that, restricted stock, and various reimbursements and perks.

Altogether, you could earn somewhere in the $100 – $125K range in your first year.

(NOTE: Salary estimates as of 2020.)

A Day in the Life of a Corporate Finance Analyst

The average day varies by time of year and group, but here’s what it might look like if you’re an FP&A Analyst in “normal times” outside a quarterly or annual close:

8 AM – 9 AM: Arrive at work and start reading emails with requests from department heads that came in overnight.

Respond to a few of them and send over data and explanations for certain journal entries in one report.

9 AM – 11 AM: Join a long conference call where another department presents its budgeted vs. actual spending and gives the full-year forecast.

You realize that this department is going to miss its Net Income targets, which matches most other groups this year.

11 AM – 12 PM: Your boss asks you to review some actual vs. budgeted numbers for this past month and fix a few bookkeeping mistakes, such as expenses that were classified incorrectly.

12 PM – 1 PM: Head to lunch with a few other Analysts.

1 PM – 2 PM: You start working on a new spreadsheet and some SQL commands that will automate parts of the data retrieval process for monthly reports.

Your company still operates a lot of legacy systems, so these small improvements make a big difference over time.

2 PM – 4 PM: You sit in on various meetings, including one with a team that needs clarification on revenue recognition issues, and one with an operations team that needs better sales data from other groups to improve their analytics.

4 PM – 6 PM: You go back to responding to emails from this morning, some of which require custom Excel work.

You also start working on next year’s budget  – it’s not due for a while, but you have some downtime today and want to get started on it.

6 PM – 7 PM: Another group is struggling with data consolidation tasks, so you send over a few of the tools you’ve developed and explain how to use them. You head home right after this.

If you’re in a business unit, you’ll work more closely with the specific revenue and expenses in that unit.

If you’re in a “central FP&A” role, you’ll spend more time reviewing each department’s numbers and reporting them to upper management.

Corporate Finance Recruiting: How to Break In

The competitiveness of corporate finance analyst roles varies widely based on the company and the prestige of its program.

For example, it would be quite difficult to win a job offer at Apple or Microsoft, but it would be much easier to work at a smaller company with a lesser-known corporate finance program.

In general, though, corporate finance roles are easier to win than investment banking or private equity roles:

The application process is fairly standard: apply online, do a HireVue or initial phone screen, and then interview with different people in the group.

In normal, non-pandemic times, you might attend a Superday with dozens of other candidates as the final step and complete additional interviews there.

Interviewers focus on the standard “fit” questions: Why this company? Why corporate finance? What are your strengths and weaknesses? How do you work in a team?

If technical questions come up, they’ll be based on accounting, perhaps with basic financial concepts thrown in (PV, NPV, IRR, etc.).

Unlike in investment banking interviews, they are not going to ask you about valuation or DCF analysis, merger models, LBO models, or debt vs. equity.

However, they could go into a lot more depth on the accounting questions, including points like journal entries that are uncommon in IB/PE interviews.

How to Succeed and Get Promoted

The general progression in corporate finance is Analyst à Senior Analyst à Manager à Director à Controller à Regional CFO à Company CFO.

But each one may have several sub-levels, and it’s rarely a straight path to the top.

To reach the CFO level, you’ll normally need Controllership experience, so you may have to switch groups as well.

The advancement process is very political in corporate finance; it’s not like a hedge fund where you will earn more if you make money for the firm.

You need to make yourself known to senior management and become highly visible to them to advance.

There are no clients, and you don’t generate revenue directly, so advancement is mostly about grinding it out and networking with the right people.

If you hibernate in Excel all day, you’ll never advance no matter how much fancy VBA, SQL, or Python code you write – that’s not how big companies work.

One “trick” to get around this slow advancement process is to join a high-growth startup as an early employee in the corporate finance team (once you have experience elsewhere).

If you do this, you could get promoted far more quickly because you’re an early employee and can build the organization from the ground up.

Exit Opportunities

Corporate finance is not an ideal pathway into investment banking or private equity.

The skill sets are quite different because you do not gain experience with valuation or deal analysis.

And while “accounting” is useful in IB/PE, you use it at a much higher level in those fields (no one cares about journal entries, just financial statement analysis).

It’s not impossible to move into IB – we’ve had coaching clients who have done it – but you’ll have to do it relatively quickly and in a good hiring market.

The more likely exit opportunities are corporate finance roles at other companies or switching into different roles at your current firm.

For example, you may be able to move into the strategy group, business development, or even corporate development from corporate finance.

Those can be nice “backdoors” into working on M&A deals and joint ventures or eventually moving into consulting.

The Corporate Finance Analyst Job: Right for You?

I’d sum it up as follows:

Pros:

  • You gain significant exposure to senior management and different groups and job functions within your company.
  • The lifestyle and hours are quite good most of the time, with occasional-but-predictable spikes to higher levels.
  • The role is fairly stable because all companies above a certain size need an in-house accounting/finance team, even if there’s a recession or other crisis.
  • Salaries can be fairly good for the hours you work and the relatively low stress levels, especially if you’re at a big tech or energy company that pays above-market rates.

Cons:

  • The work can get quite repetitive because you complete the same processes every month, quarter, and year.
  • You need to be patient because you’ll spend a lot of time dealing with IT and accounting problems from other departments, especially at older companies with fewer tech-savvy workers.
  • There is a modest risk of automation because technology could automate many processes and tasks, so the number of junior-level roles may decrease in the future.
  • The exit opportunities are worse than those offered by investment banking, private equity, and corporate development, and they are not even that great compared to other “Plan B” options such valuation firms or corporate banking.
  • The compensation and advancement opportunities also don’t stack up well next to IB/PE – yes, there is a high ceiling, but it can take decades to get there at big companies.

In short: while you can use a corporate finance analyst job as a “Plan B” if options such as IB or PE do not work out, that’s not the best way to think about the role.

It’s fundamentally different because you’re not working on deals or investments, and you develop a different skill set as a result.

You should go into corporate finance because you want the benefits above and because you want to stay at a normal company and build it over the long term.

Do that, and the job will never seem like a “Plan B.”

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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Comments

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  1. Hi Brian,

    Great article. Would you mind elaborating further on the risks of automation in corporate finance? Are the junior analysts the only major roles that should be truly worried about it?

    1. Thanks. The issue with corporate finance is that it’s not a client-facing role, and a lot of the work consists of consolidating data from different sources, cleaning up data, and generally working through data and IT issues to get useful reports.

      There’s still a human element required in that, but I would argue that it’s easier to automate than something like an IB role where you have to interact with clients.

      I wouldn’t necessarily be “worried” because big companies also move very slowly, but it would help to learn basic programming and database skills to make yourself more useful in these roles.

  2. Hi Brian,

    Hope you are doing well during these crazy times. Seems a lot of the violence has calmed down in the cities. Great time to live in the suburbs!

    I always like Corporate FP&A roles because they combined my areas of accounting and finance. I was about to transfer to the FP&A team within my company (large public company) before all of this Corona stuff started. I always liked the idea about working for smaller start ups in a corporate strategy/finance role. Would corporate FP&A at a large company translate well to a role like that within a start up?

    1. FP&A at a larger company is quite different because at a startup, you can’t really “plan” or “budget” in the same way since business is less predictable. But the accounting skills transfer over since every company past a certain size needs those. I think FP&A at a large company could work, but Controllership or Treasury would probably be more relevant to the needs of a startup (i.e., staying alive and making sure the government doesn’t shut down the company).

  3. How about Corporate Finance in investment banks? Discussion about FP&A and other internal business roles usually focus on the divide between front-office and middle-office, but from this article, are they good plan Bs for corporate finance? Thank you!

    1. It can be a good role at banks, and some financial services firms also pay above-market rates for roles like FP&A. But you’re still not likely to go from corporate finance *at* a large bank directly into IB at the same bank. Maybe you could get into a group like corporate development, though.

      Corporate finance is considered a “support role” at most firms, so it’s still more in the middle-office category. But that’s not necessarily bad if you plan to stay there for a long time.

      If you’re asking whether it’s possible to move from some other support/middle-office role into corporate finance at a bank, probably, yes. Companies recruit for CF Analyst roles from a mix of undergrads and employees already working there, so you could probably move into this role from another group.

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