finance director Archives

What value does an FD add – and why you don’t need one

This gives your business the best of both worlds – the senior financial input you need but without a full-time cost. It’s a solution that an FD would be proud of!

What value does an FD add to any business?

Broadly, there are four things a good FD adds to any business:

1. Financial information

No business can last for long without solid, consistent, up to date performance information that looks at:

P&L, compared with budget, last year, forecast
Margins
Debtors
Cashflow forecast
Client & product / service profitability

2. Financial controls and processes

Mostly, these are routines that happen every day, week or month and need to work like a well-oiled machine:

Solid bookkeeping that’s right, first-time
Frequent bank reconciliations
Robust credit control
Intelligent cost control

Without these processes and systems working well, the financial information required simply won’t be produced in a useful way.

3. Getting other areas of your business to be aware of financial issues and constraints

Ensuring that everyone in the business is aware of the financial dimensions of their job, particularly when making decisions.

4. Being involved in occasional and one-off decisions and projects

Investing in new assets, buying / selling businesses, promoting or recruiting senior staff, lease renewal. These are some of the issues that pop up from time to time and require experienced financial input. But they don’t arise every day.

All of this is important, so why don’t I need an FD?

The tasks listed above are either routine, day-to-day or monthly tasks or they’re occasional issues that pop up rarely. The routine tasks can be dealt with by good bookkeeping and accounting staff, or they can be outsourced.

The occasional issues are exactly that and don’t need an expensive, permanent presence to deal with them.

If not an FD, then what’s the alternative?

A far better answer for most businesses is to enlist the help of people like Blue Dot Consulting to act as a part-time FD to:

put in place the financial processes and controls you need
train and coach existing staff to do a more demanding job
ensure the right information, bespoke to your business (not the standard reports that you currently get from your accounting system), is coming out to those who can act on it
maintain an ongoing presence in the businesses to ensure that everything continues to run as normal
pitch in to the occasional decisions as and when required

This gives your business the best of both worlds – the senior financial input you need but without a full-time cost.

It’s a solution that an FD would be proud of!

Call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk and let’s have a free-of-charge chat about your business.

Michael

You can’t run a £1m business and only have your bookkeeping updated every three months!

Part time Finance Director

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Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

How do you fill the gap between the books and the board?

You can create bad practices that embed themselves like fossils at the heart of the business and continue to be corrosive for a long time to come.

In many businesses there is a gap between the day-to-day bookkeeping and the information the management team needs to understand, measure and improve performance.

The gap might be created for good reasons but the bigger the company gets and the faster it grows – the more this gap will act as a drag on profits.

A familiar accounting problem

Firstly, as a business gets going the cost of accounting may be something to be minimised. Often a part-time bookkeeper or the MD or a family member will do the work, hopefully using a recognised accounting package.

This is fine – if it’s done right.

When it’s not done right, when processes are set up that are not very efficient, you can create bad practices that embed themselves like fossils at the heart of the business and continue to be corrosive for a long time to come.

No-one questions how things are being done because that’s how they’ve always been done!

Fast forward a couple of years and the business needs to know how it’s performing in a more sophisticated way – monthly management accounts, profit centres, job costing, budgets and cashflow forecasting, for example.

Who knows how to do these things, let alone that they may need to be done at all?

If the gap is not closed at this point then profits will be hit, often despite strong sales growth, and it will cost more to rectify the situation later on.

A sensible solution

Our solution is based around the idea that very few companies need a full-time finance director.

What they need is an occasional dose of experienced financial management to keep them on track as they grow.

To begin with, this might require an intensive period of hands-on help:

improving and streamlining processes
improving (or even introducing) the right level of management accounts
minimising risks through better credit control and cashflow management
training current staff to do a more accomplished job

Phase two is when the accounting is being done on automatic pilot. This is much more of an advisory phase

reviewing performance
contributing to one-off issues – annual budget, overseas subsidiary etc.
working with the management team to ensure targets are hit and sustainable growth is achieved

The business continues to evolve successfully, confident that it has strong financial management and that the board is getting the financial information that it needs to run the business.

But it controls its costs because it doesn’t create a full-time role for a part-time job.

Michael

Part time finance director

Profits, cashflow and getting paid – the more things change, the more they stay the same!

^{_{© Blue Dot Consulting Limited}}

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

Part Time CFO – if this is the solution, what’s the problem?

The interim or part-time Finance Director option works well because it is quick to implement and it recognises that once the problems are solved you can go back to a lower-cost level of resource which will consistently get the right job done in the future.

There’s no such thing as a full-time FD role in most small or medium businesses. But if this is true then what can a small or medium-sized business do when it needs some experienced, practical financial input? A part time CFO might be the answer.

The first challenge for the management team is to recognise that they have some problems that can’t be dealt with by the existing finance staff.

This may be tough to do because you don’t know what you don’t know. However, some common indicators that all is not well with your business financials may include:

slow payment of your sales invoices
cashflow problems
inaccurate or late or no management accounts
losses
unpaid suppliers calling too frequently
HMRC not being paid PAYE and VAT
surprises in the numbers after the event

If you’re concerned about some or all of these symptoms then what can you do?

The expensive and slow answer is to recruit a senior financial person at Financial Controller or CFO level. A solution that’s quicker to implement and which will most likely turn out to be cheaper is to look for an interim or a part time finance director.

What can you expect from an interim or part time CFO?

Someone who knows what they are doing will have a meeting with you in which they should very quickly get to diagnose the financial issues in your business. Once identified, these issues need to be prioritised and then resolved.

What you see next will probably include:

a cashflow model (this stands out on its own because it will quickly show whether there are very serious problems with the solvency and the future of the business which need to be addressed as a matter of urgency)

correct, meaningful management accounts being produced
a plan to improve profitability and lower the cost-base
changes to systems and processes and the introduction of new ones
a to-do list for non-financial staff to get on with to improve other parts of the business – particularly based around the profitability of products, services and customers
training of your existing finance staff to be a better job in a slightly different way
recruitment plan for the appropriate level of staff

All this can be done quickly, some of it may need to be!

The race is on to get the business working more profitably on “automatic pilot” and once this is in sight the input of the part time Finance Director can scale down and perhaps come to an end.

The interim or part time Finance Director option works well because it’s quick to implement and it recognises that once the problems are solved you can go back to a lower-cost level of resource which will consistently get the right job done in the future.

If a part time CFO could be just what you need

We may be part of the solution for you.

Because we do this work for clients on a regular basis.

If some of the problems described here are achingly familiar and you need some help, please give Michael Austin a call on 020 7125 0270 or email info@bluedotconsulting.co.uk.

Let’s meet, have a coffee and a good, long, confidential chat about your business.

Michael – @bluedotmichael

Related links:

Management information

Switching accountant – you can kiss a lot of frogs

Measure business performance and make more money

There’s often no such thing as a full-time Finance Director role

Once your accounting and finance procedures are running on “automatic pilot” there’s no need for an expensive FD. So the trick is to get to the automatic pilot position and only bring in extra experience when you need it.

In large companies, with large finance teams, there will be a full-time Finance Director role, but most companies aren’t that big. If you run a smaller business, this is how you can fill the finance director space. Continue reading “There’s often no such thing as a full-time Finance Director role”

Part time finance director – could be just what you need

The ideal progression is for the part-time FD to make most of the job redundant by training other people to do it and ensuring that things which are fixed stay fixed.

A part time FD could be just the short-term financial shot in the arm your business needs right now.

An experienced pair of eyes looking at profitability, cashflow and much more besides could make a real, lasting, positive difference.

Here’s how it works.

What are the part time finance director’s responsibilities?

When we launched our part-time Finance Director service we had to ask what a company would need from the role.

There are three main areas of responsibility:

1. Financial performance measurement

Management accounts and key performance indicators
Forecasting and budgeting
Business planning

2. Day-to-day financial control

credit control
cashflow management
bookkeeping, payroll, VAT
financial and business systems

3. Relationships with third parties

banks
investors
HMRC
accountants and tax advisors

Exit planning, acquisitions and raising finance will also come under the FD’s remit as will ad hoc project management.

What does the part time FD role look like?

The key objective is to get all the routine financial processes and management reporting to work on “automatic pilot”.

Once this is happening the business should be scalable over a large range of growth. Financial processes and reporting are able to support growth without needing to be redesigned every five minutes.

Whilst ensuring the routine work is happening properly, the part-time FD can also undertake other tasks that the business prioritises and tick them off when they’re achieved.

As each objective is met the MD, and many others in the company, should notice that there are fewer things to worry about. Fewer obstacles to sustainable growth.

Less is more for the part time FD

In many ways the ideal progression is for the part-time finance director to make most of the job redundant by training other people to do it and by ensuring that things which are fixed stay fixed.

Over time the FD builds up a vast working knowledge of the business and becomes a very valuable sounding board for important decisions and it’s in this capacity that most value is added going forward.

For example, if the business wants to make an acquisition or expand into a new country or one of its major suppliers collapses, the part-time FD will be one of the first people called for advice.

Having a part-time finance director is a cost-effective and useful resource for a lot of companies and the role will be as varied as the company’s own evolution and development.

Finding the right person and agreeing the scope of the role are perhaps the most difficult challenges for MDs looking for help in this field. After all, most people have never recruited an FD before!

If you are looking for a part-time finance director for your business we would be very happy to help you. Please call me on 020 7125 0270.

Michael
Sales | Margins | Profit | Cashflow

Tag: finance director