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As businesses grow, their needs increase. The person steering the finances needs to be someone who can take on a broad commercial role. Forecasting, IT, tax issues, insurance and back office functions – all these need to run smoothly. But a fast-growth business needs someone who can anticipate both future opportunities and potential problems.
A good financial director will help owner-managers understand which aspects of the business are the most profitable, as well as forecasting ways to exploit other opportunities. (Santander)
So what key questions should you regularly ask your FD…..
- What is our cash cycle and how can we improve it – Cash Cycle Blog
- What Key Performance Indicators should we use and what are they telling us – KPI Blog
- How can we improve profitability – 15 ways to improve profitability Blog
- What is our Business Plan and is it the right plan – Business Plan Blog
- Can we reduce Overheads – 10 creative ways to reduce overheads Blog
Many SME’s wait too long before employing their first FD.
SME’s that would most benefit from an FD are those looking to invest or spend large sums of capital on assets, expand into new markets, perform mergers and acquisitions, exit from the business or prepare for a stock market flotation.
There are two part time options open to SME’s – recruiting a part time FD or Outsourcing.
When choosing a part time FD its important to look carefully at their experience and track record as the objective is to build a long term relationship.
Having the right FD will release management time to focus on other business issues.
Smarta have a checklist to help you when deciding whether or not to recruit an FD
- Determine the point at which your company is, and assess the state of your finances
- Decide on what the next step for your company is: where do you want it to be? Are you going forward for further investment? How do you want your business to grow? You need to be able to communicate this to your FD
- Determine the ways an FD’s professional input could improve how your business is run, and factor this into the job description
- Ensure the person you take on is experienced, knowledgeable and a good cultural fit
- If you cannot afford to take on a full-time FD, consider taking on a flexible or part-time FD – and make sure they are committed
You could speak to one of our team members if you need help https://business-accountant.com/the-team/
SME’s often mis-understand the purpose of a Finance Director and the value they can bring to a business.
The job of a finance director is not just about producing regular accounts: they can help your company with strategy and development. If you want a small, stable business, then you can settle for a risk-averse book-keeper. But a good FD is key if you are growing your business because FDs develop future financial forecasts and push business growth. [Smarta]
So what should your Finance Director be doing for your business…..
- The FD should be able to look into to future to see what the future financial needs of the business will be
- He/She should negotiate funding facilities to ensure the business can manage its cash flow needs
- The FD should be able to foresee the future tax consequences and risks of decisions
- He/She should help the business to achieve the best possible credit scores
- Identify ways to reduce costs and improve profitability
- Understand the business owners objective and focus the business on achieving those objectives
- Ensure financial and regulatory compliance
- Ensure accurate and timely reporting of management information
- Evaluate growth opportunities
- Apply corporate governance
Many companies that put projects on hold during the recession are now reinvigorating them as the market continues to show signs of recovery. This has created demand for experienced senior interims who can lead projects efficiently, ensuring that they run within budget and timescales. CIMA
The Interim market is estimated to be worth £1.5bn.
Key demand continues to be for experienced professionals who can ensure companies’ systems and processes are running as efficiently as possible. They will be challenged with the task of making any necessary improvements to achieve the project objectives. Their focus continues to be on commercial skills and profitability. Organisations want professionals who are able to make a calculated decision about things that will have an impact on how the business will run in the future.
Partner Financial Trend Survey July 2013 reported