How to appoint a finance director
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. This guide will help you
understand why you should appoint an FD and how to get the right
person.
Why appoint an FD?
- Don't regard a finance director as just another wage to pay.
If you want to build a successful management team, an
FD is a vital component.
- Think about hiring if you are looking to increase your
profits or raise funds.
- The management team in many growth businesses usually has
expertise centred on a particular product or service: but as
you grow you need someone to keep an eye on your financial
strategy.
- You will not have to devote as much time to dealing with
financial issues, and be able to concentrate on other areas of your
business
- Your FD will ensure your finances are compatible with your
growth strategy and will give you commercial input into key
strategic decisions.
- If you do not have accurate and up-to-date information then it
will be difficult to continue supporting your growth
When to appoint
- Assess whether you know exactly where your finances
are. When you have reached a point where you can no longer
manage and control - or even understand - everything that's
happening with your business, it's time
- If you are going forward to seek a large loan, or
preparing to float the company, an FD is a very good
idea
- Your bank, and potential investors will give more
credibility to your business if you have a financial
director as part of the negotiations
- Think about how an FD could help your decisions on
growth. Early stage companies will be too small to support
an FD; but the earlier you hire, the quicker your company will be
geared towards growth
The role
- Your FD will be responsible for producing monthly management
accounts, annual budgets and cash management
- But an FD's role is different to an accountant's
in that it is more pro-active and forward-looking
- They will advise and report on your business's financial
performance
- They will deal with all tax, treasury, and audit requirements
and ensure that you comply with all legal financial
obligations
- He/she will help you with delivery of your growth
strategy and ensure it corresponds with your business's
actual and projected financial strengths
- They will ensure that your business has enough working
capital for each month's trading and will assess whether you
need additional finance to grow further
Finding the right person
- Draw up a job specification. Consider what you
want the new post and post-holder to achieve
- Look for someone who has years of experience of
working in a commercial environment: you want someone who
understands good corporate governance
- They will be a qualified accountant and should
have solid experience of dealing with auditors, lawyers, and tax
advisers
- The new FD will become a vital part of your management team
with input on key strategic decisions, so make sure that you have a
good, trusting relationship with them.
- If you are concerned that there may not be enough work to
justify employing a full-time FD then you could make a
part-time appointment with the FD working for up to three
days a week. This would also make a substantial cost saving for
your business
Checklist
- 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
FAQ
I want to grow my business, but we cannot afford to take
on a financial director. What are my options?
You should take on an FD as soon as you can, as this will optimize
growth. However, this is not always possible to do in the early
stages of a business. You can consider offering your adviser a
share of your business in lieu of a full salary. Outsourcing is
also possible, and you should be able to employ an experienced FD
on a flexible or part-time basis. This will allow your business to
benefit from expert knowledge and support, but will mean less
strain on company finances.
Jargon buster
Finance director (FD): otherwise known as the chief
financial officer - the person responsible for managing the
financial risks of a company. Often seen as second in importance to
the company's managing director
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