Roles and responsibilities don’t have to be pigeon-holed just because it has a name attached to it. I have been working as a part-time finance director (FD) for over two years now. I’ve heard myself described as a ‘part-time FD’, an ‘FD on demand’, a ‘flexible FD’ and a ‘freelance FD’. Take your pick to what fits best with you.
People understand the job title, but there is still confusion over what the role is. Or better still, what tasks can be distributed to them. Let me define what I see as the overall responsibility for a business and the people who are part of it. It is everyone’s role within the team to contribute to the achievement of the company’s objectives.
The FD’s role should bring realism to, and help realise, those objectives.
The FD should be able to inform the management team—long before each milestone looms—whether the company is likely to achieve those objectives or not. They should also be able to tell you why.
Business planning, budgeting and forecasting is a mandatory aspect of the role. For me, commenting on the monthly and year-to-date (YTD) performance (without a forecast to compare it to) would be akin to commenting on an amateur golfer hitting balls at the driving range. If I don’t know where they were aiming, every shot looks good.
Mapping the agreed plans into a 12-month financial forecast can focus the manager’s mind too. It’s this peace of mind that becomes notable.
It is always encouraging to hear an enthusiastic business owner’s intention to increase turnover by 40% over the next 12 months. There are only two ways a company can do this, and so assuming you’re not planning on increasing prices by 40%, then I’m going to want to hear the where, how, and from who. That is going straight into the plan.
This is where the reality kicks fully in.
We will also need to map out when to introduce new employees, including the job role, level and salary. Assuming performance goes to plan, we will know precisely when to advertise, recruit, while giving us time to train and introduce the new person into the team.
Not all revenue is equal
Naturally, savvy business owners will be focused on profit rather than revenue. A strong Finance Director will be able to inform you, every month, which revenue streams are most profitable and which are causing concern.
This is where many accountants fall short. I say this where they do not understand the inner workings of business and for me, is exactly why every accountant is “not your average accountant”. This should be the bare-bottom average but few do it.
Once we know what the most profitable revenue streams are, companies should be focusing all resources—including new employees, marketing spends and materials— on those services or products.
There is only one reason why you might choose not to adopt this strategy. This is where revenue from a less-profitable income stream has greater volume potential (or actually, just easier to win!).
Boost your decision making
Good information (i.e. comparing actual performance against objectives, forecasts, and budgets, plus performance insights) can help shape every aspect of decision making at the management level. I would say at every level, in a company with a valued culture.
One of the smartest (and richest) people I have ever worked with once said: “I only want to see information which I might base a decision on.” This is smart and very true. He still employs me and I strive to deliver on that request each month.
Every business will see bumps in the road. That is normal, it is part of the journey. An FD’s responsibility is to make sure you are aware of those bumps before they arrive. It is then for the management team, including the FD, to pivot and navigate those bumps smoothly.
I believe the above are basic requirements within a small business. At least a business that has growth aspirations.
It doesn’t always need to be full time
In my short time working in a part-time capacity, I have proven that you do not need to be full-time to add value to a business. Part-time does not mean you are not committed, responsible or accountable.
Being the part-time FD does mean the emphasis must be far more on supporting YOU in the achievement of YOUR business objectives rather than steering it myself. It is wise to challenge your ideas, without telling what a business strategy should be.
There are business owners who will be conducting the above tasks on a weekly or monthly basis themselves. To those who do that, it is a fantastic achievement. However, it is only smart if they are conducting this role because they have no other profitable projects to work on.
Employing an FD can free the business owner of their time, allowing them to work on more enjoyable and profitable projects, whilst bringing expertise to both roles. You won’t be re-inventing the wheel every time you need a new piece of information.
How many business owners can honestly say they are happy with the amount of money they pay for their accounts department? Do they get much value in return? An FD would help in that regard.
I add value by making the business smarter, more profitable, and more valuable as an asset. I will share this in a future article.
The softer touch
It is often the softer skills employees bring to a team that makes them successful.
The soft skills a finance director must represent are:
- Reliability
- Trustworthiness
- Good communication—the ability to speak at all levels
- Understanding and empathy
The soft skills that I value are:
- Low maintenance
- Commitment
- Flexibility
- Honesty
- Happiness
- Fun
- Positivity
Challenging the status quo of what a finance director represents, goes beyond finance. It becomes the strategic backbone for the success of a business and the longevity of their efforts.
