There's no such thing as a full-time Finance Director 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?
The first problem is for the management team to recognise that they have some problems that can't be dealt with by the exiting 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
- unpaid suppliers calling too frequently
- HMRC not being paid PAYE and VAT
- surprises in the numbers after the event
If you are 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 Finance Director level. This might feel right, but don't overlook the view at the top of this blog - There's no such thing as a full-time Finance Director role in most small or medium businesses. Click the link to find out why.
A solution that is quicker to implement and which will most likely turn out to be cheaper is to look for an interim finance director or a part-time finance director.
What can you expect from an interim or part-time Finance Director?
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 profitablity 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 of 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 then the input of the interim Finance Director can scale down and perhaps come to an end.
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.
And if it looks a bit wobbly at some point - you know who to call!
How do we know this? 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 me a call on 020 7384 6800.