A growing business need much more than a competent accountant, in fact the better a business does the more they will need.
A great FD provides a sounding board, a source of technical excellence and a level of professional that every growing firm can benefit from.
What does an FD do?
A Financial Director is a major part of the executive team, providing financial control for the business. They head up the accounting function for the firm as you’d expect and set the standards and practices that the team are held to. The FD will also have a hand in forming policies and procedures such as those for expenses and credit card spending as well as keeping a weather eye on the day to day money situation.
Like any top executive, the FD will be able to work well as part of a team, building alliances and persuading people to a point of view rather than being able to shout loudly! Studies have shown that executive teams that seek consensus tend to make better decisions that those featuring conflict and argument.
The management team will set the strategic direction for the company and the FD will be a key part of the discussions. Often, the outline plan will be developed and then further analysis and forecasts will be produced by the finance team to allow a choice of direction and tactics to be made. Clearly this responsibility will lie with the FD.
One of the most important aspects of a growing business is keeping control of cash flow and the company FD will be in charge of guaranteeing that the funds are available for development opportunities, either by ensuring that cash can be found from organic profits or raising money externally through debt or equity.
Indeed one of the key skills that an effective FD will have is the ability to seek out new funding sources, evaluate their suitability and bring them on board for the business. At the same time they will be able to put in place any reporting requirements that the new funders insist on.
Accountants are often portrayed as shy and retiring employees with little in the way of social skills, however a key skill needed for the position of Financial Director is stakeholder management. Typically your FD will have to deal with the Bank, External Auditors, HMRC, Landlords and any number of external agencies that need to contact the company. Typically the main focus will be with investors who will require access to more detailed financial information and can sometimes be somewhat demanding. A top drawer FD will be a people person, being on top of the numbers but also able to engender confidence and respect and showing that the shareholder money is invested wisely.
The FD will provide challenge back to the business. When forecasts are made then the finance team will be responsible for checking that they are reasonable and realistic. When the results are in they will check the accuracy of the results, report back to the business and challenge where it seems that things haven’t gone as expected. Similarly at budget setting time they will be in the vanguard, ensuring that the business isn’t building fat for the future.