There’s no such thing as a full-time FD 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? A part time CFO might be the answer.
The first challenge for the management team is to recognise that they have some problems that can’t be dealt with by the existing 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
- losses
- unpaid suppliers calling too frequently
- HMRC not being paid PAYE and VAT
- surprises in the numbers after the event
If you’re 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 CFO level. A solution that’s quicker to implement and which will most likely turn out to be cheaper is to look for an interim or a part time finance director.
What can you expect from an interim or part time CFO?
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 profitability 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 part time 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 your business 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 7125 0270.
Michael – @bluedotmichael
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