Finance: Is it time to appoint a Finance Director?
As the financial year draws to a close and we breach another, the time arrives for a review of the company finances. If your company is sufficiently large to employ one, it might the right time acquire a finance director. A finance director can help you to make the right decisions as well as managing the numbers. The question arises: ‘what should I look for in a Chief Financial Officer?’
A special event or a sharp injection of capital can trigger the need for a finance director. If your start-up has been managing without one, the time will come when one is needed. Of course, smaller businesses might not need a finance director on a full-time basis. An accountant can process the numbers while a finance director works part-time supplying strategic advice. If, however, your turnover is £20m, you should seriously consider employing one on a full-time contract.
When advertising the position it is vitally important that the job description hits the spot. In smaller organisations, the role might be included with several others in one job, including HR, first contact, secretary and insurance. Even in these circumstances, you have to know what the strategic plan is over the next six months, a year, five years. You have to know what to expect from their strategic input.
It is essential that your finance director has an accountancy qualification. An MBA would be a bonus. What you must really look for, however, is a proven track record. This is critical if you are to implement a realistic strategic vision. The interview process really ought to be based on competency. Commercial awareness – an intuitive as well as qualitative and quantitative capacity – is something that you must assess yourself. You want someone who can act proactively with the numbers and apply them, within the strategic plan, to the business. It is tempting to recruit from within the sector – this is a safe option. On the negative side, however, he/she is likely to seek to maintain the status quo and be ignorant of new ideas/practices.
If you are the CEO, it is important that you get on with your finance director and establish trust. Honesty about the nature of the balance sheet is therefore essential (you do not want to go to the expense of advertising and interviewing the position only for them to leave after a couple months). Owing to his/her strategic, commercial awareness and business acumen your finance director is likely to be someone who will negotiate the best package for them. It is likely they will seek benefits, further opportunities, and even equity in the business.