Would being a Portfolio FD be right for me?
Would being a Portfolio FD be right for me?
We get asked this question often, not everyone even understands what a Portfolio FD is or does to start with. Basically it means having several part time FD jobs at the same time.
It has many advantages for example the pay rate is usually better than standard salaried roles, plus the roles are more varied. However unlike regular roles the work tends to ebb and flow so you have to spend some time every month, or even every week prospecting and networking for new business. If like me you enjoy socialising and networking then that aspect is nothing to worry about and actually part of the challenge.
If your clients are classed as small companies
- Turnover – not more than £10.2 million
- Balance sheet total – not more than 5.1 million
- Number of employees – no more than 50
Then the IR35 rules do not apply, this is based on the announcements made by HM Government as of Feb 2019, if you are reading this blog post in the future you may need to recheck this for more up to date guidance, you also need to be careful if your role is actually as an officer of the company then it always means you should be within IR35, this area is in flux so make sure to get up to date guidance.
I had two businesses of my own for 12 years and in their start up phases I had no choice but to turn my hand to everything, whether it was HR issues or customer calls it had to be done. So whilst nothing like as entrepreneurial as that sort of activity, being a Portfolio FD is somewhat more entrepreneurial but with more certainty. You get to spend enough time with each client to feel part of their senior management team, and your knowledge and experience is valued.
Portfolio FD
Typically a full portfolio FD role is four days per week, we sometimes have a full 5 day week but not always, as there needs to be some ability to put extra time into a role at year end, budget time or during fund raising exercises. Plus as always, things come at the same time, same year ends and so on. Also most Portfolio roles seem to have a finite timescale, for example you may be brought in to assist with an MBO as a condition of the PE houses funding, but once the loan is repaid your service are then not required.
Portfolio work requires you to organise your time effectively, and you need to plan ahead as contracts reduce or end earlier that expected and that uncertainty can take some getting used to. If you have developed your network sufficiently it won’t be long before the next opportunity comes your way, but there will be periods of feast and famine so you need to prepare your personal finances accordingly. I’ve been contributing extra money every month to a pension but I’ve kept my regular contribution to the minimum because I know there will be months in the year when income is lower and I need to watch my outgoings in those months, also some customers want to pay on 30 day terms. which is fine but can also cause cash flow issues if you don’t plan ahead. It’s good to keep at least a couple of months average income in a deposit account so you are covered if a new customers is slower paying that you anticipated.
Overall I find the Portfolio work approach more demanding on me in that I need to organise and prepare better, but given my own entrepreneurial and social nature it actually works much better for me than a regular role, as it plays to my strenghts. I love travelling and the opportunities for long weekends to Europe or extra holiday weeks is also a big plus factor. If you are a parent with young children this type of work can be a great way to have quality time with them and still earn a good income.
Portfolio FD
The day rate is good particularly if the type of work and client you are working for is based in Central London, typically the day rates for London are in the range £650-£850 depending on experience, whereas the day rates outside of London for Example the West Midlands (the other area FD Capital operates in) are in the range £550-£650, so still attractive, and of course London is more expensive to live in than elsewhere.
It is also worth noting that the majority of Portfolio work is around the areas of highest population and business density, so there are many roles in London and in Birmingham, but far fewer in the smaller towns and locations around the Country.
I have been working in this way for the last 4 years, but since 2019, I’ve been working mostly with FD Capital and it really is so much better working with an FD network rather than purely freelance, you get to speak with and meet with people in the same situation as you, and to share experiences, all of which make it someone less isolated and give it more of a team feel.
I can really recommend working with a Portfolio FD network, as this brings you much more regular work, plus if you have roles you can’t fulfill yourself, and like London buses, they all come along at once, it is great to have a means to refer the work on. Often referrals like this pay commission meaning that you can get a % of an recruitment fee, or a day rate %. If a role runs for longer than expected that can be a nice source of income just in itself.
So in summary being a Portfolio FD is interesting and demanding work, but rewarding both financially and from a job satisfaction point of view. It is far better to work with an organisation such as FD Capital that helps find you Portfolio work, then to work completely alone, as it can be challenging to generate enough work consistently. If you are a business or entrepreneur looking for a Portfolio FD or CFO, then reach our to us today via our contact us page.
Adrian Lawrence FCA with over 25 years of experience as a finance leader and a Chartered Accountant, BSc graduate from Queen Mary College, University of London.
I help my clients achieve their growth and success goals by delivering value and results in areas such as Financial Modelling, Finance Raising, M&A, Due Diligence, cash flow management, and reporting. I am passionate about supporting SMEs and entrepreneurs with reliable and professional Chief Financial Officer or Finance Director services.
