Do I Need to Hire a Finance Director?

One question that unites almost all small business owners is whether a Finance Director is a position they should invest in. Most CEOs assume their finances are something they can look after themselves, pass off to another employee, or that their accountant can manage it all. When it comes to the employee structure within your business, Finance Director should be one of the first to go. A Finance Director is an essential role for any business and can add value to everyday operations. We’re covering everything you need to know about the position of Finance Director and why you should invest in one as a small business.

Hiring a Finance Director can be a costly process – both in terms of time and money. When a business is starting, it is usually scraping the pennies together to get by. While a Finance Director may be seen as a luxury within your small business, it’s the perfect way to enable you to level up. Without a Finance Director, those tasks are handed down to the CEO or other employees, who have to try to come to terms with the financial industry. If you’re launching a small business, your time is money.

You don’t have to hire a Finance Director from day one. Most businesses choose to outsource an accountant or Finance Director until they’re ready to hire someone full-time. A Finance Director is crucial for any business with a debt burden or who benefits from private equity investment.

What does a Finance Director do?

Whether you’re considering before a Finance Director or opening the field to offers, you might be wondering what the position entails. The roles and responsibilities of a Finance Director are flexible and can change from position to position, but most will remain the same.

Here are the responsibilities almost every Finance Director has to do:

• Develop detailed accounts every month. These accounts set out the financial performance of the organization during the previous month, along with forecasting.
• Track financial results for the organization, along with other key performance indicators (KPIs).
• Compare the current performance of a business with its previous records, including budgeting and forecasts.
• Oversee the recommendation of financial actions, both operational and strategic, based on your analytics and research.
• Develop a relationship with key stakeholders, including banks and investors. You can provide them with information and details off the record while ensuring that everything runs smoothly.
• Oversee any auditing and tax work to ensure the organization is up to date and complying with any restrictions.
• Take the lead on negotiating and managing contracts to reduce costs for the business while maximizing potential value.

This list features the duties of the average Finance Director, although these may differ depending on the industry that they’re working in. The primary purpose of a Finance Director is to maximize finances in the business. The analysis that a Finance Director carries out as part of their everyday tasks can lead to better decision-making while providing practical advice to the management and leadership of an organization.

Hiring a Finance Director

With any business, time is money. A Finance Director can take some of the workload off the CEO and other management figures, by overseeing certain aspects of the financial decision-making. Most Finance Directors have authority over cash flow and working capital.

For certain businesses, it’s even more essential to have a Finance Director. If your business has a debt burden or equity investment from a third party, it will have to regularly report on the state of the organization’s finances. Hiring a Finance Director means one individual is responsible for overseeing this.

One skill that every Finance Director should have is commercial awareness. This knowledge allows them to feed into the business’s overall strategy and development plans. With their financial insight, they should be able to offer the CEO a unique perspective on how to balance commercial ambition against financial reality.  Most of our FD’s are ICAEW qualified chartered accountants.

Hire a Finance Director vs. Financial Controller

Finance Director and Financial Controller are two job titles that can be used interchangeably, although there are distinctive differences in their job description. Some businesses choose to hire a Financial Controller instead of a Finance Director, or they may hire a Financial Controller and give them the job title of Finance Director.

One distinction is that Finance Directors are responsible for continuous reporting, providing an interpretation of the commercial success of the business. A Financial Controller – sometimes known as a management accountant – usually reports on regulatory issues, including historical performance, as opposed to forecasting. Finance Directors act as a partner within the business, providing essential advice on financial and strategic decisions, using their unique analysis and insight into the situation of the company.   See also our FD vacancies page.

Finance Directors and Private Equity Investors

Private Equity Investors help a business to grow and maximize its value by providing financial support. As a result, they want to be kept up-to-date on the performance of the organization using financial analysis, along with an overview of their operations. A Finance Director is crucial for this as they turn the company’s data into analysis and reports, providing regular updates for investors.  See also our post on how to Achieve better board reporting?.

These Private Equity Investors are always looking for an opportunity to provide additional supports for businesses with a positive forecast. The Finance Director can keep them up-to-date on the growth of the business, whether it’s through the hiring of employees or purchases of assets.

A Finance Director is one employee who is crucial to the development and growth of a business. While it may seem like a leap to hire someone and give them sole responsibility for financial issues, it’s a win-win for any business. It frees up the time of the CEO and existing employees while providing vital analysis for daily business operations.

Investing in a Finance Director can help an organization grow both commercially and financially, from building brand awareness to boosting annual revenue, along with new system implementations to streamline operations. A Finance Director is one position that no business – whether they have ten or a hundred employees – can afford to overlook.

About FD Capital Recruitment

We are a leading London based recruiter specialising in FD’s and CFO’s if you are looking to hire make sure to reach out to our team today, we will be delighted to assist with your recuitment.  Our main number is 020 3287 9501 if you need to hire an FD then we are the people to speak to.