All large businesses will have a Finance Director (aka "FD"). Usually an experienced, qualified individual, this role is responsible for, amongst other things: ensuring there are no internal financial shenanigans or cock-ups (or, if there are, fixing them!); translating the numbers into narrative to show how the business is performing, and; providing strategic advice from a financial perspective. Usually the right hand person of the Chief Executive, a good FD can make an enormous difference to a business - and a bad one can be catastrophic. An abrupt FD resignation, redundancy or sacking is a REALLY bad sign.
All that experience comes at a high cost and for smaller businesses, employing a full time FD is just not realistic. The majority of day to day finance work can be completed by a less qualified (and less expensive) member of staff without any problems whatsoever. Whilst having an FD on payroll is not an essential of running a business, being able to access the kind of support and advice an experienced FD can provide is extremely valuable.
A number of accountancy practices and freelancers provide what is described as a "Virtual Finance Director" service. In this arrangement, a business will have an ongoing relationship with an experienced FD, accessing support as and when it is needed. The ongoing relationship means the FD has a strong understanding of the business and is able to respond to requests for advice quickly, from a highly informed and relevant perspective.
This sort of service will be at its most useful for businesses going through periods of instability, challenge or change. For example:
Where sales are down and the business needs to make decisions about how to tackle this
Where systems are changing or the business recognises it is limited by its software. Changing systems will necessarily change business processes and it is crucial that the financial aspect of this is carefully considered.
Where business is booming and you want to expand the operation. Forecasting and cost analysis can support you in ensuring you don't go too far, too fast, and help you focus on your best-performing products.
Where there are issues with cash-flow. An FD can help you improve the rate at which cash comes through your business to ensure you don't run out at a crucial moment.
Where there is a regulatory change that affects your business, or you cross over a threshold (e.g. VAT registration, first time statutory audit).
It is often useful to just have someone to call when you aren't sure about something! If you are interested in learning more about our Virtual FD services, drop us an email at firstname.lastname@example.org.