Why you need an outsourced FD

Having an in-house finance director (FD) and accounts function in your business is a big step for any new company. Having an FD helps you to drive company strategy and push for maximum performance and profitability. But an in-house FD is an expense that not every owner-managed business can afford – and that’s where partnering with an experienced, part-time outsourced FD, ‘virtual FD’, can be invaluable.

Dan Morgan talks through the key benefits of working with a virtual FD, and how this brings you the value of a whole network of business specialists and experts.  

What does a finance director (FD) do?

An in-house FD is traditionally responsible for the budgeting, finances, reporting and financial strategy of the business.

A Finance Director has to be great at forming relationships. They work closely with the owner, MD or CEO. Having those relationship-based soft skills is important, but it’s also vital not to be a ‘yes person’ and have the ability to stand up to the CEO. If you’re afraid of the boss and just say yes, you’re not adding value.

A business needs someone who can offer an unbiased, independent opinion, and someone who will challenge the owner.  

The value of an outsourced FD

My job, as a part-time outsourced FD (or ‘virtual FD’), is to understand the mindset of the owner and to help hone their strategy and vision.

Many businesses will get excited about an opportunity, but may not fully consider the outcomes. I look at things from an unbiased perspective, which allows me to be objective. That’s really at the core of having a virtual FD onboard – having that person who brings an independent and objective viewpoint to your financial management.

Management of risk is also important. Traditional FDs can be ‘buttoned down’ and averse to risk, but owner-managers will say there’s no reward without it – and there’s some real truth to that assertion. You have to be willing to roll the dice and make calculated risks if you’re going to grow.

As a virtual FD, I help clients to:

• Run the financial side of the business in the optimum way

• Provide all the detailed financial and management reporting you need

• Help you make decisions that give you the best chance of the outcome you want

• Overcome the external impacts to achieve your business goals – making sure what you want to happen actually does happen.

Providing a full outsourced finance function

When you’re starting out as a new business, having an FD and an accounts team can be a big commitment and a large expense. Having an outsourced finance team on hand, headed up by an experienced virtual FD, is a practical and cost-effective way to solve that issue.

You might not be able to commit to hiring a full-time, in-house FD, with all the associated costs and responsibilities that come with it. So working with a part-time virtual FD can be an ideal way to dip a toe into the water and to feel the benefit of that independent expert.

An outsourced finance team can offer a number of core services, including:

• Completing your bookkeeping and general accounting tasks

• Running your accounts payable and accounts receivable functions

• Managing your VAT procedures and other tax processes

• Providing regular management accounts and reporting.

Having a virtual FD in the loop takes these solid financial foundations and then adds in all the higher-value benefits of working with an expert and well-connected finance professional.

The benefits of a nationwide business network

I work with a huge range of different businesses, across a range of sectors. It’s vital for me to bring that knowledge and experience to bear on each and every client, making my advice more informed, more versatile and more flexible than that of an in-house FD. It’s a more creative role that we can bring to the finance function.

As well as businesses across different sectors, we work with a variety of stakeholders, investors, banks and other professional advisers – all of which generates a real wealth of knowledge.

If I notice an issue in the finances, I’ll introduce you to the right partners and the right people in my network. Lots of non-executive directors (NEDs) are brought on for their contacts, but working with an outsourced FD can take that to a new level.  

Defining your personal goals at the owner

An internal FD will look purely at the performance of the business. We want to understand your personal goals too and factor these into our thinking.

That means asking the right questions and getting a handle on your life goals:

• When do you want to exit?

• What are your retirement plans?

• How much cash do you need to live the life you want?

• Do you want to retire or set up a new business?

• How much capital will you need for that?

When I know your goals, I can keep my eye on the business numbers to ensure you meet your targets. I’ve got that ‘heads-up display’, like a fighter pilot, giving me all the numbers, metrics and data that’s needed to keep you on course, and judge the risk of each path.

Having an outsourced FD should make your decision-making process easier. I won’t step back from giving my honest opinion to clients and will be the person that holds you to account and ensures you’re sticking to the plan.  

Advice that helps you survive, recover and thrive

There’s never been a greater need for this kind of informed, objective insight. Many owner-managed businesses are facing tough times as we head towards next year’s post-Brexit, Covid landscape.

As we face the challenges of 2020 and beyond, there are big financial and strategic questions to ask:

• Do you continue to focus on growth, or should the business go into ‘cocoon mode’?

• How can you limit costs and overheads to preserve cashflow and survive the crisis?

• How can the company diversify to bring in new revenue streams and drive profits?

• What other financial elements will help to drive your recovery?

Whatever stage of the business journey you’re at, we can help you get the numbers you need, show you how the business is performing and can give you objective opinions on the next best steps for the company – always with your underlying personal and business goals at the heart of the strategy.

Talk to us about your business needs and about becoming your virtual FD.