Hiring an FD for your business: internal hire or outsourced finance expert?

25 September 2017

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As your business puts down roots and becomes more established, you’re going to need expert financial advice to move forward – whether this is to evolve your financial model, raise more finance or spot opportunities to help grow the business. You may decide you need a finance director to help drive these plans, but what’s the most efficient way to source your own FD?

Should you create an internal role and hire your own full-time finance director? Or will you get more value from an outsourced model, where you get the benefits of a part-time ‘virtual FD’ alongside the support of an outsourced finance function to sweeten the deal?

We look at the key reasons you may need an experienced FD in the first place, and why a virtual FD could be the best option for established start-ups looking to take their next step.

Why do I need an FD?

To begin with, let’s ask why your business needs an FD at all. You have an accountant doing your annual accounts, tax returns and monthly reporting, after all. So why do you need an FD to add to this pre-existing financial support set-up?

In a nutshell, it boils down to a key distinction between what a traditional accountant delivers, and the added value you can get from having an FD at the helm of your financial ship.

  • A traditional accountant does your accounts and makes sure you’re meeting your tax and compliance requirements. But, in essence, they deal mainly in your historical numbers. They’ll tell you where the business has been in the PAST, but will give very limited insight into where the company may go in future.
  • A modern FD focuses on analysing and improving the future performance of your financial model. While your accountant gets the financial basics done, your FD is looking at cost models, spending and financial strategy. They’ll help you save money, make more cash, define your business model and set the foundations for FUTURE growth in the company.

By looking at your key financial drivers, drilling down into the numbers and looking for the opportunities for improvement, your FD takes the business to the next level. In other words, they give you a more grown-up, forward-looking overview of your finances.

Think you’re ready to get an FD on board? Then read on.

Option 1: Hiring an internal FD

If the business is demanding a more complex overview of your financial management, the temptation is to opt for an internal hire. By creating a permanent full-time finance director role, you put some real momentum behind your financial evolution.

With an FD on the management team, you’ll get:

  • Experience and knowledge of your market – if you’re not a finance expert, having a trained and experienced FD on the team will be invaluable.
  • A finance expert driving decision-making – handing over the reins of financial management allows you to focus on what you’re good at: running the business.
  • A finance specialist driving decision-making – when you’re scenario planning and drawing up growth plans, you have a financial expert to aid the decisions you make.
  • Someone to share the leadership burden – it can be hard work at the top, so having another director to share the leadership challenges is a real bonus.

Sounds ideal, doesn’t it? Who wouldn’t want to bring this level of skill and expertise into their ambitious and growth-hungry small business?

But there is a catch. A full-time FD come with a few caveats and considerations that could make things look a little less attractive:

  • A hiring commitment – by creating an internal finance director position, you’re committing yourself to this being a long-term role in the business.
  • A hefty salary to pay – to get someone with the skills and experience required, you’re going to be paying a market-rate salary to your new hire.
  • An FD-level workload – you need enough high-level work to justify this experienced role – most FDs won’t want to get their hands dirty with basic finance admin.

And, of course, you’ve got to find the best person for the role in the first place. Finding someone with the right level of experience, in the right market, at a price you can afford is no simple task. So, if you’re at a relatively early stage of the company’s development, is there another option?

This is where an outsourced virtual FD could be the answer to your start-up prayers…

 

Option 2: The outsourced virtual FD

A ‘virtual FD’ brings all the key benefits of an internal FD, and at the same price. What’s removed is the long-term investment of a permanent director role, with the added bonus of the increased flexibility and scope of an outsourced model.

When you’re still settling into your market and whipping your business model into shape, it’s unlikely you’ll want to be tied to a permanent FD role. But with a part-time virtual FD, you can still get the kind of top-drawer financial advice that’s needed to push the company to its next stage on the business journey.

With a virtual FD working alongside your management team, you’ll get:

  • Top-level expertise and knowledge from a qualified finance professional who knows your industry, your market and the challenges you may be facing.
  • Drilled down strategic support to evolve your business model, improve the efficiency of your finances and enhance your internal drivers.
  • Flexible access to a whole team of finance people to take on your financial management, freeing up your staff for sales, customer-facing and operational work.

This last point is the real icing on the cake for ambitious businesses that have big aspirations and clear business goals to achieve, as we’ll explain…

The benefits of an outsourced finance team

Rather than gaining one internal FD role, with an outsourced model you get access to your own virtual FD and an entire outsourced finance team.

You’re bringing in the flexible services of a diverse team to cover the accounting basics, intermediate finance jobs and higher-value reporting and scorekeeping – PLUS the proficiency of an expert FD when you need strategic insight and top-level advice and planning.

By opting for the ‘Virtual FD + outsourced finance team’ model, what you get is:

  • Your basic bookkeeping and admin done as standard
  • Your VAT, corporation tax and compliance taken care of
  • Your payroll outsourced and run each month
  • Your monthly numbers and scorekeeping run like clockwork
  • Your own one-to-one contact in the practice when you have questions, and
  • Access to your virtual FD for board meetings, strategic guidance and ongoing support
  • A holistic approach to your financial management that delivers end-to-end accounting and grade-A business advice to drive your long-term performance.

If you’re a busy owner manager, or a time-starved founder with a long to-do list, having your whole finance function outsourced is a real game-changer. You can forget about mundane bookkeeping and data entry of expenses and get on with building the business.

And, with access to your part-time FD, you have an experienced finance professional to turn to when you need support, have a key strategic question or just want the confidence of talking through the next step in your business journey.

Talk to us about becoming your FD

We love working with ambitious start-ups and owner-managed businesses. And a big part of our approach is to offer your business the option of your own virtual FD, combined with our outsourced finance package

Matta, a digital marketing agency specialising in the sports industry, came to use looking for exactly this proposition, as Matt Campbell, Founder and Executive Creative Director, explains:

"What made us choose FD Works was their functional proposition and the fact that you’re paying the equivalent of a midweight financial head in your business." Matt Campbell, Founder, Matta

“You need someone to run the accounts on a day-to-day basis, and someone to create monthly accounts and give you a view on where the business is on a month-by-month and week-by-week basis. Then you need top-level, value-added, strategic direction from someone who is commercially very savvy – an FD-type person to look at the business and help you to build financial plans.

What made us choose FD Works was their functional proposition and the fact that you’re paying the equivalent of a midweight financial head in your business. They perform every financial function that you can possibly imagine at pace, at those levels. So to have access to the right people to do the right jobs at the right cost is perfect.”

There’s more on how we’ve worked with Matta to drive their business model in this case study.

If you’re hungry to take the next big step in your company’s evolution, we’ll work with you to give you control over your numbers, and provide the support, guidance and decision-making support needed to help you climb the next business mountain.

Contact us to talk through how one of our virtual FDs will transform your finances.

We want to be your virtual FD!

We give you top-level FD support, and cover all your financial basics

Call us for a chat