What is a Finance Director? What is a Chief Financial Officer?
Your Finance Director (or CFO) is much more than a ‘bean counter’. As part of the senior executive team they are responsible for your company's financial health and growth strategy. They will get ‘under the bonnet’ of your business and provide you with timely, useful management information that you can use to grow profitably and expand. They will manage your cashflow and take the lead in managing fundraising requirements. They will also develop and implement strategies that manage risk, cash flow, costs and expenditure and ensure that your company is meeting all its statutory obligations (VAT, PAYE, annual returns etc).
What is the difference between a finance director and a CFO?
In smaller companies there isn’t much difference between the two. They are both responsible for the financial management and strategy of their companies. However, in larger organisations the FD will be responsible for the high-level accounting, while the CFO will be responsible for business strategy development and implementation. The biggest companies may have an FD for each business unit or country, regional FDs or CFOs and an global CFO.
What is an interim finance director?
When you’re small and starting out you often can’t afford to employ an FD full time. An interim/part-time FD is the answer. You will be employing an individual with a range of skills for a fraction of the cost. They’ll be able to provide you with a range of skills and services, from strategy development, investment activities, investor relationships, cash flow management and expansion planning. They will attend all board and development meetings and, depending on your size and requirements, they may spend one or two days a week or month.
What is a Financial Controller?
Your Financial Controller (FC) is the FD’s second in command and is responsible for the integrity of your accounts department. They manage the day to day tasks of financial transactions which include manging your debtors, creditors and financial assets. They will produce monthly management accounts, VAT returns, payroll, and other HMRC obligations (e.g. EC sales list reporting). When a company first starts it often outsources this responsibility and so get access to an extremely skilled team for a fraction of the cost. Once more established a firm may have an FC with one or two finance assistants, depending on the complexity of the company’s business. Often when a business starts it is usual for an administrator to do these tasks but the rules can be very complex (for example, did you know that a UK Company can invoice you in any currency and still charge VAT) that it’s better to bring someone with the right skills into the business as soon as possible.
Should I have Finance Director for my start up?
Why do management accounts?
How do we manage our cashflow?
Forecast your cash in and out flows asap – know where you stand!
Invoice as quickly as possible
If possible, get a deposit paid before you start the work
If you can, invoice your larger clients for a year in advance (rather than for monthly payments)
Foster a good relationship with your suppliers’ accounts department – when people like you they pay you faster