All large companies will have a finance director or a CFO (Chief Financial Officer), they will play a pivotal role in shaping, implementing and executing the company’s strategy. They will combine financial and accounting skills with commercial and business acumen to be the CEO’s right-hand man.

If such expertise is vital for a large company why is it less so for a small company? The needs are there, whether it a large multinational or an owner-managed company. Cost could be a large barrier. A six figure package is not unusual for an experienced FD and prohibitive to small and medium sized companies. But the role need not be full time, services can be paid for on an hourly basis and turned on and off at will and without diluting the impact of a good FD.

As cost may no longer be an issue, in a series of posts; I will concentrate on five compelling reasons why any company, regardless of size, needs an FD.

The first reason is that finance is the language of business, profit; cash and return on investment targets are all stated in figures, to understand how to hit those targets requires translating activities into their financial form. FDs understand the figures and the language of business.

Secondly, an FD impacts the whole business, as custodian of the company strategy, FDs are multidisciplinary and trained to get involved in all areas of the business to make sure objectives are met.

Thirdly, FDs understand risk, not just negligence from trip hazards in the office and factory fires that can be covered by insurance but more subtle but potentially devastating risks in the competitive, regulatory, economic and geopolitical environment.

Fourthly, FDs are experts in raising money and how to control, manage, preserve and use it to its best potential.

Lastly, FDs are instrumental in managing change and transformation, from making sure growth plans are sustainable and profitable and appraising a new investment, to restructuring the business and executing an exit.

In my next blog, I will expand on the first reason and put forward the case that finance professionals attuned to the language of business are vital in translating activity into profit, growth and ROI.

Paul Foster

Portfolio Finance Director