financial director Archives - The Finance Team

Water during drought: does your business need a part time financial director

A little while ago, a Johannesburg-based friend considered investing in a water storage unit. His desire was to install a tank in his garden to catch rain and thereby always have an emergency water supply. After looking at all his financial commitments for the month, he decided to hold off on that decision. Now, as the country endures several successive heatwaves and has moved into drought territory, he wishes that he had prioritised that spending. Instead, he is having to make do with less water and is forced to place all his hopes on the next downpour.

Sometimes our businesses face a similar scenario. No business owner wants to spend money unnecessarily, and our money can only go in so many directions. That means cutting down in some areas, but it also means recognizing where that spending would act as the proverbial water tank.

When it comes to hiring staff, it’s difficult to make that call. The natural inclination is to have as few staff members to get the work done as possible. But when it comes to financial management, outlaying extra money for an added level of expertise can sometimes be the most prudent option.

For example, if your company has a full time financial manager on board, you may well feel like you’ve got your bases covered. After all, you’ve got someone overseeing your planning, your company budgeting, and preparing management reports to track your financial performance. But there are instances when you might need the input of a higher level of financial management. At these times, we recommend you bring on a part time financial director. Here are some examples of why a part time financial director might act as the ‘water tank’ to your business:

A part time financial director can help improve margins. Your part time financial director has the experience and skillset to analyze your business processes and identify how to drive down costs and drive up margins. He or she will recommend the necessary changes and then oversee the planning process to ensure they take place.

A part time financial director can help you effectively manage your working capital. If you know you can afford to undertake a new project, but are worried about the cash flow to fund it, then you could do with the expertise of a part time financial director. They will structure your cash flow in such a way that you are able to meet your short-term debt obligations and operating expenses while freeing up as much as possible for you to pursue your other aims.

A part time financial director can provide financial forecasting, financial modelling, and scenario planning. If you’re trying to decide whether or not to take that big leap, bring in some strategic input to help you make the decision. Your part time financial director can give you an idea of what the future might like look, help you develop a financial model along which to guide your decisions going forward or provide a real-life sketch of the probabilities of various outcomes. A good professional should be a trusted confidante and sounding board; someone to give you the confidence to go ahead with good decisions and help steer you timeously away from bad ones.

A part time financial director helps you assess risks before you take them, and mitigate risks when you have. They’re trained to pinpoint financial risk: whether it be institutional, environmental or internal. Once they’ve identified the risks ahead, they can help you know how best to avoid or overcome them. They’re there to smooth the bumps on your ride, and guide you towards an alternate route when a so-called road closure looms ahead.

A good financial manager plays a vital role in overseeing and controlling the company’s finances. But bringing on a part time financial director when mapping out your strategy, seeking for ways to be more profitable or contemplating risky decisions can often provide you with financial water in times of drought. Speak to The Finance Team to find out more about how someone can provide you with the high-level interim or ad hoc financial expertise that your company needs.

November 19, 2015 / No Comments /

Using your part time financial director to start a successful franchise

In some shape or form, this has happened to you. You’re in a city that isn’t home, sitting in a restaurant, coffee shop or walking through a great store. You’re loving the service and the vibe, and then it hits you: this place would do so well at home! “Hey!” you say to whoever you’re with, “we should open a franchise!”

Sometimes the thought stops with a couple of “nice idea!”-type comments and a few good-humoured smiles. Sometimes it translates into late night googling and a few jotted notes. But occasionally those thoughts become meetings, market research, fund-raising and a trip to head office. For Joanna Meiseles, a fruitless search for a hairdresser that catered to her children became the latter. Now, as the owner of Snip-its Salon franchise, she offers some insights around sussing out a good franchise opportunity. We’ve taken some of her advice and coupled it with our own.

As an entrepreneur or business owner, it’s a good idea to rope in a finance expert to help you work through the maths upfront. For cost reasons, we recommend bringing on a part time financial director – someone with the strategic understanding you need who doesn’t come coupled with a full time salary. These thoughts are given with that assumption in mind.

Determine the (estimated) return on investment. Upfront, your part time financial director will need to get a feel for the anticipated ROI. “This is the key factor — without a proven and strong economic model, there is no point in going any further,” says Meiseles. It differs from one industry to the next, but generally, business owners will be looking for a 15% ROI. If you’re outlaying R500 000, that means you should expect to receive at least R75 000 in profits by the end of the second or third year. “Also, keep in mind that a franchisee has to pay royalties, so that [money] is harder to come by for a franchisee than it is for a non-franchised business,” says Meiseles. Your franchisor will have historical figures to offer, but it’s a good idea to run your own evaluations.
Make sure the base model has been tested. Advice website for franchise owners, FranChoice.com, makes this point: “Before New York Broadway producers bring a production on the road, they’ll test it in a few smaller cities to see if the humor or pathos translates well to different audiences. After all, not every town sees life in the same way as New Yorkers. A similar comparison could be made with franchised businesses. A concept that does extremely well in one location may not have the same appeal in a different part of the country.”

Meiseles’s opinion mirrors this. Great success in one unit is not enough to guarantee success in another. She recommends that franchisors test the concept in at least three different locations. In every instance, your part time financial director should estimate ROI, margins and how long they think the company will take to start bringing in a profit.

Have a realistic idea of your access to capital. Your head office will provide you with a certain leg-up to get the ball rolling. But just because your start up is somewhat less capital-intensive than others, don’t underestimate the amount of money you’ll need. Have your part time financial director determine approximate costs for legal fees, marketing fees and setting up inventory and computer systems. Then, enlist your part time financial director in making a strong case (through a business plan and investor marketing material) to raise the capital needed.
Explore what it will mean to be in a 10-year relationship with your franchisor. “Franchising is really all about relationships, and most franchise agreements are 10 years in length, so you should be sure you are committed to long-term relationships — both good and bad,” says Meiseles. As a business owner, start out by making sure you have things working well internally. The part time financial director who gives you advice upfront should ultimately be the person who sticks with you for the duration of the agreement, and whose insight grows along with the franchise. Do you work together well enough for this to be the case? After this, consider your collective relationship with the franchisor. Not only will you need the resolve to stay steady in that relationship despite all difficulties, your part time financial director will need to be able to do the same.

If you’re looking for a part time financial director who can help you make the right call about franchising options and establish relationships that will last throughout the period, contact The Finance Team. Our finance executives can assist you on a part-time, interim or ongoing basis depending on your needs.

October 8, 2015 / No Comments /

Bringing music back to the business: Sony’s financial director Kenichiro Yoshida

It’s every financial director’s dream to walk into a company and change it from struggling to smooth-sailing. But the chief financial officer of Sony has managed to do just that. The revival of a slumping share price and the revitalisation of a flagging brand is thanks, according to some, to the appointment of Sony’s Kenichiro Yoshida. He stepped into the role of CFO near the end of 2013, being elevated several levels from the company’s internet services division in what some hail as a visionary move by CEO Kazuo Hirai.

Since taking up the financial hot seat, Yoshida’s actions can be summed up in one phrase: cutting the fat. The electronics colossus over which he presides has a history spanning 60 years, and over the decades it has become increasingly lumbered with acquisitions and vastly diverse interests. The past ten years brought a litany of bad earnings announcements and a share price under strain. In sharp contrast, the company has been leaner and stronger in recent times, with investors finding renewed confidence in the brand. Over the past year, the share price has risen from just over $19 to a high of over $32. Here are a few inspiring points of Yoshida’s leadership.

Have the courage to pull out timeously

If there’s one thing to be learned from Yoshida, it’s about making the hard decisions when they will count. Soon after taking up the mantle as financial director, Yoshida announced the intention to restructure the company, comparing it to “emergency surgery”. First, there were job cuts. Sony let go of 5000 employees, about 3% of the company’s workforce. Not an easy move for one who had recently stepped into the position, but it earned Yoshida the respect of shareholders who recognized that the company was taking drastic steps to turn things around while it still had the opportunity to do so.

“He started the most important thing that Japanese companies cannot do — exit,” a Singapore-based analyst at Jefferies Group told Bloomberg.

Keep your ego out of decision-making

Next, Yoshida helped head up the sale of Sony’s Vaio personal computer business and curb the company’s goals to dominate the smartphone market. Getting rid of personal computers and letting go of what most companies saw as “the next big thing” (smartphones) took the equivalent of turning down a date with the captain of the cheerleading team. This financial director recognized, though, that keeping the company successful had less to do with keeping up with the Joneses and more to do with carving out a strategy that recognised Sony’s individual strengths. The result paid off, with Yoshida’s financial director leadership being a key factor. The same analyst described it this way: “If you remove Yoshida, this stock is no longer a ‘buy.’ It’s probably a ‘sell,’” he said.

Be true to your real loyalties

Financial directors are often pulled in several different directions, as competing interests call for decisions to be weighed in opposing ways. Yoshida’s mantra helps clear up some of the ambivalence that many in his position may feel. “We have an accountability to the outside world, something that we still need to work on, but the idea is beginning to sink in,” he said at a results conference earlier this year. “Our reforms spared no sacred cows, whether at the main company or its units, and now you’re beginning to see the results.”

If your company needs an exceptional finance professional who is willing to be loyal to the right stakeholders, make the tough calls and steer things in a new direction, contact The Finance Team. We have a highly qualified team of executives who can provide expertise on an interim or part-time basis, according to your needs.

Image credit: Bloomberg News

September 17, 2015 / No Comments /

Business rescue – what every financial director should know

Many financial directors face this unpleasant yet familiar scenario at some point in their careers: sales at the company have been dropping for several quarters in a row. Consumer spending has dropped. The economic environment is looking less able to support your company. The business is struggling to pay salaries and honour financial commitments.

Most financial directors and business owners can tell at this point whether their companies are just going through a rough patch or whether the business has reached a turning point and drastic steps need to be taken.

In the old days, if things were looking grim, most roads led to sequestration or bankruptcy. Nowadays, however, there’s a glimmer of hope on the horizon for those in the hot seat – be they business owners or financial directors — hoping to keep their businesses afloat. It’s called business rescue, and it’s been made available by the Companies Act since 2008.

Werksmans Attorneys describe business rescue as something that aims to “restructure the affairs of a company in such a way that either maximises the likelihood of the company continuing in existence on a solvent basis or results in a better return for the creditors of the company than would ordinarily result from the liquidation of the company.”

So there’s happier news in the offing – hopefully for your company, if not, at least for the creditors to whom you are indebted. But when is it time to grab for this final life raft? The qualifier for whether or not a company should be placed in business rescue is whether or not it is “financially distressed”. Often, it will be up to the full or part time financial director to determine whether the company meets this definition, by scrutinizing its finances and determining whether it meets the following criteria:

The company is reasonably unlikely to be able to pay all of its debts as they become due within the immediately ensuing six months; or
It appears to be reasonably likely that the company will become insolvent within the immediately ensuing six months.

If either of these are applicable — in other words commercial or factual insolvency are a possibility — then it may be time to move forward with business rescue.

As either a full time or part time financial director, once the company has made the decision to take this route, you’ll need to become familiar with how it will affect your business.

Werksmans explains that business rescue will result in the following taking place in your company:

the temporary supervision of the company, and the management of its affairs, business and property, by a business rescue practitioner;
a temporary moratorium on the rights of claimants against the company or in respect of property in its possession; and
If approved, the development and implementation of a business rescue plan to rescue the company by restructuring its business, property, debt, affairs, other liabilities and equity.

As a full time or part time financial director, this process will have an impact on the decisions you make, as well as whom you interact with on a daily basis.

You need to acknowledge first off that your company will be ceding ultimate control to a third party. This means that while you are used to calling the shots about all things financial, a company undergoing business rescue will now need to defer the final financial decisions to the business rescue practitioner.

This is likely going to require you swallowing your pride and putting on your most generous “team player” hat. Effective communication with the business rescue practitioner will become paramount. As the new head contemplates making certain decisions to “save” the company, you’ll need to prove that your opinion is valuable in order to be included in the process. Naturally, the new status quo will require you to shift the way you traditionally make decisions.

The flip side of this challenge will be that the business rescue process will keep the creditors at bay. As a full or part time financial director, if you’ve got to the point of business rescue, you’ve probably spent a good while fending off the creditors. To know that the company will be “untouchable” by claimants for some period of time will come as a huge relief – one that is probably worth the hassle of working with a new partner for.

Lastly, as a full or part time financial director, you’ll need to weigh in on the business rescue plan that will be developed for your company. Your insight should help to guide the direction of the plan. The level of your involvement in this process could determine your involvement with the company once it has found its feet again. Astute insight and guidance from the financial director are needed more than ever before. Prove your worth!

If your company needs the direction of an experienced full or part time financial director to assist in the sensitive process of business rescue, contact The Finance Team. One of our experienced executives can provide you with the assistance you need for the period of time that you need it.

Image credit – www.geekbinge.com

July 2, 2015 / 1 Comment /

Why your company cannot afford to go without a financial director

Recently, someone I know decided to try his hand at baking some bread. It was an endeavour he was undertaking for the first time, and he took the job seriously. His starting point was (of course!) the internet. He googled several recipes, and decided on some sourdough bread. The photos of the end result looked delicious.

The man in question followed the recipe meticulously. He kneaded the dough, waited for it to rise at the indicated time, then kneaded it again. He put the dough in the bread pan and saw it go golden in the oven. When the bread came out, it looked even better than the photos had. He cut a warm slice and spread some butter on it. He bit into the slice with great anticipation. But his heart sank as his chewed that first bite. His bread tasted less like the culinary delight he had hoped for, and more like a mouthful of cardboard. As he ran through the recipe wondering where he had gone wrong, it hit him: he had forgotten to add a teaspoon of salt. Despite dong everything else right, that tiny bit of salt was crucial to the taste of the bread. His bread simply couldn’t afford to be without it.

In the business world, that teaspoon of salt could be likened to your company’s financial director. No matter how many other great things your company has in place, if you don’t have a financial director you are missing something crucial.

A financial director gives financial insight at the most strategic level

Some may argue that having a high level finance executive such as a financial director is not necessary for businesses of a smaller size, as long as there is someone playing an accounting role. However, a financial director (or equivalent senior financial manager) provides financial insight at the highest level for the business. When the most strategic considerations are being made, it is vital that a financial pundit is giving perspective to the conversation. Think of the failed companies that you know. Chances are that they took a leap of faith that was unjustified, found themselves in debt that was unrecoverable, or simply didn’t manage their cash flow correctly.

Almost all of the reasons new businesses fail have one thing in common: they make financial mistakes. To avoid these mistakes, you need astute financial insight and leadership at the highest level – not just someone keeping the books afloat. If your company is small and does not warrant the need for someone in a full time role, consider taking on a part time financial director instead. A part time financial director will be able to give you the strategic insight you need while not requiring the same paycheck as his full-time compatriot.

A financial director maintains control of the company’s expenses

The quickest way for company or project expenses to balloon beyond budget is for no one to be in charge of monitoring and controlling them. If your company is led by an ambitious entrepreneur who is not coupled with a senior financial executive, this may be a familiar scenario. Not only is a financial director tasked with the responsibility of forecasting, measuring and controlling expenses but he or she has the authority to do so. A mid- or junior level financial person might be able to track expenses but won’t have the authority to crack down on over-expense or wastage when it occurs. The result? Soaring expenses and a bottom line that bears the brunt.

A financial director leads the company into the future

A good financial director can recognize opportunities in the future and steer the company towards them. Their position allows them to motivate the entire company towards a clear, well defined vision – one which has been uniquely carved out by their experience. Part of their contribution is to see the vision, and the other part is bring others along. “Inspiring your team to see the vision of the successes to come is vital,” writes Tanya Prive for Forbes. “Make your team feel invested in the accomplishments of the company.”

If your company is looking for the right “teaspoon of salt” contact The Finance Team. We have a network of highly qualified, experienced finance executives who can provide financial leadership for the time and scope that your company needs.

Image credit – poetsandquants.com

June 18, 2015 / No Comments /

John Sculley’s ‘moonshot’: Why today’s financial director needs a customer plan

‘Moonshot!’: the title of the book written by the former chief executive of Apple and PepsiCo, John Sculley. It’s a word familiar to those who frequent Silicon Valley circles, and those who worked in the white house under John F. Kennedy. It is derived from the then US President’s vow to send a man to the moon and back before the end of the 1960s. A moonshot is a game changer – something that alters the landscape in which we live our lives.

According to Sculley, now in his late seventies, there are several “moonshots” underway right now. And one of them, says Sculley, should change the way that every financial director sees his job or conducts her business.

This moonshot is a shift in the terms of power of today’s businesses. One party – the producer — is ceding control. The other party – the consumer — is gaining it. It’s what Sculley describes as a “dramatic, rapid shift from producers-in-control to consumers-in-control”. And, in his opinion, it changes the way financial directors need to do things.

Customers today have access to an unprecedented amount of information, and are able to make decisions in a more informed manner than ever before. They have apps that can help them instantly compare product prices to find the cheapest available. They can find and read user reviews of the products they’re interested in. They can instantly seek feedback on services from their friends or peers. They can instantly purchase goods online as well.

Although Sculley doesn’t mention it, there is another dimension in today’s South African society bolstering the position of the consumer, and this comes in the form of institutional protection. The Consumer Protection Act now enables consumers to make purchase decisions in the full confidence that they can swap or return the product if they are unhappy with it. It’s producing consumers who are more confident and more empowered than they’ve ever been.

“The richness of this information will continue to grow exponentially in the future. It’s almost unimaginable how fast this will happen and the power it will give the customer,” writes Sculley in his book.

So what does this mean for the financial director? It means that he or she needs to be able to understand and speak to the consumer in order to survive.

The financial director needs to understand how to price products disruptively

Sculley says that financial directors need to know how to price their products in order to meet the all-powerful consumer. Today’s consumers are becoming more and more comfortable with the notion of “having things when you need them” rather than building an empire signified by owning things. So they buy things when they need them, and they buy them at the cheapest available cost. Your pricing strategies should reflect this. In Asia, Sculley points out, Xiaomi is selling an iPhone knockoff at a greatly reduced price. The company is less than five years old and is worth R45-billion.

The financial director needs to take advantage of affordable capital

While interest rates worldwide remain relatively low in government’s efforts to boost economic activity, financial directors need to use this to borrow and boost growth in their businesses. Sculley goes so far as saying that now is the best time to build a billion-dollar company.

The financial director needs to develop a customer plan

Sculley argues that the traditional business plan, while important, is not particularly strategic. In essence, the business plan is a “budgeting process”, he says. On the other hand, a customer plan is “far more telling” in several ways.

“Customer metrics are far more telling about whether you’re doing the right things to not miss an opportunity and maybe build a way of looking at an industry that nobody has ever thought of before,” Sculley said in an interview with ww2.cfo.com. “What I’m saying is that a customer plan is far more telling in terms of what can we do to really disrupt, to innovate, to dramatically change the business.”

If your business is looking for the insightful leadership that Sculley suggests is needed by today’s financial director, contact The Finance Team. We have a team of highly skilled finance executives who can assist your business on an interim or part-time basis.

Image credit – www.aidecworld.com

May 13, 2015 / No Comments /

What the 21st century demands of a financial director

In the last years of high school, your parents or guidance counselors might have encouraged you to choose a career. You may have had a love for numbers, you may have liked the doors it opened in terms of job opportunities, or you may have been attracted to rumours about the salary – but one way or the other you decided on accounting. It seems like light years ago that you slogged your way through university tests and wrote your board exams. Since then your career has enjoyed an upward trajectory, and now you’re a financial director.

But the world in which you function as a financial director is indeed light years away from the world in which you chose your career as a dreamy high-schooler. Decades ago, the pressures and expectations were different from those faced by your role today.

Here are three things that the 21^st century demands of a financial director.

The ability to manage ever-accelerating change

Time in the 21^st century is fundamentally different from what is was in the past. Think about the impact of this for a moment. In past decades, your company may have wanted to conduct market research. So you would haul out books on your subject. You would conduct interviews telephonically and face-to-face. You might even visit the library to glean further insights. This process would take weeks, if not months, to complete. The only knowledge you gleaned would be either be what you found out directly or historical information you found in books and journals.

The introduction of the internet has changed all that. Nowadays, if you’re wanting to conduct market research, the first thing you’ll do is hop online and pull up a search engine. In response to a few key words, a plethora of information will come up within milliseconds. You’ll likely be able to read online books, research reports and academic findings. Then, you’ll be able to conduct online interviews and polls, accessing thousands of audience members instantly at the click of a button. You will likely be able to conduct some high-level market research within days, literally cutting the time it took to learn new information into a fraction of what it was before.

This phenomenon means we have more access to new information at a faster pace than ever. By virtue of the fact that our world changes when we learn new things, it also means that our world is changing faster than it ever did before. As a financial director, you’re expected to know what’s changing and when. You’re expected to understand the implications of change, and most importantly, you’re expected to make decisions that react to change as soon as it comes.

The breaking down of silos

In previous eras, departments existed and functioned in relative autonomy. There was a finance department, a marketing department, a technical department, a Human Resources department and an R&D department. The heads of these departments would meet from time to time, but they generally viewed themselves in isolation, pursuing their own goals often in spite of – or even at the expense of –another. Those days have changed. Today, your mandate as a financial director is to help the company to view itself as a single collective. Departments need to view themselves as interdependent, and work together to achieve goals. If you are able to help break down the silos between departments, your reward as a financial director will be a more seamless operation with more sharing of resources and more operational efficiency.

An ability to predict the future from past experience

The 21^st century financial director needs to learn from the past. Despite their ever-changing world, they are required to use experiences from what has already taken place to predict the future. Today’s financial director needs to plan in a way that is more insightful and reflexive than ever before. Their plans need to say: “this is how the past changed me, and this is how I will change the future.”

If your company is looking for the insight of a financial director who is fully equipped with the skills demanded of them by the 21^st century, The Finance Team has the answer. We draw on a network of highly skilled, qualified professionals who can assist your company for the period of time that your company requires.

Image credit: http://financedirectorservices.com/

April 20, 2015 / No Comments /

Five traits of the highly effective financial director

There are skills every financial director has, and there are skills that exceptional financial directors have. Our experience as a company with a team of top notch finance executives has shown that the skillset required by a leading person in our profession is somewhat different to the predictable abilities of number crunching and ledger balancing.

Here are some of the attributes of a highly effective financial director:

An effective financial director is a not only an accountant, they’re a strategist and a business leader. Having sharp financial skills goes without saying. In this position, it’s a default skill to have. A top tier financial director is much more than that. They possess the skills that make them an invaluable member of the top management team of the business. They’re “big picture” thinkers, long term planners and shrewd business-people.
An effective financial director is a team player. In this role, you’ll be functioning in at least three teams. Firstly, you need the skills to build and manage your own motivated and successful finance team. The accuracy of their work will determine your success. You also need to be able to function as a member of the management team of the business – helping to strategise for the future of the company, and making decisions along with the MD or CEO that will determine the course that it takes. You need to be able to punt your point, and then accept and support the decision of the chief officer of the company. The last team you’ll need to play in is outside the walls of your company. You must be able to develop key external relationships to create a strong network in which to operate. All in all, you’ll be constantly needing to think of your role in relation to others.
An effective financial director is a communicator. Your communication prowess will be pushed to its limits in this role. You need to be able to convince top management of your way of thinking, persuade an entire company to stick within your budgets, and ensure that your finance team has bought into your vision. Above all, you’ll be constantly explaining things to people who don’t have the technical background you do. How successfully you do these things will in large measure determine how far you get. Communication is key.
An effective financial director is a people’s person. When we talk about people’s people, we are not talking about being a natural extrovert. We are talking about learning the art of bringing your team with you. Your role is not only about having accurate budget forecasts and cash flow statements. It’s about recognizing that the business is run by people, and that they need to take the business to its destination. It’s about showing people you acknowledge their roles and bringing them with you.
An effective financial director stays relevant. This means making the time to constantly update your knowledge and skills. We’re talking about ensuring that you’re au fait with the latest accounting rules and regulations, but we’re also talking about staying in touch with the needs of the people you manage, and making sure you are always accurately representing their vantage point to the senior management team. The mark of a successful director is that, if you weren’t there, a relevant and insightful voice of the top management team would be missing.

If your company is in need of a highly effective financial director, our network of top finance executives from The Finance Team can assist. We can provide anything from ongoing, full or part-time assistance to help with once-off projects, according to the needs of your business.

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February 23, 2015 / No Comments /

Why experience is key when hiring a Financial Director

Finding and hiring a financial director should be a simple exercise for most Chief Executive Officers. Traditionally you would place an ad on LinkedIn, engage the services of a placement agency or approach trusted individuals and ask for recommended individuals. Whilst all of these methods may sometimes work with differing degrees of success, finding the most experienced and most suitable financial director for your business can become a costly and time consuming exercise, fraught with frustration and taking up valuable time that you should be utilising elsewhere in the business. If you are looking to hire a financial director, chances are that you need one immediately and not in three months’ time. The longer you wait and the more desperate the situation becomes, the more inclined you will be to rush your decision and hence increase the risk of making the wrong choice.

Why experience is the most critical determining factor when hiring a financial director.

The experience of the financial director is key and probably the most vital attribute to look for when hiring a financial director. Academic qualifications are obviously important but experience is what you need and what you pay for. To become an experienced financial director you have to have had worked and operated across a multitude of industries which can range from anything from; mining, manufacturing, logistics, financial advisory, strategy and retail. Most Chartered Accountants have served at least 3 years of articles and have been exposed to numerous industries even before specialising in any one field or industry.

Why is experience so critical when hiring a financial director? The answer is that because they have experienced all types of challenges in the companies that they have worked in over the years, they can “hit the ground running” and add value to your business the minute you engage their services. This experience is why you want them working for you – they will present viable and sustainable solution for your business.

The challenges of finding an experienced financial director

1. Cost

Financial directors that have many years’ experience across a range of industries can be expensive and come at a high cost to the company, and rightly so. The greater their experience the higher their value.

2. Need

A lot of SME companies probably don’t need the services of a full time financial director. This is certainly true if the business has excellent Financial Managers and Financial Staff supported by sound systems and processes. There are companies that outsource experienced financial directors on a part time basis. You may only need a Financial Director 3 times a week. An experienced Financial Director can probably get done in 2 days that which a newly employed full time Financial Director can get done in a week.

Why use an experienced part time financial director?

Besides the obvious cost saving of using an experienced part time financial director, there are many other advantages that CEO’s tend not to take into consideration when considering using a part time financial director.

No employee tax submissions – You contract with a company, not an Individual.
No pension or provident fund contributions.
No medical aid contributions – Part time financial director’s have their own structures in place.
No labour issues – because using a part time financial director on a consultancy basis is not an employment relationship, the usual risks of full time employment are negated.
It’s a 30 day commitment – A simple 30 day notice period is all that is required.
Team approach – using an outsourcing company like The Finance Team, your engaged part time financial director has access to a pool of highly qualified, experienced financial director’s with whom they can collaborate.
Director level involvement – whichever financial executive outsource company you may choose, if there is no director level involvement initially then reconsider your options. Director level involvement will ensure that your expectations are met from the beginning of the engagement.
Finding the right fit for your business – personality plays a large part in the selection process when looking for a financial director. An outsource company can finding the right experienced financial director that “fits” within your organisation.

More and more companies are choosing to engage part time financial director’s, as the benefits that they present have a massive positive effect on the bottom line and performance of your business. It is a trend that has grown in leaps and bounds both in Europe and the States and is growing in popularity amongst South African businesses – as the old saying goes ’work smarter not harder’.

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October 1, 2014 / No Comments /