We spent time with Darren Trice the CEO at Kaizen Consulting discussing what a Part-time Finance Director actually is. To give you some background on Darren and his business which is called Kaizen would be useful at this stage. Kaizen offers far more than accountancy, having the expertise and experience to look after your business as a whole. Whatever support your business needs, they can help. They provide wide-ranging and tailored advice to help you solve your business problems and help you to realise and put in place plans for your business.
Having said that Accountancy and Finance is at the heart of Kaizen. And one of the areas that they have been working on, with their clients, are the roles played within the area of finance in a business There’s growing support for remote and part-time working in the workplace now, especially after the recent pandemic and the notion of a part-time finance director is starting to gain momentum, but it’s not particularly well understood. To help you understand this emerging trend we interviewed Darren on the subject and here are his thoughts.
Interviewer:
“ So what is the present situation with part-time finance directors and what are we going to cover today?”
Darren:
“At Kaizen, we’ve seen a surge in demand for part-time, outsourced or “fractional” finance directors to help businesses take stock of their position and help plan for the coming months and years. In this interview I am going to help you understand what a fractional or Part-time Finance Director is and how they work”
Interviewer:
“So what exactly is a fractional or part-time finance director?”
Darren:
“A part-time finance director is someone who usually has multiple clients and they’re often not on any of the client’s payrolls. They invoice each client a sum each month based on their time given to the role plus any expenses. They may work remotely, or they may be office based or a mixture of both, it varies based on the client’s requirements. They have often held senior roles in businesses finance teams and sometimes they have moved across to work in an accountancy or finance practice, but whatever their background and experience they will have dealt with the highs and lows of working in finance in commercial enterprises or businesses of all shapes and sizes. They will have worked with MDs and with senior management and finance teams through the tough times as well as the good. Because of this they can draw on experiences from far and wide. They will often have access to or employ a financial team of their own who can do all the day to day bookkeeping and basic accountancy work they need so that they have all the base information they require. It may be that they plug in to any existing accountancy staff the client’s business already have and they will help supervise them and create the data that is needed. After it has been gathered by whoever they will then interpret all the financial information and report back to the business owners on strategy and help and advise them so they can make business decisions based on sound financial understanding and advice."
Interviewer:
“ Why would I choose a part-time FD over a full time one?”
Darren:
“ It’s basically down to affordability, business need and flexibility. An experienced full time FD is an expensive addition to your payroll and you might not need that level of experience and skill at this point in time in your business development but it could be something you have recognised you will need in the near future. You will have recognised that your business does need the involvement and advice that such a person brings, so rather than having 100% of somebody’s time you can go down the part time route at a fraction of the cost but still get the right high level of advice from an experienced individual. You will also get an element of day to day participation that is necessary for decision making at the right level. The part time FD can also be involved in strategy and business decisions, knowing more about your day-to-day operations than somebody from your accountants practice for example, meaning the outcomes are better informed. A part time FD can build a relationship and understanding with the management team that an outsider (accountant or consultant) could never achieve. Whatever the situation such a person will become an invaluable asset to the business now and in years to come.”
Interviewer:
“What can a part-time FD actually do for your business?”
Darren:
“The question is more what do you want them to do for you? Here are some examples of major contributions part-time FD’s can make to your business.
- Help build a long term strategy - When it comes to making decisions about a longer term vision and strategy for your business, if there’s no one with the right skill set in the company compiling and understanding the financials then it might be time to hire a part-time FD. You may think you have a strategy and know exactly how you are going to get there, but has it been tested and how will it affect things like cashflow, future expansion and investment required. We all aspire toward a better top-line performance or figure, but do you know what effects that will have? For example do you have a detailed cash flow forecast telling you how you’ll get there and where the pitfalls may be? If finance needs to be put in place do you know what returns on capital employed have to be made to meet any investment repayments? How will costs be covered and what pricing decisions need to be made? Will growth be affordable and create the profits needed or you want going forward? Can costs be controlled further? All these are questions a part time FD will help you answer and build into any strategy you may have.
- Turn things around - Business is tough now for so many reasons, from war and conflict to pandemics and the general world economy and it’s only going to get tougher. Part-time FDs have experience in spotting areas to focus on in such situations and will be able to create or release cash. Businesses don’t go bust because they haven’t made enough profit, they go bust because they’ve run out of cash. This sort of vision may be needed because many MDs are embroiled in the general detail of running s business. They may know how to sell their product/service, or develop it, but they can lose control of the cash and that’s where an experienced person like a fractional FD can help.
- Control - There are some incredibly bright business leaders and entrepreneurs out there. They have a plan, and they know how to get where they want to be. The most enlightened of them recognise the areas where they need help. But they can’t do everything, particularly when a business is experiencing rapid growth. Having a part-time FD is a check, a control. They can demonstrate that the finances are being managed effectively and if there’s an issue then the MD can be made aware of what it is and decisions made to sort it.
- Efficiency – often overlooked a tight control and understanding of the finances in a business can lead to cost saving efficiencies that feed straight down to the bottom line. They can pre-empt the situation where losses lead to a business shutting down. A part time FD can report on headline figures that make management aware of areas for improvement, things like turnover or margin contribution per employee.
Interviewer:
“Thank you for helping to explain what a part time or fractional FD is and what role and benefits they bring”
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