Why use an outsourced FD ? Featured

Rate this item
(1 Vote)

This article is aimed at managing directors looking for some  help finding solutions to their problems. What does a financial director do anyway ? Do they add value ?  

The long answer relates to the needs and issues of your business. The short answer is 'because two brains are better than one'.

What sort of issues is your business facing ?  Questions you might be asking  include :

  1. Is the cash under control ?
  2. Do the numbers help explain the business ?
  3. Have we chosen the right key performance indicators to explain the business ?
  4. Do our KPIs show us the important trends ?
  5. Does the finance function function ?
  6. Do we need someone with a good grasp of numbers, someone who can relate them back to reality ?
  7. Does the bank / lender / investor lack confidence in what we are telling them ?
  8. Do we know enough to make this tough decision to borrow / downsize / invest / launch a new product on my own ?
  9. Is it a good idea to buy that competitor / supplier and how much should we pay ?
  10. Do we have a good fit with our markets or are there gaps in our strategy ?
  11. Does the board work effectively ?
  12. Are the right people being held accountable ?
  13. Are we stuck in a rut, doing what we've always done ?
  14. Am I doing too much ?
  15. Do I need to delegate to someone at the same level as me ?
  16. Do I need someone to complement me (I’m good at xyz, but bad at jkl) ?
  17. Will we be able to sell the business for a good price ?
  18. Will we be able to sell the business ?


If you have been asking questions like these, then there is a high chance that you do need an FD to help resolve the issues, or perhaps just to uncover them so that they can be addressed.

An FD is someone who should have an intimate knowledge of your business – what drives it; the markets it operates in; pricing segments and bundles; the operational infrastructure you have; the people; the information needed to run it; and how long the cash is going to last.

An FD is someone who will ask the difficult questions, especially the one everyone is thinking but dare not say. Someone you can turn to when you need to sound out a difficult decision, or a bright new idea. Someone who can stand between you and a difficult client / supplier / manager when you need to keep your distance or defuse a situation.

An FD is someone who understands commercial risks. Someone who can read a contract and spot the risks being transferred (TUPE, fixed price, step clauses, supplier inflation, 'flat rate' interest ...). Someone who can read a profit and loss and identify the operational risk. Someone who can read a balance sheet and spot the mismatched debt risk (such as short term funding of long term liabilities).

An FD is someone who asks "What do we want this to look like in one year / two years / five years ?  How are we going to do it ? Who is going to do it ? When does each step need to be completed ?" and then monitors progress, keeping everyone on track.

Last modified on Thursday, 01 March 2012 19:14
Login to post comments