17/04/2010

By James Nicholson-Smith, Business Development Director & Managing Principal, West Midlands Region, The FD Centre

It is really easy for a finance director to end up operating in isolation from the rest of the business in much the same way a cricket scorer sits on the border and keeps score while the batsmen, bowlers and fielders thrash it out. However this scenario is neither helpful for the business nor fulfilling for the FD.

To avoid this scenario, the relationship between the Managing Director and their FDs need to be integrated and complementary to maximise the results for all concerned. This integration between operations and finance then needs to permeate throughout the organization.

Below is a checklist of some of the things that an FD can do to achieve this:-

 The monthly financial reporting must relate back to key performance indicators that the operational team understands and that they know how to influence.

 Finance should provide active support for sales estimates so that there is a transfer of the financial implications of terms agreed with customers are fully appreciated.

 Finance should provide active support to the delivery of products or service through the operations of the business to help measure efficiency and opportunities for improvements.

 Wherever possible, finance should support the sales and marketing activities of the business by providing effective reporting to help channel sales efforts in the areas most likely to deliver profitable and cash generative sales.

 Finance needs to play a critical role in the implementation of long term strategy. The risk is that too many projects are started without sufficient resources to see them all through.

 The finance director must take the time to explain the role of finance in the organization and dedicate sufficient time to educating the rest of the management team to become more financially aware and skillful.

 The finance team needs to appreciate that other parts of the business understand business concepts in different ways. It is therefore important that the finance team uses the same language and concepts to explain the financial impacts.

 Always to be approachable. Understanding that the Finance Director often has a fearsome reputation is not always a good think. Hard, fair and direct should be the extreme and not aggressive and patronizing.

Of course many businesses consider themselves too small to warrant the appointment of a finance director and rely on a good financial controller. With a rapid growth in the demand for these integrated finance skills, the availability of Part Time Finance Directors is an attractive option for many entrepreneurs.

To make sure you have the right team in place to manage your business, contact The FD Centre and ask for a free financial health check , carried out by an experienced Finance Director. If you are interested in finding out more please visit www.thefdcentre.co.uk


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