Identifying the best time to start the process of hiring a financial controller is a key decision requiring much thought. Before going into more detail, reflect on your business journey to date. You probably already have some sort of financial infrastructure or you would never have got this far.
Perhaps you have a bookkeeper to enter day-to-day transactions, and an external accountant to file your accounts, or a part-time finance director providing strategic support as necessary. The trigger points for recruiting a part-time financial controller may include one or more of the following areas that are listed below.
As your business has expanded, you recognise that your bookkeeper is no longer on top of things, the bills from your external accountant have risen substantially, yet you do not feel that there is a corresponding increase in value added.
These are the pitfalls to be mindful of, but not the only pain points that you may encounter.
You may also be experiencing challenges within the following areas that require the skillset of an experienced FC:
Cash is the fuel that drives your business - without cash there will be no business. Therefore, you need to be realistic about any issues here.
Do you have an effective invoicing system? Do you bill regularly? How do you manage your customers? Are you on top of credit control? What about suppliers? Are you falling behind with payments or are you paying them too quickly? Neither is ideal.
Are you content that these areas are all under control and you are making the best use of your cash? Or are you aware that you could do better.
A good financial controller will bring a different perspective and take a holistic view over optimising the use of cash and better management of the working capital in the business. They will effectively manage the cash control as well as the strategic aspects of the business’s finances.
Management and financial reporting
If cash is the fuel that drives your business, then management and financial reporting will be your dashboard from which you can measure and evaluate exactly what is going on.
If you are fortunate enough to be receiving regular monthly or quarterly management accounts, you will have a good idea of what is going on. For many SME businesses the management accounts will be prepared by the external accountant or perhaps the part-time finance director. However, it is also not unusual for the bookkeeper to prepare ‘management accounts’, perhaps with the help and support of the owner. However, it is highly likely that accounts prepared in this way will not be the best.
By hiring a financial controller, the management and financial reporting responsibilities can be reallocated to the right person with the core skills set, allowing the FC to get up close and personal with the business, providing you the time to focus your energy and core skills set on larger more profitable projects, thus making an immediate addition to your company’s bottom line.
Planning, budgeting and forecasting
A plan is your road map which can be used to see how your business finances are shaping up for the future. In business your map will be created from your planning, budgeting and forecasting.
You need to ask yourself:
- Does your business have an effective budget and forecasting process?
- Do you have a detailed breakdown of sales and costs which you can use as a base to construct a model of your future business?
- Do you have any idea how that new contract will affect your bottom line, working capital and cashflow?
Planning, budgeting, forecasting and financial modelling are core skills your financial controller offers and are essential for keeping your business finances on track.
Businesses owners are under continued pressure to adhere to a host of regulations and requirements such as PAYE, Pension legislation, VAT returns, corporation tax as well as statutory returns to Companies’ House. Any issues here are a wakeup call to remind you of underlying problems.
For companies, most of these obligations such as corporation tax and PAYE will be fulfilled by their external accountants, leaving business owners to look after VAT.
But is this the best use of your time? And it is all too easy to fall behind with filing returns and making payments. Hiring a competent financial controller will ensure that all these matters are dealt with.
Benefits of hiring a part time finance resource
If you’d like to be in better control of your finances, then it may be time to review the financial control of your business and look at how it can be improved.
Hiring a full-time, experienced in-house financial controller is expensive and you may not have a full-time need. Outsourcing provides you with access to a quality individual at a cost that is aligned to your business needs.
Furthermore, you can choose the right individual to maximise performance, productivity and compliance at the correct level for your business.
By engaging a part time financial controller, you simply pay for support as and when it is required. This allows you to invest more of your funds in activities which will directly benefit your bottom line.
Want to see the benefits of better cashflow management, more accurate and up to date reporting, and creation of a model to use for budgeting and forecasting? EFM can help. Our team of experienced Financial Controllers are here to support your business.
Get in touch with the EFM central team to book your free 1 hour consultation with one of our experienced financial network members.