5 Reasons You Need an Outsourced FD

Most CEOs and MDs would agree that having an FD would be a valuable – make that, essential – addition to their company. However, bringing on a Finance Director is a risky and expensive undertaking. It may also be the case that your business is simply not at the stage yet where it needs the services of a full-time FD. That’s why outsourcing your finance function to a part-time FD is becoming a more popular choice amongst SMEs.  In this blog post, we will explore five reasons why you need an outsourced FD and how they can benefit your business.

What is an outsourced FD?

A finance director is a high-level executive responsible for an organization’s financial planning and performance. In many cases, the finance director is the company’s Chief Financial Officer (CFO). However, in some organizations, the finance director reports directly to the CEO.

The finance director position is responsible for a wide range of activities, including financial planning, investment strategy, risk management, and compliance with financial regulations. In larger organizations, the finance director may also be responsible for managing a team of financial analysts. They must be great forming relationships, working closely with the owner, MD or CEO. They must also be willing to stand up to the CEO and challenge their opinions or unsound strategies that don’t add up.

Outsourcing this position can be beneficial for companies that do not have the internal resources to support a full-time finance director. By outsourcing this function, you can get access to highly experienced FDs and expert advice and guidance on a variety of financial matters, freeing up company resources to focus on other areas of operation. Outsourcing this position can also help to save on costs, as it eliminates the need to maintain a full-time finance department.

How can an outsourced FD help your business?

Any business owner knows that financial management is essential to the success of their enterprise. However, it can be difficult to keep on top of all the financial details while also running the day-to-day operations of the business. This is where an outsourced FD can be a valuable asset. An outsourced FD can provide expert advice on financial planning and strategy, and can help to implement financial systems and controls. They can also work with you to develop budgets and forecast cash flow.

For businesses that are just starting out or small businesses that don’t yet have the need for a financial department, an FD or accounts team can be a big commitment and expense. That’s why having an experienced outsourced FD is an affordable and practical way to get expertise into your team without breaking the bank.

The type of support an outsourced FD can provide

This depends entirely on your organisation’s specific needs. Typically, this could include:

• Raise funding – this is an important stage for an startup or company going through a growth phase.
• Scale faster – the goal of any business is to grow. But you need to have the right funding, processes and technology in place to do so.
• Increase valuation – an FD can help you deliver a roadmap to give your business the value it deserves.
• Change/restructuring – for bigger businesses with existing departments that are going through change, an FD can provide experience and expertise to make this challenging period a smooth process.
• Preparing for exit – for founders looking to exit, an FD can help businesses prepare.

How do I work with an outsourced FD?

An outsourced FD will typically join your business on a part-time basis, working as little as half a day each week up to 2 days, depending on the requirements. What’s great about bringing on an FD on a part-time basis is that it’s entirely flexible. Perhaps you need more of a hands-on approach at first, so you bring an FD on for 2 days a week. But after 3 months, once the groundwork has been laid, you can reduce the hours to just half a day each week.

It’s important to note the difference here between a part-time, outsourced finance director and a consultant. A consultant advises from “outside” the business without becoming part of your management team. Nothing is executed directly by the consultant, this is all done from within the company.

A part-time finance director, on the other hand, is someone who joins your executive team, someone you will work closely with, and above all, someone you should trust. The key difference is the personal involvement: whereas a consultant doesn’t get their hands dirty, so to speak, a part-time, outsourced FD personally oversees and takes responsibility for all the work and gets involved in high-level strategic discussions with the CEO.

5 reasons to hire an outsourced FD

Still not convinced? Here’s a breakdown of five key reasons to hire an outsourced FD.

1. They’ll remain objective

While an outsourced FD will join your team on a part-time basis, they are still technically a contractor, meaning they’ll approach issues without bias, giving you an outside and objective perspective. This way, you’ll get completely independent guidance and opinions on all aspects of your business finances.

2. They’ll be highly experienced

Part-time or portfolio FDs won’t set out on their own unless they’ve worked for many years in senior finance roles within various companies. By bringing one into your team, you’ll be bringing this wealth of experience and expertise with you.

3. They are cheaper to hire than an in-house FD

In-house FDs are expensive, especially if you’re in the early stages of building your business. It can also be a huge commitment and a time-consuming process as you conduct interviews to hire the right individual for your organisation. Paying for an outsourced FD is a more cost-effective solution, as you’ll only be paying for them as contractors when you need them. Many FDs work remotely, and can be flexible with working hours when you need them to be.

4. You can hire them on a part-time basis

Outsourced FDs are usually hired part-time and are flexible to the needs – and budget! – of any organisation. One of the promises we commit to at Leadership Services is to deliver the same value and impact as a full-time Director even when working part-time. This is possible because of the experience and expertise our FDs bring to the table.

5. They’ll help you understand your business objectives more clearly

Whether you plan to take early retirement or open up a vast business portfolio, an outsourced FD will work to make your ambitions a reality, while offering objective insight and advice. You’re paying for their high levels of expertise, and if they think you’re making a mistake, you’ll be the first to hear about it. They won’t be afraid to push back or offer better strategic solutions if required.

Do I need an outsourced FD?

If you need an outsourced FD to help navigate any challenges you might be going through – whether it’s looking to scale faster, increase valuation, or prepare for an exit – then we can help. Our job is to connect CEOs and MDs with highly experienced part-time finance directors who can help your company navigate big strategic and financial challenges so you can achieve your ambitions.

Contact us today to see how we can help you find the right outsourced FD for your needs.