Recruiting an FC as an SME
“I have an accountant – we have used them for years, their office is only a few miles away’ – in this article we briefly explore why it may be prudent to invest in a Financial Controller as an SME.
The tipping point at which SME business owners / shareholders decide to invest in an in house Financial Controller / Head of Finance is specific to each organisation. Whilst revenues and turnover milestones are a good indicator as to when it is sensible there are a range of other factors that are considered to justify the hire.
Some business owners find themselves uncharacteristically trigger shy when it comes to bringing in a qualified Accountant to their business – potentially through reticence to show someone their bank account or because they don’t see the value in the headline price-tag spend.
Using an external accountant to produce your quarterly and annual accounts makes sense early doors in your businesses journey – it can be cost effective and relatively simple. There are some brilliant practice partners, managers and seniors who will really help guide your businesses fiscal decisions. But those individuals will (and should) eventually hold up their hands and advise growth SMEs to invest in an internal resource to help manage their finances and provide a sounding board for business investment decisions.
An FC / in house Company Accountant can give you REAL TIME financial information and commercial insight into the business performance. Lots of business owners criticise the retrospective stance of accountants – the ‘how have we done’ mentality. Ironically most of the qualified finance professionals I meet want to do the opposite and feel they add most value through forecasting, spotting trends, mapping future scenarios and providing insight into future risk and opportunity.
FCs reduce risk. They help manage cash, spot areas of concern, understand cyclical trends in trading and in some cases can spot black holes appearing before they become gaping chasms that could swallow the business!
Ultimately they will reduce unnecessary cost. An external accountant can give you insight into areas of possible overspend. An FC can spot those areas, have the appropriate conversations (internally and externally) and drive down the cost base. They will make systems and controls slicker which should also have an immediate impact on audit costs and potentially make the relationship with the bank easier.
FCs usually have a penchant for changing their hats – they will often add value in areas such as HR, IT, health and safety, general business administration, even marketing and sales… often your ‘Accountant’ will become the go to for almost all of the things you want to take off your desk!
They help you make decisions based on evidence rather than gut feel. The numbers they interrogate will feed into reports that tell a story based on fact rather than gut feel, optimism, caution or politics.
FCs grow with the business and with your leadership team and allow you to be primed for change – whether that be growth through acquisition, troubled waters and cash tightening, exit strategies which could include MBO or external sale, etc.
Bringing an FC into the business can have a major impact outside of simply ‘getting the numbers ready on time’. It can be a significant decision but is an excellent signalling point that your business is in good shape and has genuine ambition.