Do I need a part-time finance director?

Part-time finance directors: the future

There’s a growing body of evidence to support remote and/or part-time working, which is well-documented and so we won’t try to re-gurgitate much of that here. What we will look at is the notion of a part-time finance director, a phenomenon that’s been around for decades but is still not particularly well understood.

Since the outbreak of the COVID-19 pandemic in the Spring of 2020, our working lives have changed completely. New age apps such as Zoom, Slack & Teams, previously the reserve of global or funky technology businesses, have become the normal way of working for even the most traditional of businesses. This enforced change has opened our eyes to different ways of working and that “presenteeism” isn’t always the best measure of output.  

At Headstar, we’ve seen a surge in demand for part-time, outsourced or “portfolio” finance directors to help businesses take stock of their position and help plan for the coming months and years.

What is a part-time finance director?

In a nutshell, a part-time finance director is someone who most commonly has multiple clients. I say clients as they’re usually not on the payroll. They invoice a sum each month based on their time, usually through their own limited company. They may work remotely, they may be in the office, it really varies based on the business requirement.

For a part-time FD, this is a career choice. They don’t want a full-time role anymore and have grown tired of the politics or grind of the day job. They want flexibility in their life. They’re willing to sacrifice benefits such as pension contributions, fancy cars, healthcare plans and the like to take ownership of what they do from one day to the next. 

They’re entrepreneurial. That’s right, an accountant can be entrepreneurial! How so you may ask? Well these people have given up everything I mentioned above and are backing themselves to be self-employed. They’re offering themselves and their skills as a service. They’re running their own companies. They’re in charge of winning their own work. They have to do their own bookkeeping, their own tax returns, their own marketing, networking into the wee small hours looking for that next client.

They’re experienced at being an FD. This might sound obvious, but I’m still amazed at the amount of businesses who claim to have an FD in the form of their accountant. Soapbox time, sorry. Partners & directors of accountancy firms are phenomenal people. They have experienced the highs and lows of businesses of all shapes and sizes. They’ve worked with MDs & with finance teams through the tough times and the good. They can draw on examples from far and wide. But have they ever worked in any other business other than an accountancy firm? Have they ever managed a finance team from day to day? Have they ever had to work out how much profit that product coming off the line really makes us? Have they ever actually been a finance director of a company? The answers in 99% of cases will be no.

What is a part-time finance director NOT?

For some MDs, the idea of a part-time FD is a comfortable one. Someone who can do the FD job but in a shorter (read “cheaper”) space of time. There are some key differences between the full-time position and the part-time position though:

1 – Where’s the team gone? A full-time FD will often have a settled team churning out the numbers on a weekly & monthly basis. This allows them to focus on the bigger picture issues, working closely with the rest of the executive team on strategy. With a part-time FD, this is usually in a smaller business where the Management Information (MI) isn’t so readily available.

2 – Relationships are different. Working in a business every day is completely different to dropping in periodically through the week. Things happen, things change, decisions are made. The part-time FD must accept that they cannot be as close to everything as they would like. 

3 – Limited board size. Coming out of a full-time role, someone transitioning to portfolio might be surprised to see that they’re often just working with an MD, rather than a board of directors. This intensifies the relationship, leaving it to fail miserably or succeed spectacularly. We’ve seen and experienced both. 

4 – The need is not always recognised. We’ve lost count of the times we’ve had to convince a lonely MD that taking on a part-time FD really is something they need to do. They see “cost, cost, cost” and struggle to commit, despite the story of woe they’ve just given us. Forgiving my poetic licence, I would say that in 100% of cases the decision proves to be a good one! 

5 – They’re NOT your accountant. I’m off my soapbox now you’ll be pleased to hear. Businesses need an FD, and they also need an accountant. They are 2 very separate roles. They work closely together but they are not one. The FD helps you build your strategy, manages teams, is your confidant & conscience on decisions. Your accountant helps them & you make decisions around the accounting & tax treatment of transactions in your business.

What can a part-time FD do for me?

At the risk of sounding like a JFK quote, the question is more what do you want them to do for you? Here are some examples of things a part-time FD has done for businesses over the years:

1 – Help build a strategy. When it comes to making decisions in your business, if there’s no one in the company saying “let’s run the numbers” then it’s time to hire a part-time FD. You may think you have a strategy and know exactly how to get there. But is this turnover-focused, or headcount-focused perhaps? We all love aspiring towards a great big top-line figure, but do you have a detailed cash flow forecast telling you how you’ll get there and where the pitfalls may be? 

2 – Turn things around. A dearly departed mentor of mine used to coin the phrase, “looking for the rivers of cash”. Business is tough and in a lot of cases it’s only getting tougher. We don’t know what we don’t know. Part-time FDs have experience of spotting areas to focus & release cash. Businesses don’t go bust because they haven’t made enough profit, they go bust because they’ve run out of cash. Many MDs are embroiled in the detail and know how to sell their product, or develop it, but have lost control of the cash.

3 – Keep a hand on the tiller. There are some incredibly bright business leaders. We meet more every week. They have a plan, and they know how to get there. The most enlightened of them recognise the areas where they need help. They can’t do everything. Having a part-time FD is the sense-check or the comfort blanket. The finances are being managed and if there’s an issue then the MD can be made aware. 

How do I become a portfolio FD?

Start now. That’s not what you wanted to hear is it? It’s nerve-racking, there’s no question. You’re giving up a monthly income, your pension contributions, that nice car. Are they the most important things to you? If so, don’t do it! If not, read on:

1 – Do your personal budget. You’ve heard of the old analogy of cobblers and shoes? You’ve been building budgets, forecasts and cashflows for years now, all for your employer. It shouldn’t be difficult to do it for yourself then should it? Give it the same level of regimen, go right into the detail and roll it out over 3 years.

2 – Shift your mindset. You are no longer an employee. Repeat, you are no longer an employee! You are now in the world of sales. Did a cold shiver run down your back at that point?! Don’t worry, if the term “sales” conjures images of 1980s used car traders then use something else, like “business development”. The fact is though you need to be comfortable that you now have a sales obligation. 

3 – Work out who you are. Part-time FDs are not all things to all people. Some are “fixers”, people that go in and do a job and then move on. Others are “builders”, they like to get into a business early doors and help them grow. What do you like doing? What are you good at? How are you going to market yourself? You’ll need some evidence to support this claim. 

4 – Get out there. Without doubt, the most successful portfolio FDs we’ve seen have been those that aren’t afraid to put themselves out there and not be afraid to fail. The ones that recognise it’s often about who you know, not always what you know. In professional services circles, many firms keep a tally of “reciprocity”. It sounds a little trite but it’s true. Work out how you can help others to help you.

“What’s the market like”?!  

Having ventured into the world of recruitment, alongside portfolio FD work, this is a question I’ve come to love and loathe in equal measure. I really enjoyed a fellow recruiters’ stock answer to this, which was, “well if I’m busy it’s good. If I’m not, it’s bad.” That pretty much sums it up but in the world of part-time finance directors, there is possibly more to it given how unexplored it can be.

There are thousands of businesses who need a part-time FD. The trouble is, not all of them realise it just yet! Sadly, not all of them realise that it’s an option either. We therefore have a collective responsibility to fill business owners & leaders in. 

There’s healthy competition. I know of one cohort of part-time FDs who have set-up their own whatsapp group and meet from time-to-time to trade war stories. This is the very epitome of healthy competition in my book. 10 years ago this group wouldn’t have existed (not least because they were all in full-time positions then). What’s great though is these people have made the leap and are forging successful careers with their respective portfolios.

It’s getting easier. Previously we were tied to the restraints of geography when it came to placing part-time FDs into businesses. They needed to ideally live within an hour of the office, a couple of hours at a push if it was just a day a week. But if we can be thankful for anything when it comes to COVID-19’s impact, it’s that remote working is so commonplace now. Mid-lockdown, we were able to place the perfect FD with a hospitality client in the Northwest, which wouldn’t have been possible the year before given their respective locations.  

The future is now

It’s a cliché but the global pandemic has moved us forward in so many ways, fostering new ways of working, balancing work and life (and the dreaded homeschooling!), and making us all take stock of what’s important.  Businesses have had to look at their model in granular detail and engage with advisors to help them steer through uncharted territory.

With the long road to recovery ahead, the presence of a part-time FD in just a fraction of the 5.9 million or so SMEs in the UK will go a long way towards ensuring a healthy future for many of them.

For those FDs who have had the epiphanic “get me out of here” in their full-time job during this period, what better time to get the ball rolling.

Interested in hearing more about how we can solve your challenges? We’d love to hear from you.

James Roach

Managing Director

James Roach