45. The qualities of an outstanding FD

“What does an outstanding FD look like and do you need one?”

All too often Finance Directors (FD or CFO), particularly in SME businesses, act more like “heavy” bookkeepers or management accountants rather than being a true member of the senior management team providing input to strategy and driving the business plan through in partnership with senior colleagues, most often the MD or CEO.

If this resonates with you, then you have a good Management Accountant/Financial Controller/Head of Accounting working for you…..but not an FD.

So what makes an FD so different from the rest?  Have a look at this short list and just check that you are getting what you need to drive your business forward:

The “givens” – a recognized professional qualification, technical skills and a thorough understanding of accounting  – sometimes referred to as the hygiene factors – coupled perhaps, although not always, with particular industry accounting experience.  However an FD needs many additional skills to be effective.

Integrity – Among the foremost of these are being honest, trustworthy and displaying integrity at all times.  Whilst this is true of all people it is particularly relevant to the FD as gatekeeper of the business’ financial well-being and steward of its assets.

Challenging – It can require a challenging mind at times; for example when key strategic decisions are being decided the FD is the one who balances the ambition with the reality of affordability. A great FD will be both challenging and supportive to his/her senior colleagues. They are expected to be the one who will stand up to the CEO, while at the same time supporting him and the Board.  For example, challenging where business decisions make little financial sense or, indeed, business sense; supportive in providing accurate financial management information in graphs, charts and other media – not just numbers – to ensure effective business decisions are made quickly and based on a sound understanding by all .

Strong interpersonal skills – vital; in particular the ability to communicate clearly and effectively in a multitude of ways and a multiple of levels.  Not purely “death by spread-sheet”, but also formally in written work and most importantly be able to meaningfully interact with colleagues on a day to day basis.

Great network – The great FD has great relationships with banks, funders, accountants, lawyers and other advisers.  These relationships can be key to the success of the business and it’s the FD’s job to maintain them for the benefit of the business.  All too often a Financial Controller does not have this reach or is unable to do this effectively.

Will take responsibility – The Finance Director is just that – a director; and with the title comes the responsibility.  Collective responsibility of the Board – yes; but also individual responsibility to lead on financial matters and partner with the MD/CEO and to make decisions … and not just sit on the fence.

Makes excellent decisions – consistently.  Having commercial acumen and being collaborative are probably the key ones to good decision making (along with the “givens”). Beware the FD who spends all their time on spreadsheets. A good one will regularly get around the business to understand and influence what’s going on, and they will be able to communicate financial matters concisely in plain English that colleagues understand.  In so doing they will display their commercial and financial acumen in a collaborative way.

Forward looking – perhaps often missed, is the ability to use the facts of the past not just to tell you where you have got to (and how you got there) but critically to look forward with authority and integrity.  The ability to pick the key moments from financial history, interpret them and provide analysis, insight and challenge to inform better planning and decision making is a rare skill.

So, how does your FD measure up in these 8 areas?  Do they match up to these qualities?  Tectona FDs do!

This blog has been written by Simon Ainley, Client Finance Director at Tectona.

To find out more about outstanding part time FDs, if you would like to discuss any of the other topics with Tectona, please contact Mark Nicholls on 07818 407061.

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