An in-house accountant or finance manager plays a critical role in any business. SME owners are typically entrepreneurial characters, primarily looking at the big-picture focus of growth and new ventures.
This mindset is important for success, but balancing this with a finance partner focused on sustainable growth is critical.
The right business partner should be the wise voice in your ear, ensuring you remain focused on cash flow while not losing site of growth potential.
The vast majority of our turnaround SME clients have lacked this structure.
The right person for you will depend on the size of the business and industry sector you’re operating within – their commercial perception should be a top priority.
Exact industry experience isn’t essential, however business synergies and understanding the commercial process of your company is crucial.
The position of in-house accountant / finance manager can be mistakenly seen as a required overhead that exists to ensure company books are managed sufficiently, suppliers and staff get paid and stakeholder engagement is managed.
What often gets forgotten is the commercial value and significant cost saving the right appointment should be able to deliver.
As with your sales manager, your in-house accountant / finance manager should be able to add significantly to the profitability of the organisation.
Capabilities of an In-house Accountant / Finance Manager
As well as traditional in-house financial responsibilities such as cash flow, budget control, reconciliations, AP/AR and stakeholder management – an SME finance manager should have experience working on process and commercial analysis. These are the necessary skills to look across the business and action improvements.
By giving them freedom to communicate directly with operations such as the site team or factory floor, they’ll be able to find ways of improving systems, process and controls, running through why a current process within the business is not cost efficient, and offering an alternative solution.
This includes anything from supplier reviews, customer and product analysis (e.g. 80/20- rule), stock analysis (e.g. to identify slow moving stock), and generally realigning expenses with current revenue levels.
Savings may be minimal or significant, but the focus on improvement could make a big difference to your net profit.
Well run organisations often have specialist management accountants or business/commercial analysts. These staff are the cost saving, streamlining specialists and the savings they identify often pay for their salary two or more times over – in line with what is expected of the sales team.
As well as internal process, they’ll conduct external or market analysis on your company. This will enable them to identify business growth or new venture opportunities.
Identifying an In-house Accountant / Finance Manager
In an ideal world, as a business owner or leader in your business, you will be looking for a CA/CPA who has fulfilled both a financial and management accountant or analyst role. This experience should give them the basic knowledge and skill-set to combine the traditional financial duties along with strategic analysis.
If the person you’re looking at is currently within one of these positions, you’re probably giving them their first lead position. They’re stepping up into an autonomous role and one that will allow them to add value and make their own mark, creating a career milestone.
This experience, combined with being the right cultural fit for the business and driven to step up from an entry level role, will generally mean the candidate has what it takes to succeed in an in-house accountant / finance manager role.
Throughout the interview process, be careful not to over-sell the opportunity. You will need to stress the importance of being hands on in the role as well as being comfortable at focusing on the basics as a priority which could take up the most of their time, especially in the beginning. They should not be expected to delve into the commercial elements and wider analysis of the business until they’ve got a good understanding of the day to day accounting fundamentals.
Screening questions to ask
- Describe a recent example of being ‘hands on’ within a business – Are they experienced and comfortable within an end to end accounting role?
- Can you give me an example of how you have improved system, process or procedure and the financial outcome to the business? – Can they add value through cost saving? Are they commercially savvy?
- What do you see as your main achievements to date? – Are these commercially focused and based around cost saving?
This is a process I’ve followed with a number of turnaround SME clients. Once a business is heading in the right direction, we’re looking to pass the reins over to a safe pair of hands.
An important factor is cultural fit. If you’re not naturally ‘gelling’ with the person from the outset, the chances are it won’t work.
Without that mutual respect, you’re very unlikely to offer them complete transparency into your business which they will need to do their job to the best of their ability.
Rik Blanchard is a Senior Executive with Vantage Performance – an award winning, national business transformation and turnaround firm with proven success in solving complex financial, operational and people performance issues.
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A work mate referred me to your resource. Thanks for the resources.
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@ John. Surely you are talking about professional ethics/standards. This should not prevent the need for a pay cheque. However it does mean being prepared to say no as and when needed. However the true added value should be steering the business away from the risks that will bring out these situations rather than addressing the issues that should have been avoided.
Posted by Neil Wheatley via the LinkedIn Group Finance Director CFO Careers
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Business success depends not only on how much to invest in it. In today’s dynamic world, different positions may perform the same duties. Now it is very common. A very important point is to assign roles & responsibilities among staff taking into account their education, experience and personal qualities. There are both a routine and an analytical work with varying degrees of depth in the financial and accounting fields. More experienced people run routine maintenance much better & quicker. But sometimes an absence of prejudice is very helpful for business. To hire either P/t or F/t an in-house accountant, finance manager? In this issue one should be guided by the quality & the quantity of work, not by personality…..
Posted by Anna Kastromitina via the LinkedIn Group via the LinkedIn Group Finance Director CFO Careers
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Neil, The very essence of professionalism is the ability to & willingness to disagree and / or tell a client bad news – what they need to hear, rather than what they want to hear. This rare ability – to walk – distinguishes the true professional from the 98 % fee-driven bean-counters, and should therfore be better marketed by proven part-time, independent F D.’s, with a successful portfolio of clients. True independence must be independent from next month’s pay-cheque / fee invoice.
Posted by John Stewart via the LinkedIn Group Finance Director CFO Careers
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@John. I agree with your general sentiment and we have in fact grown a business providing only proven experienced candidates. However to say that they don’t need the job or the money is not always the case. In the example of taking growing businesses to an exit for the current owner, there will be many people who have achieved this and need to move on to the next role and are the best candidates to do exactly the same again. However having done this once or twice does not take away their continuing need for employment and revenue generation. There are others that just want to carry on either in full or part time roles because they enjoy the work. And as for not needing the money, who are we to judge how much money someone needs?
Posted by Neil Wheatley via the LinkedIn Group Finance Director CFO Careers
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While most accountants claim, and genuinely beleive, that they are visionaries & master strategists, in addition to the essential functional book-keepers, this is seldom the case, but only time & money will tell.As always, picking the right ideas & people is the eternal challenge of the true entrepreneur, who should pick from an experienced pool of proven professionals who don’t need the job .. or the money.
Posted by John Stewart via the LinkedIn Group Finance Director CFO Careers
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I agree with the general theme of this. Full and part time Accountants working with business owners/MDs have an enormous impact. The earlier they are involved the better the results.
The only problem is putting this across to those uninitiated with the benefits. As they say “money talks” and return must be the only way forward.
Posted by Philippa Charman via the LinkedIn Group Finance Director CFO Careers
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I agree completely with Neil’s comments. The challenge is often getting the owners to understand the difference between an accountant and an FD and to see the value an FD can add to their business in both time and money. I also recognise the scenario Tim mentions.
Posted by George Ralph via the LinkedIn Group Finance Director CFO Careers
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I share Neil’s point of view. Changes in the enterprise architecture bring significant cost savings. This functionality is outside the scope of preparation of FS.
Posted by Anna Kastromitina via the LinkedIn Group Finance Director CFO Careers
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I understand Neil’s comments however the wife/husband tends to be the bookkeeper and the auditors the FD until the SME gets to a size where they want a long term solution. Also the ‘other half’ also tends to be distracted away from the business by doing the books so getting a hands on qualified not only has savings and income potential (costings / tenders) from himself but can also free up someone who knows the business and can therefore help develop it.
Posted by Tim Watson ACMA MIoD via the LinkedIn Group Finance Director CFO Careers
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@ Richard. Not sure about your market, but part time finance directors work well for SMEs over here. The advantage is that the owners are more willing to get them in sooner. It also gives you more flexibility. P/t bookeeper plus p/t finance director is often more effective than a hands on finance director who gets bogged down in the mundane
Posted by Neil Wheatley via the LinkedIn Group Finance Director CFO Careers
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Some great tips Rik.
Every business needs people with analytical skills (a fresh face with new ideas and new skills) . How to distinguish people with such skills and create conditions for the development and application of these skills?
Posted by Anna Kastromitina via the LinkedIn Group Finance Director CFO Careers
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As far as part timers who can become full timers you’re really shortening the candidate pool there, particularly if this person is expected to have the skills and be happy focusing on the nuts and bolts accounting duties whilst also analysing potential savings. An SME with a strong USP can grow quickly so for me, expanding the finance function with different skills is essential. A fresh face with new ideas and new skills makes the difference. Ultimately you get what you pay for. Working in turnaround and assisting businesses strategically with growth, this is something I see on a weekly basis. The advantage we get is to be the advisor to the entrepreneurial business owners and really show them what they’re missing. This is a fairly unique situation but analytically skilled Finance Managers need to be able to do this themselves. My advice would be to get straight to the point and tell them how much money could be saved with more time spent on analysis. Deliver on this and you’ll be managing your replacement pretty quickly.
Posted by Richard Blanchard via the LinkedIn Group Finance Director CFO Careers
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An accountant is a dying profession. In the near future an accountant will be replaced by financial managers, cost managers etc. due to the roll-out of new IT technologies wich requires a reallocation of responsibilities among employes. Additional qualifications will be needed, it will depend on a more narrow specialization (financial managers-ACCA,cost managers -CIMA).
Posted by Anna Kastromitina via the LinkedIn Group Finance Director CFO Careers
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I agree with most of what has been said. However this starting to become a plug for CIMA. There are good CIMAs and not so good CIMAs, the same as in all brands of accountants. The key point is the individual and the value that he or she adds to the business.Finally, back on the main subject, always with SMEs and growing businesses look at the part timer who can become a full timer as the business grows. Thay way you get a dedicated professional for the hours/days you need only, but is focussed on your businesses activities as opposed to fee generation for someone else.
Posted by Neil Wheatley via the LinkedIn Group Finance Director CFO Careers
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Absolutley. The biggest challenge to this issue is the mindset of accountants themselves and the short term perception that many operate under. The role of the accountant is changing and if accountants don’t get on board and realise that they should be helping organsiations deal with business issues rather than pure financial accounting issues then others will take that space. Accountants need to stand up in many cases to the leaders in their organisations and tell them that the traditional reporting processes and mechanisms in todays dynamic environment don’t add value in relation to business performance. However most accountants don’t see that and are happy to continually perpetrate the current status quo. It will require significant education for accountants especially those that seek to progress in their careers to a senior level. CIMA in the UK run an excellent Masterclass series of workshops entitled CFO of the future. I would like to bring that to Australia.
Posted by Walter Edgar via the LinkedIn Group Finance Director CFO Careers
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Thanks for the opinions and wise words. They’re fair points you both make. It’s easy for me to say that businesses need to have a better understanding of what’s really needed but people don’t miss what they don’t know. Do you think it falls on the SME Accountant themselves to teach business owners of their true cost saving potential?
Posted by Richard Blanchard via the LinkedIn Group Finance Director CFO Careers
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I agree with both Richard and Tim of the value of a real professional financial business partner for SME’s especially those that are or have been or don’t know they are in trouble. Accountants themselves need to recognise that to be of value to a business they must be more than a bean counter but a real business partner providing all the services detailed in Richards blog. The accountant of the future has to become the business partner otherwise they will be superseeded by technology and outsourcing.
Organisations seeking such individuals should look at accountants with a CIMA qualification such as Tim. CIMA is leading and promoting through its education and training program and through Continuing Professional Development for qualified accountants that accountants are true business partners.
Regards
Walter Edgar FCMA GCMA FCPA FAICD FAIM MBA
Posted by Walter Edgar via the LinkedIn Group Finance Director CFO Careers
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As an accountant that helps a company’s development, sometimes from a poor position, I can only agree with Richard’s comments.
An “Accountant” is a cost to the business however a finance professional is worth their weight in gold and will have a many fold multiple pay back.
If you’re interested in a bean counter then please don’t contact me on linkedin@letw.eu or phone me on 07985 706 645 but if you want to improve your bottom line then please do.
Regards
Tim Watson ACMA MIoD
Posted by Tim Watson via the LinkedIn Group Finance Director CFO Careers
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