Financial controller resigned? Just imagine it is Friday afternoon after a busy week and your financial controller sets up a meeting with you just before you are all about to head off to the pub. They inform you that they have found another job and tender their resignation. Expected, or unexpected, this could happen at any time and could have a serious knock-on effect on your business if not handled appropriately.
For many SME businesses the financial controller will be the most senior finance person in the company. Although primarily looking after the finances, they will be a close adviser and confidant, and a key member of the senior management team. Handling their departure correctly will be essential if you are to avoid any pitfalls.
Your first thoughts will usually be to ask why the financial controller resigned. There could be for all sorts of factors, however recent research identifies the top three reasons as: career advancement, work/life balance and money. However not everyone is truthful and you may not be able to identify the real reason. There are lots of other reasons such as cultural differences, bullying, over-work, loss of confidence in the company’s senior or middle management, lack of recognition, poor or no benefits, lack of training opportunities, and difficult or long commute and others.
Assuming you have identified the reason why the financial controller resigned and you feel you can rectify it satisfactorily, you may be tempted to make a counter offer and attempt to get your financial controller to withdraw their resignation and continue. Although this does happen it rarely ends well as the relationship may have been damaged irreparably.
Without getting involved in the legal aspects, you need to be clear that once the resignation has been intimated to you it stands. Any subsequent change or revision will be by mutual agreement.
PR and Communications
Resignation of your financial controller is likely to destabilise the workforce as well as external stakeholders, so you need to manage it carefully. You need to be decisive and agree a clear plan of who, how and when to tell. That will need to be established and agreed straight away. Any embargo or delay in making an announcement will increase the chance of a leak and rumours developing which could be bad for you business. You must agree the communications strategy with the departing financial controller before they leave your office.
As the finance team will be losing their leader, you need to make sure they are fully informed and kept “on-side”. First of all, they will most certainly want to know why the financial controller resigned. Managing them will be key as they will be required to adapt and cooperate if things are to go smoothly. Indeed hidden talent may emerge! Other interested stakeholders include key suppliers, banks, investors and lenders whose ongoing support is will be crucial to the business. You may also want to talk to your key customers, especially if they are a large account.
Maintaining the relationship and confidence of all stakeholders is essential. This should not present a problem if you have a clear transition plan and get in touch with them before they find our through a third party.
Whether they continue to work or are on gardening leave, you will need to agree with the departing financial controller on what can or cannot be said during the notice period.
Transition and Handover
As there is likely to be a gap before a successor is appointed, agreeing the departure date and creating a clear transition plan will provide a structure which will ensure that everything that needs to be done is done. The departing financial controller will be able to assist here. You may also ask them to come back and do a handover at a later date. Alternatively if this is not possible for any reason, you can ask your external accountants to assist.
Without a clear transition and handover plan, much company knowledge may walk out the door.
If you are not already aware, you should aim to understand the regular financial cycle and milestones and who is responsible for their execution. To a large extent, this will be the accounts team who will have to keep the show on the road, handling the day-to-day matters such as sales and purchases ledger and routine reconciliations. You should also keep in mind any reports or reconciliations and returns required by external stakeholders such as banks and finance providers.
Other things to consider:
- Are there any partially-completed projects that need to be finalised or handed over?
- How will you manage and look after the cash?
- What about invoicing and credit control?
- Password and security codes.
- Changing the bank mandate and cancelling the authority of the incumbent.
- Completing and filing statutory returns.
- Upcoming holidays.
Before the search for a replacement commences, it will be a good time to carry out a full review into why the financial controller reigned and whether anything can be learnt and applied in future. You may also consider a full review of the finance department structure before deciding how to go forward. Perhaps there is a good number two who can be promoted.
Depending on the circumstances of the resignation and what has come to light thereafter, it may be also a good time to review company policies, benefit and remuneration strategy.
Roy Duncan FCCA
RG Duncan Senior Finance Recruitment Specialists, 33 St James’s Square, London SW1Y 4JS
T: 020 7930 4401