Roy Duncan

13th April 2016

Time to hire your first financial controller?

Hiring a financial controller for the first time is rather like a ‘coming of age’. It is when exercising control over your business finances starts to become serious. Identifying the best time to start the process of hiring a financial controller is a key decision requiring much thought.

Before discussing this in more detail, let’s just reflect on your journey to date. You may already have some sort of financial infrastructure or you would never have got this far! Perhaps you have a bookkeeper or accounts manager, and you have an external accountant or a part-time finance director providing strategic support as necessary. The trigger points for recruiting a financial controller are likely to include one or more of the following.

As your business has expanded, you recognise that your bookkeeper/accounts manager is no longer on top of things, as once they were; the bills from you external accounts have risen substantially, yet you do not feel that there is a corresponding increase in value added.

In fact they have explained much of their fee is being spent rectifying errors and chasing the bookkeeper for information; your part-time finance director has been spending more time on operational finance matters thus increasing their fees yet not spending sufficient time on financial strategy.

You may also be in the position that your bank or investor does not feel that the information that you are providing is sufficient.

These are all clear trigger points to heed, but not the only issues. You may also be experiencing challenges within the following areas:

Cash control

It may be cliché, however it is worth remembering the old business saying; turnover is vanityprofit is sanity, but cash is reality. So true; cash is the fuel that drives your business and without cash there will be no business. Therefore you need to be realistic about any issues here.

How do you manage your debtors? Are you on top of credit control? And not to forget, do you have an effective invoicing system? Do you bill regularly?

What about creditors? Are you falling behind with payments or are you paying them too quickly? Neither is ideal.

If you have stock in your business, how do you manage and control it?

Are you content that these areas are all under control and you are making the best use of your cash, or are you aware that you could do better!

A good financial controller will have a different perspective and take a holistic view of optimising the use of cash / working capital in the business.   They will be capable of managing the minutia as well as the strategic aspects of the business’s finances.

Management and financial reporting

If cash is the fuel that drives your business, then management and financial reporting will be your dashboard from which you can measure and evaluate exactly what is going on.

As you will have an external accountant, they will prepare your annual statutory accounts. However you may not receive them until several months after the year-end which will be too late if you are to make meaningful use of the information.

If you are fortunate enough to be receiving regular monthly or quarterly management accounts you will have a good idea of what is going on. For many SME businesses the management accounts will be prepared by the external accountant or perhaps the part-time finance director.

However, it is also not unusual for the bookkeeper to prepare ‘management accounts’, perhaps with the help and support of the owner. However, it is highly likely that accounts prepared in this way will have errors.

Even when you have an external accountant, things can still go wrong. As the external accountants are not an integral part of your business, the reliability and accuracy of the management accounts will depend on the accuracy and completeness of the information provided by you and your bookkeeper. It may not always be correct or there may be missing information or paperwork.

Other areas that may arise as your business grows include pitching for new business and pricing your goods or service. Do you have a pricing strategy? Do you know the true cost of providing and delivering your products your services? What about the difference between gross profit and net profit?

Do you regularly review your management accounts and balance sheet with your accountant or do you see it as a once a year ritual?

Within weeks of hiring a financial controller, one of our clients increased the minimum project value that they were prepared to work with. That allowed them to focus on larger more profitable projects thus making an immediate addition to the bottom line.

Planning, budgeting and forecasting

Like all things in life, having a plan is like having a road map which can be used to see how your business finances are shaping up for the future.  In business your road will be created from your planning, budgeting and forecasting.

Ideally you will have an annual (or longer) forecast based on a realistic budget and broken down by month and totalled by financial year which provides a fully integrated profit and loss, cash flow and balance sheet.

By modelling your business in this way, you will be able to see the effect of your plans. Indeed, once you have such a model, you can experiment with different scenarios and identify areas of potential cash shortage before you take the plunge.

You need to ask yourself, does your business have an effective budget and forecasting process?

Do you have detailed breakdown of sales and costs which you can use as a base to construct a model of your business for the future?

Do you have any idea how that new contract will affect your balance sheet and cashflow?

Planning, budgeting, forecasting using modelling techniques are cores skills you would get from hiring a financial controller and essential for keeping your business finances on track.


Businesses owners are under continued pressure to adhere to a host of regulations and requirements such PAYE, Pension legislation, VAT returns as well as statutory returns to companies’ house and corporation tax. Any issues here are a wakeup call to remind you of underlying issues.

For the majority of companies, much of these obligations such as corporation tax and PAYE will be fulfilled by their external accountants, leaving them to look after VAT.

However, accounting for VAT has many anomalies and not always easy. It is often open to misinterpretation resulting in unpleasant surprises later. Also, are you behind with submitting your VAT returns, or have you fallen behind with payments?

Another critical key area here is receivables finance.  Once in place, the finance provider will make regular visits to satisfy themselves that there are no fraudulent transactions or errors which may result in withdrawal of the facility. You must make sure that you are able to manage it effectively.

Hiring a competent financial controller will ensure that all these matters are dealt with.

So is it time your business looked into hiring a financial controller?

The answer to this question will depend mainly on business size, turnover and growth and how our business finances are being managed right now and your own financial awareness.

However if you do not feel in full control of your finances and have had some scares then it may be time to review the financial control and look at how it can be improved. After all who wouldn’t like to see the benefits of better cashflow management, more accurate and up to date reporting, and creation of a model to use for budgeting and forecasting?

These are just some of benefits that investment in a good financial controller could bring. Plus, it could be a weight off your back and free you to add value in other ways.

Watch out for a future blogs about financial control in you business and don;t forget to sign up to our database so you don’t miss out on any future blogs. Sign up HERE

Roy Duncan  is the founding director of RGDuncan , an independent boutique recruitment consultancy specialising in sourcing high calibre senior finance and accounting staff for permanent and interim roles in London and the South East.

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