Entrepreneurs who start their own businesses tend to be innovators, who specialise in a specific area. For example, those who are good at designing and manufacturing products, or those who excel in marketing. However, expertise in the financial side of business doesn’t tend to be a common skill, at least not when you’re starting out. It’s for this reason that many companies utilise a financial director.
Financial directors offer an invaluable service and can help with multiple aspects of the business, including accounts, sales, bookkeeping, taxes, cashflow, as well as general advice on financial decisions. Although incredibly useful, financial directors who are employed by the company and work in-house, can be extremely expensive. This is particularly problematic for smaller businesses who don’t yet have the stability or capital. In fact, even larger, established businesses may struggle to employ a financial director, particularly when we consider the current economy.
Fortunately, there is a solution in which a business can benefit from the expertise of a financial director, without the hefty price tag – outsourcing. Outsourcing specific services has become extremely popular in recent years and finance is no different. Working with a third-party, offers much more flexibility, allowing you to utilise financial services, when and if you need them. This not only provides much more freedom but it also helps you to save money.
What do they do?
Financial directors offer a wide range of services, many of which are vital to the day to day running of the business. These include bookkeeping, general accounting tasks, accounts payable and accounts receivable functions, VAT and taxes and account management and reporting.
When you think of financial services, these are often the first tasks that come to mind but financial directors are also an important part of the overall decision making process of the business. They offer an informed, unbiased view on the company, it’s goals and how to achieve them. Many business decisions come with risks and it’s the job of the financial director to identify and highlight these risks.
Benefits
Financial direction is a virtual necessity for many businesses, particularly larger companies. As we have established, these experts offer a wealth of benefits, both practical and advisory. However, there are specific advantages to outsourcing this service.
The main advantage that third-party financial services have over in-house employees is cost. The average salary of a financial director, in the UK is £100,000- not including any specific work benefits. This contrasts with the outsourcing model, which allows businesses to pay when and if they need specific financial services. Considering you are only going to pay for active work hours, outsourcing is always going to be a cheaper option to employment.
Talking of flexibility, this is another benefit to utilising a third-party. The business world is turbulent, with many unexpected ups and downs. This is particularly true in our currently post-Covid, post-Brexit new-normal. Outsourcing provides companies with the flexibility to upscale or downsize, if and when required. Rather than the hassle of hiring new staff or letting people go, you can make the appropriate change with the click of a button.
Financial directors play an important role in the overall path taken by the business. Company owners are often eager to grow and may be overly ambitious to the detriment of the business. It’s the financial director’s role to temper this enthusiasm and provide grounded advice. Objectivity is much easier for a third-party, than it is for those working within the business. Not only will an external party have a truly unbiased approach, they also won’t be afraid to give this guidance, even if it’s what the boss doesn’t want to hear. Suffice to say, in-house employees may find this much more difficult, considering their position.
Businesses looking for an expert financial service should look no further than Fund Flow. Fund Flow offers many specialised services, including an outsourced FD strategic function. Don’t hesitate to visit the website for further information or you can get in touch directly.
