Why you may benefit from a Fractional Finance Director

The fast nature of growth within scale-up businesses can sometimes have you trying to wear all of the hats for your business at once as you try to balance all of the tasks thrown at you but it is only a matter of time before the roles that you are trying to juggle become too big and complex to handle. 

Kat Wellum-Kent of Fractional Finance - Driven financial experts in accounting, forecasting, and strategy explains below why you need a Fractional FD so you can focus on leading the business. 

You’ve worked incredibly hard to establish your business and move out of the start-up phase.

Now the business is growing and fast!

Which is great news, but it doesn’t come without its challenges.

As your business scales, all the hats you are wearing weigh you down more and more. The roles become bigger and more complex and the need to pass on responsibility increases.

The most common scenario I see for companies at this stage is that you or one of the other directors has the responsibility of the finances. They’re not an accountant, or have experience of being a  Finance Director, they’re just the one that is most comfortable with the figures. You have an accountant who helps with the year end accounts, and gives you tax advice. They might also do your bookkeeping, VAT returns and payroll, or you may have a bookkeeper that helps you with these.

This is where a Fractional FD could be a key member of your leadership team, adding to the financial support you already have in place.

For anyone that hasn’t come across the term “Fractional FD” before, it is also called a Virtual FD or an Outsourced FD. I think fractional is a better description of the work we do as we’re real people and we work closely with you and others in the business, just not on a 100% basis.

A Fractional FD will provide a different perspective from what you’re already getting from your accountant.

They will focus on the future

One of the key priorities for any Fractional FD will be to ensure that there is a robust financial forecast which aligns with your Business Plan. This is fundamental for any scaling business. The forecast will identify the resources need to get to where they want to go, as well as scenario planning for upsides and downsides, enabling you to work through risk mitigation strategies in advance. With the level of uncertainty that we’ve faced over the last couple of years, and the continuing challenges many businesses are experiencing, this is a key tool to increase resilience.

They will ensure the right figures are being captured to analyse the business performance

Your bookkeeper and accountant will make sure that your records are up to date and correctly reported in your accounts and for HMRC. A good Fractional FD will think about how the numbers can be analysed to understand what’s driving the performance of the business: which products/services/ customers/locations are making money and which aren’t, for example. A great Fractional FD will then give you options to build on these opportunities or fix the problem areas.

They will support you in decision making

As the leader of a scaling business, you need to make decisions everyday. One of your goals may be to reduce the number of decisions you personally have to make. But there will inevitably be important, strategic questions that are raised which you need to answer. A Fractional FD will bring a different perspective to the discussions, leading to a more robust thought process and therefore a better decision.

They will help with project work

A key part of most scaling company’s Business Plan is at least one of acquisition, investment, or exit. Often, it’s all three at different times. Each of these are time consuming activities which often happen when there is limited bandwith in the existing leadership team. A Fractional FD will be able to add further capacity to the team, by project managing these transactions. It’s also likely that they will have been through these processes many times before, so they can also bring their experience, to improve the chances of a successful outcome.

The final question then remains: why is working with a Fractional FD better than recruiting directly?

This comes down to two factors, cost and flexibility. Fractional FDs are usually very experienced professionals who would command high salaries if you were to recruit them directly (c.£100,000 - £150,000). This is before considering the other costs of employment, IT equipment, training, and the list goes on. This level of cost is often prohibitive to scaling companies, especially when you don’t need full-time support. Working with a Fractional FD on a day rate basis will often be a more cost-effective solution.

This brings me to flexibility. As your business scales, you are likely to need more time from an FD but to begin with it may only be 1-2 days a month, or be project based. Fractional FDs can work much more flexibly, meaning they can adapt to the specific need you have, giving you greater value for money.

Fractional FDs, along with fractional support for areas such as HR, IT, and Marketing are becoming increasingly common. They solve a lot of the challenges that the leadership team of a scaling company faces. Could they help you?

If you feel that a Fractional FD might be well suited to your business needs and would like to get in touch with Kat or Fractional Finance then click Here to view their website. 

Kat Wellum-Kent - Founder/CEO of Fractional Finance 

Website: fractionalfinance.co.uk

LinkedIn: linkedin.com/in/katwellum-kent

Email: kat@fractionalfinance.co.uk