Part Time Finance Director - FD4Success

Invoice Discounting and factoring

2013-07-12T16:50:00.001+01:00

Once again today I have been shown that the top four banks cannot compete on service with the smaller independent providers, when it comes to factoring and invoice discounting.

Lots of promise and bluster, for it all to fall down on not being able to fund my clients biggest customer! This was after RBS took £750 for the initial audit fee! Against my better judgement I allowed the client to go with their existing banker!! Never again.

If you need any help on finding an invoice discount company or a factoring company, save yourself a lot of time and drop me a line and I will give you the benefit of the research we carried out.

Why use an interim FD or a part time finance director?

2013-07-11T19:01:00.002+01:00

A small business if successful eventually becomes an SME, but this doesn't happen overnight! It can evolve over a period of months or years, during which time costs still have to be managed.

Using the services of a part time FD is the best solution, giving the knowledge and experience that is required with a price tag that suits the business.

An FD is far more than an accountant or a book-keeper. Whilst accounting knowledge is essential, so is:

Tax knowledge
Business experience
Financial understanding
Access to funding
Sector knowledge
Business planning ability
Marketing and sales experience

...and I could go one.

Don't dismiss what benefits an interim or part time FD could bring your business without talking and test driving one first.

www.pt-fd.co.uk

2013-03-06T15:20:00.003+00:00

Business and Divorce

Entrepreneurs sacrifice huge amounts of their time and money building up successful businesses. They are passionate, ambitious and they accept that there is risk – whether from bad luck, a bad idea or stiff competition – that may cost them their business.

However, the divorce of a business’s founder can also have a dramatic and dreadful effect - not just through the distress and distraction for those involved, but particularly through the cost of the final settlement – possibly necessitating the sale of some or all of the business to finance it.

Following the landmark divorce case of White v White in 2001, the overarching principle in divorce cases is that the family’s assets should be shared on a basis which reflects the respective contributions of the parties.

However, vitally, in assessing contributions the role of the ‘homemaker’ (typically the wife) will be seen by the Court as no less valuable than that of the ‘breadwinner’ (often, but not always, the husband).

To decide on an appropriate percentage for each party, the Court is required to test its proposed decision ‘against the yardstick of equity’. For most cases this will be a 50-50 split.

Recently Sir Martin Sorrell successfully argued that he had made a “stellar” contribution to the family’s wealth, and was awarded 60% of the family’s fortune of about £75million…. So if someone that successful gets 60%, most business owners will get a lot less, and certainly won’t get much more than half.

In Britain, statistically, you are more likely to divorce than to stay married for life. So the bad news for entrepreneurs is that, if they divorce, their spouse will be entitled to half of the value of the business. Some may think this is fair – after all the entrepreneur may well have risked the family home and livelihood when starting up, so at the very least the spouse in a long marriage may well have incurred financial risk and provided invaluable support, whether they wanted to or not!

Advice for the single

A cynic might say “stay single”. However, only a real miser would prefer such a cold and unromantic view. If you are not married but have built up a valuable business, you could consider a Pre-Nuptial Agreement to protect your wealth should the marriage not last.

Whilst not enshrined as binding in law, courts are certainly highly likely to take them into account in distributing assets in a divorce providing each party was properly advised, gave full disclosure, did not apply pressure and understood the nature of the agreement.

Whether your fiancée will appreciate a pre-nuptial agreement will have to be left to your judgment. Although given the cost and heartache that hostile divorces involve, a well thought out agreement that both people see as fair should avoid subsequent heartache should your marriage end.

Advice for the married

The truth is that if you are married, it’s a bit late for a pre-nuptial agreement. You could innovate and ask your spouse to sign a “post nuptial agreement” but I can’t help thinking this may hasten a costly divorce! After all, at the ceremony you almost certainly promised to endow your spouse “with all your worldly goods” – so your spouse has a matrimonial entitlement to a share of your assets and that can’t be undone by anyone but them.

Minimising the impact of divorce on a business

When I advise business owners involved in divorces, I have two main principles:

1. If a business is the source of your family’s current prosperity then everything must be done to keep it going successfully (or else the family’s prosperity will suffer)

2. A sensible and commercial view must be taken when valuing the business (with everything possible being done early on to get consensus between the two parties so costs don’t escalate needlessly).

These principles are important since the courts are increasingly looking to achieve a ‘clean break’ settlement between the husband and wife, with additional payments for their children being provided for via periodical payments. In most cases, the parties will want to have the business valued so that the “clean break” can be achieved by one party buying out the other. However, be careful as this is not necessarily the best approach for you and your business:

Firstly, a business may be profitable and successful but, at the same time, not be worth the sort of sum, post costs and Capital Gains Tax (even at only 10 per cent) to enable the family’s lifestyle to continue at the pre-divorce level.

Secondly, even if a value can be agreed it may be impossible for the party purchasing to fund the acquisition - especially if the former matrimonial home is passing to the other party and there are no other significant non-business assets.

Thirdly, and perhaps practically most importantly, where both husband and wife are instrumental in the business, the continued involvement of both parties in their respective roles may be fundamental to its future success.

For these reasons there is a strong argument for an income stream arising from the business to continue to be used for the family’s benefit via periodical payments until, if in the fullness of time, the business is sold to a third party. Then the interests of both parties can be capitalised.

To consider checklist:

· Can the business be operated without the involvement of both parties?

· If only one party is involved, can the other be confident that the business will be run in an open and honest manner?

· Can a “clean break” be funded either immediately or on a safe and secure deferred basis?

· How will the staff react to the divorce?

· Has an independent and commercially realistic view of how to resolve the business issues been obtained?

2013-03-06T15:14:00.002+00:00

What is a Part time Finance Director - one view!

A part-time finance director oversees the financial operations of a company or organization. While many firms employ full-time directors, some companies split the role between two part-time directors, each of whom has a special area of expertise. Small companies sometimes employ part-time rather than full-time finance directors because there is not sufficient work to keep a full-time director busy.

The operations of many organizations are controlled by a board of directors and a part-time finance director may have a seat on this board. In such instances, the director provides the chairperson and the other board members with reports that detail the organization’s recent financial performance. The finance director may be responsible for managing the company’s budget as a whole, as well as developing annual performance goals for the finance department. During company expansions, the part-time finance director is responsible for securing funding from lenders or investors and during economic downturns the finance director is usually responsible for finding ways to cut costs.

In most instances, the part-time finance director is the senior most employee within the finance department. Therefore, the director has the ultimate responsibility for hiring and firing employees although directors at large firms often allow regional managers to recruit their own direct reports. Finance directors set production and performance goals for regional finance managers and the director normally holds regular meetings during which the company's progress towards these goals is tracked. Typically, a finance director has the authority to reassign goals mid-year if one department falls short of expectations or if another department surpasses its goal sooner than expected.

A part-time manager normally works half as many hours as a full-time director. Some part-time directors choose to work on the busiest days of the week while others report to work each day, but only stay for half a day. At firms with two part-time directors, one of these individuals may handle internal accounts while the other may take care of tax reporting and external relations with financiers and shareholders. Laws in some nations enable a single individual to serve as a part-time director at more than one firm, although such individuals must be careful not to compromise proprietary information about either company.

Typically, a part-time finance director is an individual with a college degree in finance, accounting or a related topic. Many firms prefer to promote from within in which case a director may be an individual who spent several years working in junior roles within the finance department. Other companies appoint well-known people to the board of directors in which case a part-time finance director may be a semi-retired accountant, government minister or a prominent figure from industry.

2012-05-19T14:32:00.004+01:00

2012-13 Wages and Dividends

2012-13 Wages and Dividends

As at - 9 March 2012

If you run a limited company, you should consider extracting funds through a mixture of wages and dividends.

By understanding and utilising the various allowances, you will be able to have income up to the basic rate threshold with no tax and minimal NI to pay.

Setting your wages

As a company director without a formal employment contract, you are able to set your remuneration as you choose.

For 2012-13, the level of earnings at which the company is required to pay employers NI is £7,485 or £623.75.

Although no NI will be payable at this level of earnings, you will still receive a full year's NI credit to your state pension record.

And the maximum dividend to pay?

The level at which higher rate tax becomes effective for 2012-13 remains at £42,475 but will now be made up of personal allowance of £8,105 plus a basic rate band of £34,370.

In determing the dividends payable each month, you will need to firstly ensure that the company has sufficient reserves after corporation tax to pay these. If this is not the case, then you will need to consider a remuneration (payroll) strategy.

If we assume that you receive a monthly salary of £625, this leaves £34,975 payable as gross dividends (e.g with the 10% tax credit).

Summary calculation: 42,475 - (12*625) = 34,975

This equates to a monthly dividend payment of £2,623.12.

At this level, earnings from wages and divdends will be within the basic rate threshold and no personal tax will be payable.

www.pt-fd.co.uk

Use a Part time FD

Does a Part Time Finance Director Work?

2012-05-13T19:36:00.003+01:00

When a business is growing one of the most essential requirements is to keep good control of the finances. Poor cashflow can kill a business very quickly and having someone who really understands the finances and how they can work can save a company from disaster.

The challenge is that when a company is in the early or mid stages of growth it generally can't afford a full time Finance Director (FD) or CFO, even when it's needed. A good FD or CFO is expensive because of the years of study, training and experience they have to undertake to achieve and maintain their qualification. They are also a scarce resource and the good ones can make a huge difference to a business.

So companies struggle through without anyone really looking at their financial strategy and underlying financial performance. They may bring in a bookkeeper or a firm of accountants to keep their books and put together some reports. However, more often than not, it's the CEO who has to handle anything to do with raising finance, figuring out commercial terms, dealing with investors, developing business plans and models and handling banks. And that's a big distraction for someone whose focus should be on building, marketing and developing the business and leading and motivating staff. And if they get it wrong, it could spell the end for the company or the CEO.

When a company is growing there's often no need for a full-time finance professional in the business and companies that do bring in a heavyweight CFO or FD can find that much of their time is spent on low value activities, such as bookkeeping and admin. Alternatively, they start to get involved in many other areas of the business or just spend a lot of time sitting around waiting for something to happen. This can be frustrating for them, as they're not fully using their skills, and it's an expensive luxury for the company that it can probably ill afford. And, with salaries for a good, experienced CFO or FD easily into the six figure range, and all the employment costs on top, it often doesn't make good business sense to take someone on full time.

More and more growing companies are recognising that using a part time Finance Director or CFO in their business provides a solution to these issues. There are a growing number of companies in the market providing finance professionals who work with companies anywhere from 1 to 4 days a month as their CFO or FD. This provides a flexible solution to the needs of the company, allowing the CEO to focus on their stronger areas and ensuring that the finances of the company are being steered in the right direction. By using just a few days each month it ensures that the focus of the CFO/FD is on the right areas rather than getting involved in anything that comes up. And the good ones will tell you very clearly if they believe the work can be done by someone for a lower cost.
Another advantage of having someone who's also working with other businesses is that they can bring new insights into your company and are less likely to fall into the "we've tried that before" or "we don't do it that way" traps that hamper many companies.

A part time CFO or FD will agree a plan of action for the business and make sure that the fundamentals of strategy, business planning, cash flow forecasting, financial management and good commercial practices are applied. For the CEO, they have a great sounding board and business partner that they can turn to for advice, guidance or just to bounce ideas off. For many CEOs the value of a having a trusted advisor to hand hugely outweighs the costs.

The cost of a part time FD or CFO varies on their experience, qualification and the level of work you need. They are usually charged on a daily rate which is equivalent to around 1% of the base salary for their level. And when you consider that you don't have all the employment and recruitment costs associated with an employee (which can easily take the base cost up another 60%) and you only pay for the days you need, this can work well for the business. Also, when you consider the value that a good CFO can bring to a company, then you can easily get a 10 to 20 times return on your investment and considerably more peace of mind.

So, do part time FDs work for business? It will always come down to the chemistry with the team and the experience and training of the individual CFO/FD but the flexibility and focus that they offer is proving to be a very attractive proposition for many growing companies. Investors are seeing the benefits of having a strong financial presence in the company and CEOs welcome the support that they provide, so it's certainly a field that going to grow.

Why have a Part Time Finance Director ?

2012-05-12T15:34:00.001+01:00

A financial Director- the prime responsibilities of this role are managing the financial risks which are undertaken by the business entity. They are also responsible for the financial planning and the record keeping, as well as the relaying of this information to the higher management. In more recent years this role has also included communicating financial performance and forecasts to the analysts.

So as the name suggests the prime responsibility of the Financial Director is to oversee the decisions made by the Accounting/Finance section of the business entity, so as to ensure that the financial risks taken are minimal and within the boundaries of the business entities long term strategies. A financial director is usually a member of the company's board.

A financial director also often holds prime responsibility for the financial budget, including all budget allocations and short comings. Because of this a high degree of people skills and previous Accountancy skills are required to fulfill this role.

It is a role that is becoming increasingly diverse, and is at the core of business management, which is increasingly focused on human management, and the skills required to be successful at it. In more recent times many Financial Directors are taking a central role in defining their businesses strategies.

A financial controller- Classically does the job of an assistant to the financial director, in that they usually report directly to them.

A financial controller's main role is that of an Accountant who is responsible for supervising accounting and financial reporting within a business.

And to implement internal controls, and to continually monitor them so as to ensure their success. Within certain countries, like the USA this role is often held by a Government official this ensures accountability.

The role of a financial controller is to essentially oversee the financial sector of a business, and to implement the financial strategies that the financial director creates.

In a very real sense a financial controller is the middle management of the finance sector of a business, responsible for the day to day running of the financial sector, implementing the risk strategies, collecting or reporting on all of the financial information of the business entity. Often they are required to prepare financial forecasts based on the gathered information, outlining the company’s current risks, ways to minimise these, and the forecast effects of implementing any new strategies. All of which is reported to the financial director.

A financial controller is a safe guard within a business entity. While in many respects the job of financial controller and director are very similar. A financial controller is there to analyse all of the financial information so that nothing is overlooked. It is a role that is often made redundant in companies looking to downsize, and cut costs. But with the continued expansion of the financial director’s roles, many companies are realising the need for the financial controller and its 'middle management' role. Having a financial controller, as well as a financial director, can often mean the difference between success and failure.

www.pt-fd.co.uk

www.fd4success.co.uk

marksmall@fd4success.co.uk

Does A Part Time Finance Director Work?

2012-05-12T14:27:00.003+01:00

Another advantage of having someone who's also working with other businesses is that they can bring new insights into your company and are less likely to fall into the "we've tried that before" or "we don't do it that way" traps that hamper many companies.

A part time CFO or FD will agree a plan of action for the business and make sure that the fundamentals of strategy, business planning, cash flow forecasting, financial management and good commercial practices are applied. For the CEO, they have a great sounding board and business partner that they can turn to for advice, guidance or just to bounce ideas off. For many CEOs the value of a having a trusted advisor to hand hugely outweighs the costs.

The cost of a part time FD or CFO varies on their experience, qualification and the level of work you need. They are usually charged on a daily rate which is equivalent to around 1% of the base salary for their level. And when you consider that you don't have all the employment and recruitment costs associated with an employee (which can easily take the base cost up another 60%) and you only pay for the days you need, this can work well for the business. Also, when you consider the value that a good CFO can bring to a company, then you can easily get a 10 to 20 times return on your investment and considerably more peace of mind.

So, do part time FDs work for business? It will always come down to the chemistry with the team and the experience and training of the individual CFO/FD but the flexibility and focus that they offer is proving to be a very attractive proposition for many growing companies. Investors are seeing the benefits of having a strong financial presence in the company and CEOs welcome the support that they provide, so it's certainly a field that going to grow.

marksmall@fd4success.co.uk

Bank Meetings

2012-05-12T14:21:00.001+01:00

Do you spend as much time preparing for a meeting with your bank (possibly you major business investor) as you do with a new client? Well if you don't you are probably among the majority. For many a meeting with the bank is just a case of dusting off the audited accounts, printing off the management accounts and going along to the meeting!

Perhaps a little time invested prior to this meeting would ensure you had a very different outcome. The use of a part Time Finance Director for a few days each money will pay dividends to your business. The additional financial and business skills will see you viewed differently by your bank and investors, and your understanding or cash generation, profit and strategic financial planning will improve.

If this is of interest give us a call. www.pt-fd.co.uk

Looking to meet MD's

2012-05-12T14:19:00.002+01:00

www.pt-fd.co.uk - looking to meet MD's or Businesses who need stronger financial skills within their business, test drive the Part Time Finance Director service for half a day free of charge.