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Mentoring and Coaching of Finance Directors (FDs) &Financial Controllers (FCs)

“Mentoring is a brain to pick, an ear to listen and a push in the right direction”

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Newly appointed or inexperienced FDs and FCs often need help to play an active part and add value to the rest of the business. They may know transaction processing and management accounts practices inside out but they may be isolated from what is really happening within the business.

The same can be said for FDs and FCs who have ‘grown up’ with the business. Long-serving Finance staff often stay doing things the way that the company has always done things. They can be blinkered and unaware of how things have moved on in the outside world.

In my own case, my first move out of the profession from KPMG was into a business that grew from start up to become a £100m turnover multi-site manufacturing business within 10 years. That rate of growth meant that I was forced into areas that I had literally no knowledge of during my life as a senior auditor in the profession. One day I would be dealing with a lease for a new sales branch office, the next I might be visiting a potential supplier to negotiate new plant &machinery, the next I might be dealing with Trading Standards.

That set the theme for the rest of my career. I have always worked alongside sales, supply chain, manufacturing and warehousing and logistics teams. I bridge the gap between finance and the rest of the business. I have the skillset to make the finance team more commercially aware and the rest of the business more financially aware.

That experience is not taught in accountancy training. You only gain a commercial approach when you have done it on the job. That might take years. Or, if you are lucky, someone can coach you how things knit together and how a FD or FC can add value to the business. That is what the Mentoring service is all about. showing your staff how to make the figures come alive, how to add value, how to be better members of the team.

The Mentoring and Coaching service can be fully tailored to the needs of your business and your FD/FC. It might be provided periodically (eg) one day a week or two days a month etc or you might prefer a full week programme initially followed by one day or half day a month followed by as-and-when-needed support.

The areas that seem to bring the most added value are:

  • Bringing budgets alive so there is a full suite of who needs to do what to achieve the budget
  • Monthly departmental reports – showing how each department is performing versus budget and last year / last quarter so that the departmental managers take pride and ownership and reduce inefficiencies
  • Sales trend reporting (by channel, by customer, by product) so that declining sales levels are pinpointed at the earliest possible time
  • A suite of margin management reports – margin by division, by territory, by product, by customer. This shows where margin has been achieved and highlights where action needs to be taken
  • Stock Management reporting – highlighting how imbalanced the stock profile has become and where we are under or over stocked – and forming the base for a corrective action programme
  • Purchasing reports showing how the price of all key raw materials and services is moving (versus budget and last year / last quarter)
  • Warehouse reports (by team and by individual) showing how picking and packing and replenishment performance has moved compared with previous periods and budget
When you face a crisis, you know who your true friends are.

FAQs

The Frequently Asked Questions sets out what an interim CFO / FD is, what he/she does, where he/she can add value to your business and how the arrangements for utilising the Interim’s services can be structured.

  • What is an Interim Finance Director?
  • How can I be sure that we will get a return on the cost of the Interim FD?
  • When do companies use an Interim FD?
  • How do I pay the Interim FD?
  • Will you do my year end Accounts and sort the tax out?

An interim Finance Director is a widely experienced accountant and operational manager who provides a short term service that is required by his client. They have the experience and ability to come into your business and hit the ground running.


Generally speaking, Interim CFOs or FDs act through their own Limited Companies and do not come onto your company’s payroll. Consequently, you will not pay employers national insurance and other add on costs and benefits such as a car allowance, employer’s pension contributions, private health insurance etc.


Interim FDs have very often already been through the crisis or project with other businesses. This means that your business does not have to re-invent the wheel. The experience that you buy shortens the path to completing the exercise and increases the likelihood of a very successful outcome.


Interim FDs therefore provide more hands-on and more practical assistance than a Management Consultancy service or Accountancy practice. They tend to deliver solutions rather than talk theory.


Once the project has been completed, the Interim FD will simply move on to the next assignment. There will be no cost to the business to remove the Interim FD. Indeed, you can bring the relationship to an end at any stage that suits you.

You should gain a huge amount of confidence that the Interim FD is right for your business even before the assignment commences. During your initial discussions, the Interim FD should be able to demonstrate practical examples of where he has previously had hands-on experience that matches your requirement.


Once the assignment starts you should be comforted because (1) the Interim FD will hit the ground running and (2) he or she should bring a calm but focused approach to their task. You should see green shoots very early in the assignment because the Interim FD has been there before and done it.


The advantage of using an Interim FD is that you can bring the arrangement to an early close if you feel that it is not progressing to your liking.


The chemistry between the CEO and the Interim FD will be key to ensuring that the project is successfully and smoothly brought to a conclusion on time and within the agreed budget.

Interim FDs are used all the time by businesses that either (1) do not have the relevant skills and experience for the project in-house or (2) have the skills and experience but those heads are currently fully occupied with other priorities.


A business may well have a very capable FD in place but he or she may not have the hands-on experience of dealing with the project in question. In such circumstances, the business has a choice of using an Interim FD to get the job done (while coaching the in-house FD along the way) or - a slower and more risky route – is to let the in-house FD do the work and effectively re-invent the wheel. This is considered to be more risky as the in-house FD could fall into traps that the Interim FD has previously fallen into and would therefore avoid this time around.


The likely scenarios when an interim would be right for you are as follows:



  • You don’t have the experience in house

  • Your own FD is otherwise engaged

  • You want the Interim to mentor / coach the in-house FD

  • You want to cover sickness or maternity leave

  • You want to replace an under-performing FD

  • Your business has simply outgrown the current FD

  • You want to cover for a FD who has handed in his or her resignation

  • Your business has grown to the stage where you feel it might be right to bring in your first FD


The kinds of assignments that you may need assistance with include:



  • Buying or selling a business

  • Preparing a business for sale

  • Preparing a business for future investment (Private Equity, Angel Investors, Flotation)

  • Reorganising or restructuring a business (or group of businesses)

  • Completing a health check of the business and identifying risks and opportunities and areas where profits can be improved

  • Preparation of a 3 or 5 year plan with integrated financial forecasts

  • Cashflow forecasting by the day, week, month or the next twelve months

  • Closing, relocating or expanding manufacturing activities

  • Financial modelling - maybe new shift patterns, maybe new business streams, maybe supply chain forecasting

  • New IT developments (full systems implementations or departmental developments)

  • Acting as your first FD – developing appropriate controls, reports,

  • Professionalising current financial controls and financial reporting systems

  • Developing much more sophisticated budgeting systems that can be used to monitor progress in all areas of the business

  • Improving the financial awareness of non-financial staff, improving the business awareness of your finance staff

  • Improving working capital management systems and generate cash as a result

  • To prepare plans for approaching potential funders

  • To renew and/or re-finance existing bank facilities

  • To investigate unexpected figures / losses in the monthly accounts

  • To improve awareness of where margin is coming from (and where there are lost margin opportunities) ie margin reporting by division, by territory, by customer, by product

  • To improve the profile of your stockholding and identify which products are overstocked and which products are understocked

  • Change Management initiatives – help with changing under performing parts of your business or painting a vision of where the business is going and how it is going to get there

The interim FD generally works through his or her own Limited Company. The become a supplier to the company just like a solicitor or your auditors.


A daily fee is agreed and, depending on the nature of the assignment, sometimes a success fee is agreed if the assignment is completed successfully to the satisfaction of the company (eg - sale of a business). The interim FD will present a formal invoice and this would be paid on agreed terms such as 7 days from the date of the invoice.


The interim FD will not invoice the company if he or she does not work (eg bank holidays and sickness). In other words, they are not an employee of the business.


The daily fee payable to the Interim FD should be the equivalent to the total cost of employing an in-house FD. In other words, the daily rate agreed is not comparable to the daily salary of an in-house FD. With an employed FD, as well as the salary you would pay for holidays, bonuses, car allowances, pension contributions, healthcare insurance, employers NIC etc.


It is sensible for a Letter of Engagement to be issued if the Interim FD is contracting directly with the company. This L of E sets out what the objective of the exercise is and over what timescale. It ensures that both parties are on the same page.


Sometimes the Interim FD has been introduced via a third party (such as a recruitment agency) and then the contract is between the Recruitment Agency and the Company. In such circumstances, the recruitment agency will invoice the company and the Interim FD will invoice the Recruitment Agency.


Many Interim FDs will be insured under a Professional Indemnity insurance policy. This should give the company comfort that they are protected if the Interim FD is negligent.

The Interim FD is not an accountancy practice and is usually not a tax specialist. They are therefore not the best option for these kinds of services. An accountancy practice is not the best option to gain the true commercial insight of an experienced Interim FD. Conversely, the Interim FD is not the right go-to option for your year end compliance activities.

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Les Thomas FCA, MBA
Email: info@538.org.uk
Telephone: 07977 485726

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