Boards in the corporate world are currently undergoing a change.
When recruiting for directors, there is a new emphasis on finding people with geopolitical expertise, tech backgrounds and knowledge of ESG and sustainability.
This is different from the past, when the most important qualification for a director was usually their financial track record. Traditionally, boards have been stuffed with people who can offer serious financial guidance and insights.
But in recent years, businesses have been exposed to new geopolitical risks such as the war in Ukraine which has affected supply chains, food and energy prices and more. Meanwhile technological advances are transforming some markets at speed. And businesses are increasingly intent on making a meaningful contribution to communities and to the planet – not just to focus on profit.
All this has led corporates to try and diversify the mix of people sitting at the top, so they can get different skillsets and perspectives.
But in smaller companies turning over under £10 million – the ones I deal with day in, day out – I often see the opposite problem.
Their boards and senior management sometimes have little or no financial expertise at all. There are very few people at the top experienced in running the financial side of a business, who understand numbers or who can offer the kind of financial guidance that corporates take for granted from their directors.
They are starved of the kind of knowledge that is the very foundation of a normal corporate board.
This has many implications for the companies concerned.
One we see all the time?
Your company is growing nicely, and as it becomes more complex, you invest heavily in your sales team. You modernise your IT, bring on experienced senior people and perhaps expand to new offices or develop new products.
You do all this because you realise that a larger company needs more professional, more sophisticated management and operations.
But the finance function is left behind. It still operates much the way it did when your company was younger – with the same people in charge, the same accounting software and the same systems (if you have many at all).
It’s under-developed, because no one at the top is very interested in the financial function, understands where it might be falling behind, or is paying it the attention it deserves.
The problem is that money is the lifeblood of your business. To run successfully and to grow, your business needs its finances to be in order, including a smooth cashflow, funds to invest and a clear understanding of your financial situation so you can plan for the future.
Despite the increased emphasis on building businesses with a social purpose, you still don’t have a viable business if the financial side is a mess!
That’s why finance can’t be the very last part of your business to professionalise. It has to be amongst the first, because everything else depends on it.
This takes people at senior management or board level who not only understand why this must be done and can push for it, but know what a really good finance function looks like – so they can make it happen.
If your company lacks those people, we can help.
Working directly with you and your senior management, our Outsourced Finance Department can professionalise the way you run your finances.
Not only do we provide you with essential financial guidance and insight, but we install all the financial systems and processes necessary to bring your finance function up to world-class standards. Then we run your finance function for you day-to-day.
Instead of trailing behind other parts of your company, your finance function will set the pace for professionalisation…
…Operating as smoothly as the finance functions in the best-run corporates…
…And becoming the vehicle through which you can fund and push forward all your ambitious plans for your company – instead of holding you back.
To find out more about the Outsourced Finance Department and how it can help you grow faster and maximise your profit, get in touch with me today. Hit ‘reply’ to this blog or call us on 01279 647 447, and let’s talk.
Warmly,
Garry
