When Should An SME Hire A Financial Director?

Updated: 5th February 2024

As an SME, you’ve inevitably navigated the many challenges of running a business with a limited number of staff. Now that you're expanding, it’s time to think about bringing experts in to take your venture to the next level. One issue you now face, however,is that positions such as a financial director can be expensive, and hiring the right person is vital to the future success of your business.

So, to help navigate through this problem,it’s first important to understand what a financial director does and the potential benefits they could bring to your business. The role and responsibilities will inevitably change based on the company itself, but their key objectives will include:

  • developing detailed accounts and tracking financial performance;
  • tracking financial KPIs, as well asother targets;
  • creating reports of current performance against historic results, including budgets and forecasts;
  • developing relationships with other financial stakeholders, internally and externally, such as banks and investors;
  • keeping these stakeholders up to date and abreast of key financial information, including performance, budgets and records;
  • overseeing auditing and tax work;
  • ensuring the business is financially compliant; and
  • overseeing negotiating and managing contracts.

As you can tell, it’s not just adding up the numbers and spending yourlife in spreadsheets! If you’re not a financial expert or don’t have experience in these areas, then it’s likely that this side of running a business has been stressful, complicated and time-consuming for you. After all, time is money for businesses of any size. So, being able to pass these responsibilities to an expert will not only make processes more streamlined and effective but will also give you more time to focus on the areas of your business that you enjoy and are best at!

However, the need for a financial director is more essential for some businesses than others. If your business has a significant debt burden or a large amount of equity investment, it’s likely there will be more financial reporting needed. Alternatively, if you’re a smaller SME with fewer accounts, a full time, in-house financial director will not add as much value to your business for the outlay you’d need to make. In these cases, it may be worth considering whether a part-time financialdirector is the right solution for your business. They’ll be able to speed up your processes and handle any extra workload, without you initially making the commitment of a full-time hire.

On top of this, when it comes to finding the right person, it’s important to consider what their core responsibilities will be–and include these in your recruiting information. If your business requires constant reporting and account updates, then someone with proficiency in Excel and creating reports will be key. On the other hand, if you need someone to oversee contract negotiations and build relationships externally, then a candidate with more people skills and experience making deals would suit you better.

There’s never a single, definitive point at which you should hire a financial director, but it’s likely to be worth considering if:

  • your business is going through a period of rapid growth;
  • you’re seeking external investment or funding;
  • you require reliable and detailed financial data to inform your decision making; or
  • you’re developing new products or expanding into new markets.

All of these scenarios represent a period of growth or change in your business. Being fully informed and confident in your finances during these moments is likely to be key to your success, particularly whereyou’re expanding or seeking new investment, when compliance with financial regulations is vital. Having a person you can trust in these situations will make a real difference.

At the end of the day, the process of hiring a financial director is not a one-size-fits-all endeavour. You need toweigh up the potential benefits while also considering the type of work you will need doing. But it’s also important not to rush into a new hire. Finding the right person is just as, if not more, important as getting someone in at the right time. When done right, the position can alleviate a huge amount of pressure and workload from your business and allow you to grow further.

Knowledge is king

If you would like to keep up to date on the latest industry news and other related content please subscribe to our newsletter.

I agree to receive Taylor Hawkes newsletter and other related communications. privacy policy.

Our Privacy Policy describes how we process your personal data, sets out your rights as a data subject, and identifies how to exercise them.