As your business grows, your finances usually become harder to manage. You have more staff, more customers, larger contracts and more money tied up in stock, equipment or unpaid invoices.
But as that complexity grows, you need more financial visibility to get your next decisions right.
That’s often where a fractional FD comes in. A fractional finance director gives you access to senior financial expertise without employing a full-time FD. Here are some of the problems a fractional FD can help your SME solve.
You’re profitable, but cash flow still feels tight
Being profitable doesn’t necessarily mean you have cash when you need it. Sometimes you have to wait months for a large client to pay. In the meantime, you still have wages, supplier invoices, VAT and other costs to pay.
A fractional FD can build cash flow forecasts around when money is expected to enter and leave the business. That gives you time to identify any potential shortfalls and consider your options, which could include improving credit control, renegotiating payment terms, arranging finance or delaying certain expenditure.
You’re making future decisions with backward-looking information
Your year-end accounts are important, but most of the decisions you make today are about the future.
Can you afford to recruit another manager?
What happens if a large customer leaves?
Can the business fund new equipment?
How much headroom would you have if sales came in below target?
A fractional FD can support your wider business planning, helping you assess how a decision could affect your cash flow, profit and the business as a whole before you commit.
Forecasting won’t tell you exactly what will happen, but it can show what needs to be true for a plan to work, where the pressure points are and what you may need to prepare for.
Your revenue is growing, but you don’t know what’s driving profit
One customer might generate significant revenue but contribute relatively little profit once labour and other delivery costs are taken into account. Likewise, a product that was profitable two years ago may no longer cover rising materials and labour costs. Discounts, overtime or inefficient processes can also erode your margins without standing out in your headline figures.
A fractional finance director can help you analyse profitability by customer, project, product or department, alongside the operational KPIs that help explain why your results have changed. Combined with accurate management accounts, this lets you move beyond seeing that margins have fallen. You can identify where and why they have fallen, then decide what action to take.
Your next financial decision is too expensive to make on instinct alone
As your business grows, the financial consequences of each decision usually grow, too.
Hiring five people, taking on larger premises or committing to a major contract can have a significant impact on your cash flow and profitability.
A fractional FD can help you test the financial assumptions behind those decisions before you commit. If you’re considering recruitment, for example, they’ll model the full employment cost (not just the salary), the extra revenue required to support the team and the cash flow impact before that revenue arrives.
Your finance function hasn’t kept pace with your business
The processes that worked when your business was smaller may not work as well now. As your transaction volumes, teams and responsibilities grow, your management information can take longer to produce. Different people may be working from different figures, reports may contain more detail without providing more insight and important trends may be spotted later than they should be.
Adding another bookkeeper may not solve the problem. A fractional FD can help shape your finance function around what the business now needs, from clearer reporting and more useful KPIs to stronger financial controls and better management information from your existing finance team.
Too many financial decisions still depend on you
There may also come a point when you become the financial bottleneck. Perhaps you’re still building forecasts yourself, checking whether expenditure is affordable or interpreting reports before board meetings. Or perhaps you have a capable finance team managing day-to-day work, but nobody providing senior financial oversight and challenge.
A fractional FD gives you that input without requiring a full-time appointment.
They can challenge assumptions, highlight risks and take greater ownership of financial oversight, giving you more time to focus on running your business.
Get ahead of your numbers with a fractional FD
A fractional FD won’t remove all the uncertainty from running your business, but they can give you a clearer view of what lies ahead.
At Sysum Howard Duggan, our fractional FD services combine senior financial expertise with an understanding of your wider accounts, tax position and business objectives. We can help you use your numbers to manage your cash flow, plan ahead and make better-informed decisions.
So, if your business has outgrown its current level of financial oversight but doesn’t need a full-time finance director, get in touch with Sysum Howard Duggan to discuss whether fractional FD support could give you the visibility and senior financial input you need.