Video round table: FDs – The First 100 Days

NEW finance directors should capitalise on enthusiasm for change, understand the true position of their business and build external relationships with key partners.

That was the central message to emerge from a round table discussing how FDs should approach their first 100 days, hosted by TheBusinessDesk.com in association with Ernst & Young, Sewell Moorhouse, Hammonds and Santander Corporate Banking.

The round table was chaired by David Parkin, editor of TheBusinessDesk.com, and comprised: Nigel Brewster, managing director at Sewell Moorhouse; David Buckley, senior partner at Ernst & Young; Duncan Hay, finance director at DavyMarkham; Graham Henderson, formerly finance director at Engage Mutual; Jonathan Thompson, relationship director at Santander Corporate Banking; Mark Simpson, tax partner at Hammonds,

Peter Hindle-Marsh, finance and investment director at Clean Energy Capital; Philip Jennings, financial director at Overseas Trading.

David Buckley, senior partner at Ernst & Young, said: “When you go into a new business the fact that the finance director is a new senior appointment in that business, there is something in human psychology, people are ready for change. Talking to finance directors across Yorkshire one recurring theme was it was felt do things you identify early, do them early. People are ready for change.”

Around the table there was agreement that the challenging economic times and the problems facing companies as a result had changed the approach FDs are taking on joining a company.

Nigel Brewster said: “One of our observations over the last two years is that the first thing finance directors want to do is have a look at the real state of the business – have a look at the balance sheet and the reconciliations behind that and see what the state of the business is. If you’re already in the business that’s a given but if you’re new to the business some of the quality of the financial information that you can access before you go there is minimal.”

Graham Henderson warned that it was “very rare” that a business is in precisely the state described to potential FD candidates. “One thing we can say about good finance directors is that they will be quite analytical. Coming into a business you are looking with a fresh pair of eyes and therefore basically you need to validate what actually has been said to you through the interview process.”

Developing a good understanding of the business and its direction is not always as straight forward a task as it might seem. “The starting point is usually the strategy and a lot of businesses, regardless of size, don’t have really a strategy,” said Peter Hindle-Marsh.

“A well thought out strategy for a finance director is great, you can slot into that. But my experience is very much that businesses say they have a great strategy, ‘we’re going to number one’, but have they have never gone to the next level down, how are we going to do it, what’s involved?”

One of the main challenges facing new finance directors is balancing the need to spend time building relationships within the business with the clamour for attention from external stakeholders.

“Speaking as a banker its important to keep those people at bay but reassured whilst as an FD you present with a credible strategy and a credible vision for the financial future,” said Jonathan Thompson.

“Its almost a case of buying that time by scheduling time with the bank and stakeholders to present your findings but in the meantime taking a period to reflect and build relationships with the chief exec and operational management to understand the key drivers in the business and also understand the perspectives of different stakeholders so when you do have those interactions they are from a very informed base.”

Mark Simpson stressed that far from being simply a demand on FDs, outside partners could be an “external database” of information on the firm. “There’s a whole load of relationships to be established with customers,

clients, suppliers, on the finance side with the banks but with other advisers who may have worked with the business for a substantial period of time and have an accumulated knowledge about the way the business works and may have something to add, if its a turnaround, how it could be turned around.”

Modern finance directors have had to develop a far broader skill set than their predecessors and round the table it was stressed that the role now had a much broader impact on a business.

Philip Jennings said: “There’s a lot of things we can bring to the party that can make a big change to the business very quickly. If you can bring communication to the party and open up the dialogue between the shop floor and the very top and get a structure in there you start dragging people with you very quickly.”

“What you will get is sales will look at his bit, production will look at his bit etc etc. We’ve got to look at the whole spread of it and tell the whole story because if we don’t understand it our forecasts will be worth not a lot,” said Duncan Hay.

“The last thing we are there to do is to produce the accounts.”

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