5 key qualities you should look for in an FD

A talented FD needs to be able to steer the right course for the business and communicate the financial situation to the board. Having a strong person in the role is also key in maximising value when looking to take on outside investment or heading for an exit. For those looking to take on an FD here are some points you should consider.

1. Good grasp of budgeting

This should be a given but it’s really important that FDs genuinely know what they are doing when it comes to the company accounts. As well as understanding where the company is now, they need to be able to see where things are going.

They should be able to anticipate the potential pitfalls lurking in the future and be prepared to adapt the budget to changing circumstances. This is particularly true for growing businesses ? where you are a year from now could be very different to how things are at present, and FDs need to account for this when planning for the future.

2. Exemplary communication skills

An FD shouldn’t simply be an input output number-crunching machine. They need to be able to pick out the key elements of budgets, forecasts and accounts and communicate them effectively to the board, the management team and other departments.

They need to be capable of explaining to their colleagues why their perspective or decision over a financial matter is important. Without this skill, FDs risk losing touch with other departments and being seen as just a barrier to be overcome.

Sarah Hunt is the founder of Equity FD, which specialises in recruiting FDs for growing businesses which are backed by private equity, and a regular judge of Real Business’s FDs’ Excellence Awards.

She says FDs need to be: ?Someone that can speak non-finance language to non-finance people.

?In many cases they’re also externally facing so they need to be someone who is comfortable representing the business both internally and externally with banks, investors and the City.?

3. Leadership skills

As well as being in charge of the numbers, FDs need to be business leaders in their own right. They will need to be adept at managing junior finance staff, like financial controllers, and playing their role as a member of the board. A recent study by Hayes found that 18 per cent of FDs said that people management skills were the single most important skill for an FD.

4. The right relationship with the CEO

FDs are junior to the chief exec and should act to support them, but also need to be prepared to challenge them in certain circumstances. Particularly in cases where the CEO is also the founder, it’s easy for them to get lost in their vision for the business and lose touch with the hard reality of the numbers.

FDs need to work with the CEO to achieve their goals but also be a grounding force which brings them back to earth and helps them see what can be achieved when.

Sarah Hunt says that while it’s important that CEOs and FDs get on, it’s important not to fall into the trap of choosing someone just on that basis.

5. An affinity with the company and industry as a whole

FDs must look beyond the spreadsheets and really get to grips with what the company is doing. Without a passion for what the business as a whole is doing, the CFO will be in less of a position to see why the numbers themselves are important.

John Kearney is FD of Nortech group. He says: ?Being a financial director is so much more than keeping an eye on the bottom line. Whilst sound financial planning and management are crucial aspects of the job, having a well-developed overall business sense and knowledge of the sector you are working in are also important.

?Cash flow is the lifeblood of any business, but sector knowledge helps with an appreciation of the challenges and opportunities faced by the business. No business exists in isolation; so, in our sector for example, it is vital that anyone in this role understands how we fit into the oil and gas supply chain.?

Related: Board meetings: Don’t get bogged down in the detail

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