From the FD’s mouth: Property is a demanding and challenging sector, particularly post-Brexit

The International Federation of Accountants once suggested there were five principles guiding the role and expectations of a CFO. They have to be a key member of senior management; be able to balance the responsibilities of stewardship with business partnership; act as an integrator and navigator; take effective control of the finance and accounting function; and bring professional qualities to the role.

It certainly sounds like a hard pill to swallow, driving home the concept that modern financial leaders need to wear numerous hats.

Now imagine the pressure if an FD’s firm were to operate in several sectors? It’s the type of situation that Kajima’s Nigel Chism finds himself under. We took this opportunity to ask Chism – who served as a financial leader within several industries – a range of questions from the various expectations of FDs and how to manage cash flow, as well as a look into the property market. Here’s what we found.

(1) Having worked in a diverse range of sectors, did you find that the role and expectations put on FDs varied?

Throughout my career, there has been a big difference in the role and the expectations of me as an FD. Take two sectors where I worked – PR and property. Whilst the FD’s role in PR involves building a supportive platform for the creative team, being an FD in the property sector can be more demanding. The FD is a much more fundamental and enabling role, key to the success of individual projects given the importance of arranging the right funding and optimising budgets.

It’s not only the sector or the type of company that different requirements are demanded. For example, where an FD is imposed upon a company, the challenge is to counter the concern that you will be a restrictive influence. Where the FD’s role is already valued, the challenge is to meet high expectations. Fortunately, Kajima was a company that saw the importance of an FD and my background and experience in managing a portfolio of PFI companies made me a good fit.

It’s often the larger, more established companies that recognise the need for an FD and why he or she is important for the company. However, small firms ought to be mindful of the value of bringing in an FD at an early stage, so that accurate budgeting, forecasting and planning can be done to ensure the growth of the business.

(2) Were there any sectors that proved more challenging than others?

Property is a demanding and challenging sector, particularly post-Brexit, where there is considerable uncertainty in the market around investment and valuation. The challenge is to constantly stay on top of the broader market backdrop, which is influenced by factors like GDP growth and the direction of interest rates.

In the public relations and creative industries, the challenges are different. With long-term PFI-type property projects, or even shorter-term commercial projects, forecasting was easier as the time frame is either longer or is under our control. But in, say the PR field, it is difficult to forecast where you will be financially even in a year’s time, due to variable new business pipelines, turnover of staff, which is typically higher in such service industries, and less certain fees, which can change in relatively short periods of time if the projects or clients service requirements vary.

(3) On your journey to Kajima, what were the most important skills you learned for your role as FD from other sectors?

The most important skill for an FD is to ensure that the finance function is embedded in the business and that it is fully geared to support the operational, outward facing parts of the company. It is important to hold regular meetings with heads of departments, to be aware of new ideas and upcoming projects and to support the various teams.

Patience is also a virtue as an FD, as you are often balancing the needs of a broad variety of stakeholders, including senior management colleagues, investors, staff, suppliers and professional advisers. They all have their different perspective on the business and a good FD should be able to recognise this and be quick to address their concerns and issues.

Also key, is to ensure a balanced finance team that complements the full requirements of the finance function, auditing, budgeting, forecasting, modelling etc to ensure that it is fit for purpose to support the overall business.

Continue for Chism’s advice on managing cash flow, as well as insight into the property market.

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