The Value of an Interim Finance Director

Bridging the Gap in Financial Leadership

Strong financial leadership is essential in every business so when the CFO / FD is missing, the company and its executive team can really suffer. That’s where an Interim CFO / FD comes in, bridging the gap between finance executives. By providing financial expertise and a reassuring presence in the boardroom, an Interim FD (IFD) is worth their weight in gold. This business success story demonstrates the value a Secantor IFD added at fast-growing recruitment business when they suddenly found themselves without a CFO. Having stabilised the finances, our IFD was retained by the incoming permanent CFO to undertake several specialist finance projects allowing him to focus on financial strategy.

Background

The client, a successful fast-growing recruitment business supplying both Temps & Perms in the UK and several overseas markets became a victim of their own success and were suffering from severe cashflow pressure. A leading firm of Accountants had investigated and reported on behalf of the incumbent Invoice Finance (IF) funder during Covid lockdown and identified various irregularities created by the former CFO who had raised invoices/credit notes to alleviate funding issues. This was finally sorted out after four months by a temporary Finance Director who sadly had to resign for health reasons. The situation revealed by the Accountants was a major challenge for the founder directors causing severe shortage of funds and lack of trust between them and the funder who intended to exit quickly and required the facility to be transferred to an alternative funding provider.

Project 1: Cash flow management and forecasting

The business was constantly struggling with shortage of cash and often had difficulty paying payroll and critical suppliers. The debt owed to HMRC was £1.1m so a time to pay arrangement was established. The critical tasks were:

• Managing a total funding facility of £3m (which later rose to £4.2m) successfully including daily cash management & forecasting and careful creditor management.

• Transitioning from the old to the new funder within one month whilst continuing to pay weekly contractor payroll.

• The new funder for UK was factoring a CHOCCS facility and therefore required more careful management to ensure maximum lending was achieved.

• Working with IF funders in Netherlands, Switzerland and for USA to maximise available cash overall especially overcoming significant difficulties with the new funder in Netherlands due to poor accounting in the past.

Our IFD was initially taken on for three months to hold the fort prior to the new CFO taking up the role. During this time our IFD coordinated & communicated with directors and the new CFO, urgent decisions & actions required to maintain an effective finance function. The new CFO, once in post realised the crucial role of our IFD and requested a further project for at least six months to:

• Identify and scope the role for a new full time Treasury Manager to manage cash across Group including the Swiss, Dutch and US entities which were fast growing each with their own factoring to manage.

• helping recruit and train the new Treasury Manager, transitioning the IF relationships and completing the full handover to the new permanent incumbent

This enabled the CFO to fully focus on supporting the owner directors in developing business & financial planning and strategy. After six months and with the funding of the business safely secured the CFO requested our IFD to take responsibility for two more major projects to support the substantial and growing business.

Project 3: Development of new finance system

• The business had been using a small proprietary accounting system which was limited and struggling with the multicurrency requirements of the group and could not give the business the analysis it needed to make key decisions.

• A new more comprehensive system was selected and designed to give the required analysis while still able to connect to other key components e.g. pay and bill system, expenses system and payment files across various entities and countries.

• Following design of the system, our IFD created and cleansed initial data files from poor data on previous system and other recording mechanisms including:

  • Chart of accounts

  • Suppliers

  • Customers

  • Banks/credit card information

  • Employee information

  • Companies

  • Analysis set up (i.e. by team/ division/employee)

  • A key element was the design of MI reporting systems

• Working with third party systems to obtain required information/data transfer e.g. pay and bill, expenses system and bank payment files

• Working with the new team to ensure correct training and support and prepare staff towards going live

• Working to achieve fully successful implementation completed after a further eight months and follow up to ensure monthly management accounts are facilitated.

• Setting up invoice templates, reports and budget uploads and comparative reports.

• Ensuring consolidation correctly set up, plus VAT etc for required entities.