I’ve worked with a number of FDs over the years and I recently helped one of our CEOs hire a Finance Director by reducing a long list of candidates down to two that he could choose between for best fit. So what makes a good FD… and what makes a great one? I believe there are a number of characteristics that allow you to distinguish between the good and the great. The question is, are there some characteristics that are more important than others?
Relentless focus on cash. Future cash flow is the most important metric impacting a company’s valuation. A really good FD will obsess not just about working capital and capex return but also about how to shift the underlying economic model of a business to optimise the quality of its cash flow.
More forward than backward looking. I’ve met FDs who don’t see the need for rolling daily and weekly cash flow forecasting – this can be deeply negligent. The most valuable financial custodians will spend more than half their time focussed on the future, working closely with the CEO and other colleagues to plan ahead and provide analysis, insight and challenge to inform better judgements.
Able to see the big picture. Businesses need an FD that can cut through noise to understand and prioritise the big things that matter most for value creation.
Collaborative. Beware the FD who spends all their time tinkering with spreadsheets in their office, or worse, from home. A good one will regularly get around the business to understand and influence what’s going on, and they’ll be able to communicate financial matters concisely in plain English that colleagues understand.
A bit of a worrier. A less-exciting but critical part of an FD’s job is to be all over the detail of the numbers and contracts, diligently mitigating downside risks. I prefer to work with conservative FDs and believe it’s the job of the CEO and Sales Director to be bullish and optimistic.
Strong character. To be an effective partner to the CEO, the FD will need to be confident about challenging and influencing their thinking.
Hungry and ambitious. The job of an FD of a fast growth company is always challenging, hard work and requires someone absolutely committed to winning.
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