Finance Manager or Finance Controller and the additional expertise that a Finance Director brings

By Greg Broadbent on May 18th, 2020

We’re often asked to help businesses hire Finance Managers and Finance Controllers – but what’s the difference and when might a business hire its first Finance Director and what additional value might that person bring? Some of the lines may be blurred from business to business but here’s our take…

Finance Manager (“FM”)

A Finance Manager has a great responsibility for running the day today finances of the business. The FM will normally be responsible for production of the monthly management accounts and supporting the budgeting and reforecasting processes. In delivering this, they will need to ensure that all of the daily transactional work in completed efficiently (either by themselves or by a member of their team), that appropriate monthly reconciliations are carried out, that cashflow is effectively managed and that income is recognised correctly through liaison with client account handlers .

In small business the FM may report directly to the Management Team (eg Managing Director/Owners) or as the business gets larger, may report into a part-time Finance Director.  Depending on this senior team structure the FM may also help with analysis of various performance measures (eg service levels, profitability of projects/clients, and cost reduction.

FMs may do all of the above by themselves (“sole-role”) which appeals to some candidates as they have control of the process from start to finish (note: from the business perspective there needs to be sufficient internal controls in place in terms of authorisation processes to mitigate against the potential for fraud). Or, in larger businesses, the Finance Manage may have finance assistant supporting the transactions data entry and/or the client billing processes.

A FM will usually be part-qualified (i.e. part-way through their professional accountancy exam process), occasionally be fully qualified or may simply be Qualified By Experience.

Basic salary level will depend on the size and complexity of the business, size of the team and extent of professional qualification but will usually range from approx. £40k-£55k pa.

Financial Controller (“FC”)

The role of the Financial Controller is, in many ways very similar to that of the Finance Manager. We see the principal difference being the size of the business that they are helping to ‘control’. Mid-size to larger agencies will usually be more complex – possibly having different business units, divisions or subsidiary companies – have higher levels of revenue and will usually have more people in the finance team.

Note that there are exceptions to this. For example, in a smaller business someone ostensibly carrying out a ‘sole-role’ FM function but who comes with greater experience and who also provides some strategic input to the owner/managers, could command a Financial Controller title and salary.

The FC role will usually attract a higher salary level than the FM, reflecting the increased responsibility and complexity of the role. Basic salary levels for FCs will typically be approx. £50k-£70k pa.

Finance Director (“FD”)

The main difference between the Finance Director and the FC is that the FD should be expected to provide valuable insight and strategic direction to the management team of a business. The should ‘direct’ where the FC/FM ‘controls’ and ‘manages’ the day to day finances of the business.

They will play a key role in business planning, analysis of services and new initiatives, support/lead commercial negotiations on client contracting (for example with new clients  and client procurement requests), and lead tax & M&A investment strategies. They will also often lead other operational & Capex investment decisions (eg Property and IT).

In our experience, businesses in the sector will have some form of strategic financial support from outset – be this from their external accountants or a Portfolio FD. Depending on the size of the company, this senior FD level support will usually be working in tandem with an FM/FC – maybe in the early stages of a business’s life this might be a ‘book-keeper’ – and a wider finance team as the business grows.

(Note: there are a significant number of expert FDs who will provide part-time FD consultancy and who will come with a vast wealth of practical experience having worked in the sector for many years (typically referred to as “Portfolio FDs”). This allows businesses to benefit from the support of a dedicated FD, likely to be at a lower cost than the external accountant – this needn’t harm the relationship with the accountant who can still be called upon to provide specialist audit, tax or corporate finance advice as/when required.

Once a business has reached a headcount of approx. 30 people we find that businesses will usually be engaging with a Portfolio FD which allows the FD to scale up his/her input as the business grows. Note that the investment in a good FD will be far outweighed by the financial benefit that they bring through their experience and insight.

As a practical example, COVD 19 has created a hugely challenging environment for the sector as client spend is slashed and the impact felt by pretty many agencies. Navigating through the government initiatives and planning the way forward for the agency and its people is something in which all FDs have been playing a lead role – it will have undoubtedly been much harder to do this without an FD in place.

For SMEs in the sector, basic salary levels for FDs will start at around £90k pa ranging to around £150kpa. Salary levels will rise beyond this for larger businesses. Day rates for part-time consultant FDs will typically range from approx. £500-£1000 depending on experience.

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