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The growth of SMEs over the last 20 years, alongside that of cloud-based accounting, has proven the perfect environment for a new kind of role: the virtual finance director.

A finance director provides a business with financial direction and leadership, helping businesses understand how they are doing and where they are going. A virtual FD does all this remotely, often on a part-time basis, perhaps never meeting a client face-to-face. And, as a business owner, the virtual FD also needs to factor in the day-to-day running of their own business.

While Ciaran O’Donnell FCCA, founder of Virtual FD, doesn’t see himself as entrepreneurial, having surrounded himself with entrepreneurs for the past 11 years, he says it has rubbed off on him.

‘I left the corporate space because I didn’t want to be surrounded by employees and wanted to work with remarkable people looking to create value,’ he says.

The role

Virtual FDs work with people who are not financially ‘chipped’, as O’Donnell puts it – in other words, they need someone to lead, manage and control this element of their business.

You may only work two to three days a month for a client, so within this timeframe an FD needs to make them feel they have a finance leader. This can mean taking on ad hoc tasks or handling urgent issues as they arise. Client care is vital.

A virtual FD is expected to accurately and efficiently report and review a business’s finances often, and quickly implement and track remedies. You also need to be prepared for anything; for instance, understanding Brexit, Covid-19 government support and regulatory changes.

With an eye on growth, you must be able to provide forecasts with validated assumptions. ‘Forecasts are just a bunch of “ifs”, so how good are the “ifs”?’ says O’Donnell. Performance metrics based on strong key performance indicators will underpin your forecast assumptions and are key drivers for businesses looking to scale up.

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Finally, structure – capital (equity/debt), staff remuneration, return-on-investments, founders’ exits, the makeup of teams and corporate governance – are all vital for businesses seeking to scale up by impressing investors.

Key skills

Virtual FDs need to be able to structure a finance function that supports and drives a business forward. They are strategic business thinkers with commercial acumen garnered from experience.

O’Donnell, for example, spent over 10 years in senior finance and strategy roles prior to setting up Virtual FD. ‘I did a lot of business planning, forecasting and modelling,’ he recalls. ‘Working with smaller entities, I have had to strip the mega-corp mindset and models right back to work for startups and early-stage companies.’

Virtual FDs are expected to provide a lot in little time. They are helped in this by modern technology. You need to be more than comfortable with cloud accounting (for example, Xero and QuickBooks), online documents (such as Google Drive) and communicating (through channels including Google Meet, Microsoft Teams, Zoom and Skype).

As for soft skills, FDs must be able to collaborate with clients, and influence and persuade stakeholders. And you will need to consider fit: ‘Not every FD is a good fit for every CEO/MD,’ says O’Donnell.

Getting in and getting on

Experience is crucial. Finance leadership and management roles, project completions and proven successes in the corporate sector are valuable. The more strings to your bow the better.

With a decent network, you may have all the contacts ready to hit the ground running. Or, as O’Donnell did, you might dip your toe in first.

‘I did mates’ rates for friends, which didn’t pay well but I learned a lot and it confirmed I was a good fit for it,’ he says. ‘I was also excited I had a product to take to market.’

The work can be varied. You may do interim work (full time with one client) or build a diversified portfolio, which could include higher risk start-ups. From this, you could be incentivised to join a business full time to take them all the way through to exit or flotation.

Successful virtual FDs may end their career in this role, especially those who take well to the entrepreneurial, work-from-home lifestyle.

Author: Neil Johnson

This article was first published in Accounting and Business magazine February 2021​

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