You run a business that has reached a decent size (let’s say, £12m turnover). You love what you are doing and want to kick on, raise some funding and scale-up to the next level (why not £50m turnover?). But there is a problem… Cash-flow is tight and you are not sure that your finance function is up to the job. They’ve been stretched getting to where you are now. Your FD is busy applying the financial paddles to keep cash flowing and she has not got enough time to step back and make the changes that are needed to:
a) pass the due diligence process for raising more money
b) introduce the sophistication of financial management needed for growth and
c) generally reduce the stress of those who work in and around the finance function.
What do you do?
You can replace your FD but that will take time, and it might not help. And you think that she could actually be capable of taking the finance function on that journey but she is simply over-stretched. With some help she maybe able to get there. And the good news is that help is at hand.
The first step on the journey to a better finance functions is to take a step back and identify the specific improvements that need to be made. To help you achieve this I have developed the Ffat* Test: a tool that allows this evaluation to be done quickly and objectively. By answering a series of simple questions any experienced finance professional can create a picture of the changes that are needed in a finance function. In fact, not just one picture but two.
You can do the analysis yourself: just contact me and I’ll send you the template; or I can come and do the assessment for you. You will receive an easily understood diagnostic of where to focus your future management effort backed up with detail of where improvements should be made, enabling quick and easy planning.
The left-hand picture shows how the 6 dimensions of your finance function are performing:
· its culture
· the information it creates
· the people who run it
· the processes which underpin it
· its involvement in strategy and
· the tools which make it tick.
The second gives it a rating on the 5-pointed LASER scale:
· is it LEAN?
· how ACCESSIBLE is the information it creates?
· how SPEEDY is it in turning things round?
· are its team ENGAGED with your business?
· and most importantly of all, how ROBUST is its output?
Armed with this analysis the process of change can begin. The case for change can be made, supported by easily understandable analysis. A plan can be created which focuses on areas that will make the biggest differences to performance. Progress can be monitored using the tool over the months and years to come.
In future blogs I will explain more about the indicators which support the analysis and talk about the action that will need to be taken to make performance changes. In the meantime I’d love to hear about what you think of the Ffat tool. Would it help the organisation that you work in?
If you would like to find out more about how this tool can help your business run a more effective finance function please get in touch.
*Ffat = Finance function assessment test (all suggestions for a better name gratefully received)