And we're back...

Apologies for the radio silence, but winter has been busy. So blogging... well, it took a back seat. But hopefully we're back with a more regular look at issues around private equity, growing businesses and financial management.

Starting with this story about "edgy fashion designer" Jonathan Saunders, which is notable here merely for the journalist's observation that: "Tall and lean as a lamp-post, Saunders looks boyish yet not at all frivolous. Rather, his all-black raiment and titanium-framed glasses give him the appearance of a dynamic business manager or financial controller..." Times are changing, folks: the FC should look like they shop at FCUK rather than C&A these days. Worth bearing that in mind for the job interviews...

The value of the FC

See, contrary to popular belief, some entrepreneurs do get it: "[John] McGuire, who set up [Phoenix Car Company] in 1993, added: 'A good financial controller can make a big difference' for a company that is just starting out."

I've met numerous entrepreneurs' FCs/FDs, and two things strike me. First, it's amazing how often they make a huge difference to growing companies. Everyone assumes a start-up has to be some cult of personality, with the visionary CEO totally unfettered by accountants. The truth is that unfettered entrepreneurialism is just ideas and energy - not a business. Second, the FC involved tends to get much faster exposure to operations. Fewer people - and certainly fewer people who have the first clue about process and systems - in a company means you have to get your hands dirty from day one. And that's great news if you want options later in your career.

Final point: note how McGuire says just starting out. Lots of smaller, growing or entrepreneurial companies make do with a book-keeper or a part-timer when they kick off because they think they can't afford a full-time expert. OK, in some little lifestyle start-ups, that's probably true. But a serious business plan requires a serious finance function - even if that's just one FC.

FC career path of the week

There was a lot of talk earlier this week about common sense returning to ITV with the appointment of Michael Grade as chairman. At last, said the media crowd, a TV person running the organisation, not a beancounter! (Although what's got less attention from the meeja folk is that FD John Cresswell is likely to be Grade's number two as COO... Smart guy, our Mike.)

Well, I sympathise. A bit, anyway. Good CEOs with accountancy qualifications know their limits and concentrate on running the business, appointing the best talent in the production roles. (Interestingly, I think the only reason to make Grade chairman instead of "creative director" is that the company has such poor morale that having a true figurehead is essential. He probably wouldn't have settled for anything less that the chair, anyway, but I doubt he'll be on the audit committee or spending all his time with shareholders. Enter Cresswell.)

And then I found this story about the new vice-chairman of Monmouthshire Building Society, one Robert Williams. He was formerly managing director at Mills & Boon - having been its financial controller. There are lots of stories like this, but it's a timely reminder that smart finance guys with a breadth of vision and a willingness to get stuck in can succeed as leaders at companies that require creative, brand-driven growth.

Why growth companies are a great option for ambitious finance people

I've just got off the phone from a CEO of a property management company that did an MBO earlier this year. It's a big expansion capital deal - the business was turning over £4m a year and was focused on one particular area of property management. The team saw an opportunity to buy a much larger rival, which has not only given them much bigger volumes of business (critical in a low-margin operation like property management), but has also helped them diversify their income streams with differnt types of clients and a couple of high-growth niche operations in related areas. Total raised: £8.5m, £5.5m from the bank and £3m from a regional PE player.

Great stuff, and a fantastic challenge for the finance functions of both the buying company and the acquired businesses - it's about financial discipline, growth and diversification. The guys in those teams will also get exposure to PE, which looks great on the CV.

But the big win? Well, said the CEO, one exit route being considered is an AIM flotation at the back end of 2008. But since the company has never produced consolidated accounts before - but will have to to March 2007, along with comparatives for 2006 - they're looking seriously at switching to International Financial Reporting Standards.

It's brilliant for the company. Since they've got a mountain to climb anyway (the consolidateds and the comparatives), they may as well do IFRS as UK GAAP. It'll be more or less the same workload. But it will also get them ready for the flotation should that be the exit; and if it ends up being a trade sale, how convenient for a quoted buyer if the numbers are all IFRS-ready.

It's also brilliant for the senior guys in the finance function. They get to step onto that learning curve way ahead of most other accountants. The FC will be able to say they're well versed in both UK GAAP and IFRS - which gives them a huge advantage and loads more options when it comes to their next assignment.

We've said it before: growth companies with dynamic and valu-focused management teams are the best place to learn your trade, move outside your comfort zone and super-charge your career. IFRS is just one example of how that happens.

Speaking of FC jobs you'd like...

I think we have a winner. Charles Hammond is financial controller at Cable & Wireless Seychelles. Actually, it's better than that. He was FC until CEO Usman Saadat was forced to leave over work permit difficulties. So he's now interim CEO. Man, just when you think it can't get any better...

(And there's one FC I ought to interview about climate change, I guess...)

More new roles for FCs

Just a quickie: Finance Week reports that Chrysalis financial controller Simon Winder is now a trustee of the company’s pension fund. These days, the group FD role is seen as incompatible with trusteeship, so I guess that makes sense. But as FC, Winder will still have some some conflicts - most notably if he's a member of the scheme and certainly if (or when) he gets a few share options. Pensions: it's a minefield.

Just in case you were still wondering

Saw this FC job ad just now. Sums up everything I've been saying about how the role has changed and pushed the finance number two into the old FD's job (my emboldenings):

Salary: £60k + Bonus + Bens
Location: Mid Kent
My client, a rapidly growing Healthcare business, is looking to recruit a truly commercial FC. The prime objective is to add value whilst ensuring the financial systems are maintained, controlled and developed creating an accounts function capable of delivering sustained business benefit in a changing environment.
Key elements of role:
* Driving major change through business reporting
* Managing (parts of) re-engineering programme integrating back and front office systems
* Standard responsibility for procedures, controls and liaison with external parties
You are likely to have had experience of managing larger teams and will be looking for a role where you can have a clear understanding of the future strategy of the business. You are likely to be driven and ambitious whilst still having a keen eye for detail. Excellent prospects."

Says it all, really. That could easily have been a "modern" FD role ten years ago (and still could be in some companies). If your business (or your current FD) doesn't take this approach to the FC role, it's time to move.

More jobs at the leading Equity finance professionals site...

Want a top FD job? Be a top FC

Just back from the FDs' Forum, Richmond Events' annual finance function fest aboard the cruise ship Oriana. The unoffocial theme this year seemed to be personal and career development, testament to my long-held assertion that from the management accountant to chairman of the audit committee, finance executives now need to have great communication, delegation and interpersonal skills if they're to succeed.

Unsuprisingly, the sessions focused on careers got a great turnout from the assembled FD and FC delegates. (And the fact that there were a fair number of FCs, but the suppliers on board were also delighted, is testament to the purchasing power now held by numner twos, I think...) One speaker was asked about how an established FD might go about engineering a step up to the big leagues (FTSE 350). It's tough if you haven't built a career in that sort of organisation, but the best advice was to take a number two slot in them and work up from there - even if the title is theoretically a step down.

Well, it looks like good advice: over at FTSE 100 oil and gas play, Jann Brown, the group financial controller, has been announced as Kevin Hart's replacement as FD. (Hart is off to be a CEO at a smaller company.) That shows what we've always said here: that the FC role is no longer a pure-play number cruncher. Like the FD role a few years ago, it's been shifted into a more strategic, advisory role. And that's true in all sizes of company, not just the FTSE power-players. Bored FD of a static company? Find yourself a broad FC role in a bigger, but growing, business - and if you get your first taste of private equity experience that way, you're adding a crucial component to your CV for when that PE-backed FD role comes around.

But note also: "Elsewhere, Simon Thomson, the commercial manager, has been appointed legal and commercial director." Which, I think, suggests that companies are more willing now to share out some of the roles that got dumped on the FD in the past (such as legal). And that means an FC with strong communications skills and a strategic mindset will find the transition to the top finance role even easier.

Ambition

Check this out - the link takes you to a blog called Successwithu. It's written by Alex Chan, a Chinese guy working in Singapore. He's a financial controller (hence his appearance here), but he's dissatisfied with his lot:

Many accountant are working under my team. When they join my company, they are young and poor. After a few years, they are rich and Wealthy. Some are much richer than me........ Yes, there are so many opportunity there ! you can make money from share market, from property market, from trade, from joining a group of friend doing small business and make it big ..... But, I didn't do any ! What is the reason ? Why I didn't ride on it ? Why am I not set up a company there nor forming a team of people that we can work together ?

Good question, Alex. And that's one many more FCs could probably ask. And there are entrepreneurial opportunities out there, even for accountants, as he points out.

Is it too cheesy to suggest that getting into a growing business with a bit of excitement about it, an opportunity to make some decent money and a chance to experience life beyond the boundaries of the corporate finance function satisfy at least some of those frustrations? That is, after all, what the guys at EquityFC try to help FCs do. I'm not sure being FC at a high-growth PE-backed company would fulfil Alex's definition of success ("a person that can do the thing he love to do all the time"). But it's probably a lot closer than doing the faceless finance function thing in a faceless corporate...

By the board

We've written before on the need to think unconventionally about finance careers - get out into the operations side of the business, think laterally about job titles, look for positions in businesses where you'll get the right experiences to take your career forward and so on. But this story adds a new dimension into the mix: the FC as board member. I suspect it's far from being the only case.

It's a good news piece about a new management structure at "one of South Wales' longest-established companies," Andrew Scott, a subsidiary of the Rowecord Group which employs almost 250 staff has reported a turnover of more than £25m. Company secretary and financial controller David Hadley is part of this turnaround board. So why not an FD? Well, perhaps it's a seniority thing, and maybe the title will come in due course. But look at the rest of the board: a commercial director and an ops director? (There's also a BD director, so the commercial guy isn't solely responsible for sales and marketing.)

Which sort of implies the FC role is being treated on its own merits. If the FD role really does encompass a bunch more commerciality now (and it does), and if that side of the function is being handled elsewhere, why not have an FC on the board of directors?

OK, I realise that we may be about to turn full circle here: if he's a director, why no just call him "FD"? But that's my point. Maybe we will, indeed, see the emergence in UK company culture of a COO or an ops director or a business services director or even a support director to do the broader job that many FDs currently do - and the "FD" will become the FC who's senior enough to sit on the board. Which begs the question: would you hanker after the pure FD role? Or the wider "support" director's job?

Could you be a lifer?

It's unusual, these days, to come across someone who's worked their whole career in one organisation. (Even the notorious loyalist Lord Browne spent time as CFO of at Standard Oil... shortly before it merged with BP, admittedly.) So my eye was drawn by this story about the retirement of Greater Manchester Passenger Transport Executive director general Chris Mulligan. Why's he on this blog? Well, he joined GMPTE in 1977 as a management accountant, became financial controller in 1985, FD in 1987, and DG in 1991.

So he's another finance professional who's proved more than capable of operating at the highest levels of general management (and in Mulligan's case, politics, too). But I was also struck by the acceleration in his career. Eight years to get to FC, then just two to FD and only another four until he took the top job. The lesson? A smart FC will find a posting that's got plenty of meat to it, get stuck in, but then have a clear idea of how they plan to sling-shot out of that position into wherever it is they want to go. Mulligan managed that in one organisation; but for most of us today, that means picking the right jobs, stretching ourselves and having a clear exit strategy.

Ready to throw away the assumptions?

I was having lunch the other day with some people from a company that specialises in human resources (I'll leave it vague...). Great bunch, really smart guys, and had plenty of experience with FDs and FCs - but mainly in quite big companies.

I was talking about the financial controller post - and arguing that in the same way that the FD is now really the general manager of "the services that allow a business to function", so the FC is increasingly a person who, in order to put his skills to best use, or ought to have experiences outside the finance function. One of the guys demurred - in his experience, the controller is the numbers guy. End of. But I think he's just not looked at enough growing businesses where you can't afford anyone to have that narrow a view.

Evidence? Well, it's all around, but this news item caught my eye today: "Israel-based food importer G. Willi-Food International Ltd. on Tuesday named Albert Israeli as its chief financial officer, effective immediately. Israeli replaces Gil Hochboin, who served as CFO since August 2000. Israeli previously served as financial controller and sales and operations manager of Golf & Co. Group Ltd."

Our first exclusive EquityFC.com feature is about making the move from FC to FD. In it, we argue that experience outside the finance function is getting increasingly important. A financial controller can do those jobs - and I'm not just talking in IT or HR, areas that are functionally close to finance. Sales and ops manager? That's what I call gaining non-financial experience...

Quick-start FD

Over at AccountancyAge, they've featured the story of 27 year old Charis Walsh who's stepped up to become finance director at Black Sun, "a small public company specialising in marketing and communications advice". BS didn't have an FD, so when she became finance manager and subsequently proved her worth in the business over the next 18 months, it was a relatively simple decision to move her up to board level. Great story - and a reminder that small, growing companies offer finance executives a fast-track to greater responsibilities and exposure to board-level experience. And as Walsh tells AccyAge, it's not about the beancounting: "I do a lot of human resources stuff, which is obviously not what you would think is within an FD’s remit, but actually it helps you understand a lot more about people and how they work. That does have an influence on things like utilisation capacity, staff turnover and what you’re paying." Good stuff.

Incidentally, Black Sun is an interesting company in its own right. It does a lot of work with companies on narrative reporting, and it's well worth poking around at its web site if you're trying to get to grips with this increasingly regulated area. But Walsh's appointment as FD might in part be related to the company's need to practice what it preaches: "As a partner to some of the UK's leading businesses we recognise the fundamental importance of good practice in Corporate Social Responsibility. We manage our own environmental and social impacts through communicating and reporting our progress simply and transparently. The intelligence, knowledge and experience of our people brings competitive advantage to our clients - as such we are committed to their continual growth and development." Having a finance manager running that all-important function perhaps shows a little less commitment to its people than having an FD do it...

If you've got a good FC, why have a "finance" director?

I've often wondered about how long the "finance director" tag can last. I'm not talking about the emergence of the "CFO" in the UK - it's more to do with the fact that outside the very biggest companies, most FDs do a lot more than finance (bits of IT, HR, facilities, procurement and so on). And when a company has a good financial controller to instil discipline, run the finance team and collate reports... well, maybe the board-level guy ought to be called something else.

This latest rumination on the subject was prompted by this story about a company called Andrews Sykes, where FD Anthony Bourne has been made redundant. "One of the non-executive directors, Jean Christophe Pillois, will assume overall responsibility for the group's finance function, assisted by the the group financial controller," it says.

Which makes a scary kind of sense, if you think about it. It's sort of an extension of the audit committee. Now, whether or not the rest of the board - which will take on Bourne's other duties (presumably all those IT, HR etc etc responsibilities) - will be able to hack it is another question. There's a reason FDs end up with that sort of stuff on their plates: they tend to be much better than most people at functions dictated by systems and processes. But it seems quite sensible for the FC to report directly to a non-exec on the pure finance side, no? And when he's ready to use the skills and cross-business expertise he's sure to pick up doing that role... well, maybe he'll call himself something like "Director of Business Services" rather than FD - just to make it clear he's not replaceable by his own FC!

(By the way, my first reaction was: there's a problem at the company, so they're slashing costs from the top - but the latest interims look pretty healthy. Or there's been a board-level falling out. But the release says the financial legwork will have reduced thanks to disposals - hence the "redundancy". So there you have it...)

Control is the new black

I was chairing a panel discussion with a couple of FDs this monring at the Loss Prevention 06 event in Kensington. (Stay awake at the back!) The subject was getting "LP" noticed at board level, and I was joined by Annie Guerard of Diesel and Peter Hartley, formerly FD of Blacks Leisure, Next and Texas Homecare. But it was something Annie said that really caught my attention.

She was stressing the importance of control in the modern business. Now that the systems have given us visibility within the organisation and the pace of change has accelerated (in a retail context, she pointed out, that also means the speed with which shoplifters, crooked staff and fraudsters evlove their tactics or exploit a weakness in huge numbers before you discover it), having a great controller in place to ensure that things are just as they seem is critical. In bigger organisations, of course, that might become the duty of an internal auditor or even (again, in retail) a dedicated loss prevention/security director. But for most businesses, the controller needs to be on the money all the time if the company isn't going to suffer a death by a thousand cuts. Her point was that everyone else needs to appreciate the importance of the FC role to their own function and pay it due respect.

And, actually, retailers are great places to see how the control role allows you to cross boundaries. It's no good having your finger on the pulse when it comes to the numbers and reporting them brilliantly. It's not even enough to be able to use them to spot where things are going wrong. In retail, all that stuff is bound up in marketing, customer service, supply chain management, stock control - only by being financial controller of all those things can you control any one of them. So here's to a silo-less world - and to the benefits of "connected" controllers as extoleld by one FD.

What's up with the AIDB?

Time to reflect on the Mayflower case, which has resulted in no charges being brought against PwC or members of the finance function at the transport group's subsidiary, Transbus. To recap, Transbus’s former financial controller Ian Shelton had been accused of iffy invoicing practices designed to retain cash in the business and flatter its cashflow; PwC was charged with failing to test those practices and thereby signing off a dodgy audit.

The case was the first big test of the Accountancy Investigation Discipline Board, the supposedly more open replacement for the behind-closed-doors Joint Disciplinary Scheme. But on Monday, the AIDB decided to drop the case against Shelton and yesterday decided PwC also had nothing to answer for. (Mayflower's FD, David Donnelly, is still waiting to hear how he'll fare on seperate charges.) In fact, Shelton's old boss at Transbus, FD David Berry, was out of the country when the hearing was held. Shelton admitted he'd done wrong by not blowing the whistle; but he blamed Berry, saying if he'd refused to manipulate various spreadsheets, he'd have been fired.

Two points. First, because the financial controller is the individual closest to the preparation of the accounts - and also has close proximity to the banks, the raw numbers and the grunts in the finance function - they're inevitably going to get caught up in any dodgy dealings. As Sherron Watkins, a group financial controller in all but name, showed at Enron, you have to speak up when you discover things smell bad because otherwise you're taking a hit that'll be worse than losing your job. Hell, that's what chairmen are for.

Second, what a disappointment the AIDB is. Check out its web site - its first big case is closed (albeit only partially, and not terribly conclusively) and it has nothing to say (as at 11.40am on the day after it dropped the charges against PwC). And the fact that a key witness can disappear to South Africa and thereby (seemingly) derail its case is a damning indictment of its effectiveness just at the moment that it needs to prove that it's an able watchdog for an accountancy profession struggling to re-establish credibility in many people's eyes. The much maligned JDS took over eight years to rule on Coopers & Lybrand's failure to audit Robert Maxwell's businesses. The senior audit partner involced had died before that case was heard; the JDS report blamed him and said anyone below him was "just obeying orders". So no-one was struck off. Sound familiar? There's no suggestion Berry was in on the fiddle (although as FD, if he didn't notice what was happening, he should have been fired anyway). But blaming someone who's not actually answering charges? It's deja-vu all over again.

Looks like honest FCs are the best guarantee we have of ensuring a clean and clear accounting profession...

Big companies and their crazy nomenclatures

Always nice to report FCs taking a step up. It's not uncommon, of course, in bigger companies for divisional FCs to move into divisional FD roles - like Nic Nicandrou, who has been promoted to the role of finance director of Aviva’s UK life business, Norwich Union Life. His successor will be Tim Harris from PwC (which happens to be Aviva's auditor - I thought there were rules about that sort of thing now...).

But here's the thing. Nic, and now Tom, is called "group financial control director". Whoa. Two things: first, I don't really care if it is a huge company: "directoritis" is a real pain wherever it crops up. If you're the group FC, then you're the group FC, yeah? Helps everyone understand what's going on - and having a "GFCD" sounds almost like some marketing guy six years ago got uptight about not being "director of somethingorother", so he got the title and the HR department then upgraded everyone else at that pay grade to "director" status. Second, it does make the FC role at growing companies seem that much more attractive. In most entrepreneurial businesses, you may get called something simple like "FC", but you can bet your bottom dollar you'll see a lot of action outside the finance function. That's not only more interesting - it's better for your career, too. (Mind you, after PwC, anything in business probably looks like a trip to Vegas...)

Ambitious FC? Get a mentor (the older the better)

The new age discrimination laws are coming into effect on October 1 - that's next week. You don't even want to think about how easy it's going to be to fall foul of them, and there are sure to be a whole raft of test cases after companies leave subtle references to age in job ads, hand people a golden carriage clock on their 65th birthday (and then clear their desks), or tweak their benefits packages according to their decrepitude.

Ach, most of this kind of legislation is poorly drafted, over-fussy and fails to protect those most in need. But... smart companies do know that with age comes wisdom and experience, which are hugely valuable commodities. Just take a look at Anite Group, where FC Neil Bass is facing a taxing time in the absence of FD Christopher Humphrey, who's been out of action since earlier this month with health problems. He's set to be off for a few weeks yet, so Anite has brought in Geoff Bicknell, a seasoned FD with bags of experience in the IT services sector, to act as interim.

Geoff's seen it all - he was the FD who helped turned basket-case MDIS into rather more successful Northgate Information Solutions, for example. He's been around the block - and the world - a fair few times. Just the guy you need to mentor an FC in this situation - and proof that the senior memebers of the business community have a huge amount to offer, whether they're "protected" by legislation or not. More from Geoff on his interim experiences (and how his plural career is shaping up - "I started going into the non- exec arena, but a full time job, albeit for only a few weeks was an irresistible challenge," he tells me) when he's less busy!

From FC to FD to MBO - textbook trajectory

I've got a passing personal interest in this story: "Incisive Media PLC, the specialist business information provider, has recommended a cash offer from Apax Summer worth 195 pence per share, valuing the group at £199m." I know FD Jamie Campbell-Harris a bit - he's been CEO Tim Weller's right-hand man for ome years and they're built the business up from virtually nothing. Now they, and COO James Hanbury, will have an 11.7 per cent stake in the busines as it goes private.

Weller started the original business, City Financial Communications, in 1994; Incisive was launched after CFC merged with Timothy Benn Publishing in 2000. But Campbell-Harris's story is our inspiration here. A CA who moved into treasury at Saatchi & Saatchi in 1994 after qualifying with PW, he became the ad giant's European financial controller in 1996 and then CFC's FC in 1998. The FD role came the following year. But that's a classic trajectory: accounting to a pure-play finance role (treasury), to a financial management role in a big company, then the same role in a smaller company in a related industry - proving his worth as a strategic partner to the entrepreneur to win the top job. Textbook.

(And well done to all on the deal!)

FC to FD - it's the operational skills!

I'm going to be writing a lot about the move from financial controller to finance director here and elsewhere. This is a fantastic example: "Toby Mundy, founder of independent Atlantic Books UK, was among the publishers to look on enviously when Waterstone's overhauled its finances a few years ago. The country's largest high-street retailer squeezed its suppliers hard and ruthlessly streamlined its own stockholding, to the extent that it moved into 'negative working capital' - meaning that it generally sold books faster than it paid publishers for them. Now Mundy has decided he wants a little of that wizardry, and has poached Waterstone's financial controller, Tom Connor, to be Atlantic's first ever full-time financial director. It is not entirely a figures-driven appointment; Connor is known as an astute reader and observer of publishing." Brilliant: he's earned his spurs as a top-notch numbers man, clearly got a rep for some sweet financial strategy, made a visible difference to his organisation - and to top it off, he's known as someone who's in touch with the business. Ideal.

FCs and IT

There's no room to be choosy about your roles at mid-sized companies, especially not if you're FD or even financial controller. So it's good to see an FC speaking out at the Best of British Manufacturing IT conference. "Nigel Nash, financial controller at vitamins and minerals supplier LycoRed, will describe how his company moved to an agile ERP environment consistent with food industry requirements, enabling it to compete with much larger rivals on flexibility, speed, lead times and quality of service." Getting stuck into this kind of project - which any ambitious FC probably will do if their business is even remotely up-to-date technologically - is an absolute must. Not only will it give you the technical smarts and project experience that look so good on the CV - getting a single view of the business you're already in can only make the job easier, more fun and free up time for more sophisticated (and interesting) analytical and strategic roles. Nice one.

UPDATE: Missed this story in a similar vein, quoting GNER financial controller Tim Kavanagh about the train operator's new EPOS system. Intimate knowledge of that kind of project is a major plus if you have ambitions outside the finance function, of course. But then, with the board clear-out at GNER last month - which saw rail division FC Tom Fielden promoted to FD - it's hardly surprising that there are opportunities there to get your fingers into different pies...

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