Do you need a part-time Finance Director? Ten signs it's time

Most small businesses don't need a full-time Finance Director. Plenty don't need one at all. But there's a stage where the owner is doing the finance job in the evenings, the accountant is doing the compliance, and nobody is doing the bit in between. That gap is where a part-time finance director earns their keep.

This guide covers what a part-time FD actually does, ten signs you might need one, and the times you honestly don't.

What a part-time Finance Director does

A part-time FD, sometimes called a fractional FD, is an experienced Finance Director who works with you for a set number of days a month rather than full time.

The easiest way to understand the role is to compare it with your accountant. Your accountant mostly looks backwards. They prepare your year-end accounts, file your corporation tax return and often handle VAT returns and payroll. That work matters, and you can't skip it.

A Finance Director looks forwards. They help you answer questions like:

• Will we have enough cash in March?
• Which products or customers actually make us money?
• Can we afford to hire two people this year?
• What should we charge for the new service?
• What would a bank, investor or buyer want to see?

Some accountants do both. Many don't, and the ones who do are usually charging for it separately. We cover the difference in more detail in fractional FD vs accountant.

Ten signs it's time

Count how many of these sound like you. Be honest.

1. Cash surprises you

You check the bank balance and it's lower than you thought. Or higher, which is nicer but just as worrying, because you don't know why. If cash keeps surprising you, nobody is forecasting it. A simple rolling forecast, such as a 13-week cash flow forecast, stops most surprises before they happen.

2. You don't know your real margins

You know your turnover. You know roughly what's left at the end of the year. But if someone asked for the gross margin on your top three products or services, you'd be guessing. Without that, you can't tell which work to chase and which to quietly stop doing.

3. You're pricing by gut

Your prices are what competitors charge, or what you charged three years ago plus a bit. Costs have moved since then. Wages, energy, materials, software subscriptions. If your prices haven't been worked out from your costs and margins, they're probably leaving money on the table somewhere.

4. Management accounts arrive late, or not at all

Good management accounts tell you how last month went, in time to do something about it. If yours arrive six weeks later, run to 30 pages, or don't exist, you're running the business on feel. You should be able to read your monthly numbers in five minutes and know what to do next.

5. Tax bills catch you out

VAT is usually quarterly. PAYE and National Insurance are due monthly, by the 22nd if you pay electronically. Corporation tax for most small companies is due nine months and a day after the end of the accounting period. None of these dates are secret. If they still feel like ambushes, it's because nobody is setting the money aside and planning for them.

6. You can't hold it all in your head any more

When the business was small, you knew every number. Now there are more staff, more customers, more suppliers and maybe more than one site. You've grown past the point where gut feel and the bank balance are enough, but you haven't built anything to replace them.

7. Someone outside is asking questions

The bank wants a forecast before it renews your overdraft. An investor wants to see your numbers. Someone has asked whether you'd ever sell. These conversations go much better when the person answering has prepared answers like that before, and much worse when you're building the spreadsheet the night before.

8. You're making a big decision without a model

New premises, a new product line, a big hire, a new van fleet. Each one is a bet with real money. If you're deciding without a simple model of what it does to cash and profit over the next year or two, you're taking more risk than you need to.

9. Your accountant does the year-end, but nobody helps you run the year

This is the most common one. The compliance is handled. Everything else, the planning, pricing and cash, sits with you. And you've also got a business to run.

10. You're doing the finance job at 10pm

If your evenings and weekends go on spreadsheets, invoices and worrying about cash, the finance role already exists. You're just doing it unpaid, tired and alongside everything else.

How to read your score

There's no official scoring, but here's a rough guide.

• Zero to two. You're probably fine for now. Keep an eye on cash and margins, and revisit this in a year.
• Three to five. You'd likely benefit from some help, even a few days to set up a forecast, a pricing review and better monthly reporting. That might be all you need.
• Six or more. The gap is costing you, in money, time or sleep. Ongoing part-time support is worth looking at seriously.

When you don't need a part-time FD

Being honest about this matters. You probably don't need one yet if:

• Your bookkeeping isn't up to date. Sort that first. A Finance Director working from messy books spends their time tidying, which is an expensive way to get bookkeeping done. A good bookkeeper and cloud accounting software, such as Xero, QuickBooks or Sage, come first.
• The business is very simple. One service, a handful of customers, steady cash. A good accountant and a monthly look at the numbers may be plenty.
• You need a one-off answer. If it's a single question, like "should we lease or buy?", you need an afternoon of help, not an ongoing role.

Part-time, full-time or neither

A full-time FD makes sense when the finance work fills a week, every week. For most small businesses, it doesn't. A part-time FD gives you the same experience for the hours you actually need, whether that's a couple of days a month or a short burst around a big decision.

When you compare costs, compare like with like. A full-time hire carries salary, employer's National Insurance, pension, recruitment and the time it takes to find the right person. Part-time support should come with a clear scope and, ideally, a fixed price agreed up front. If someone can't tell you what you'll get each month and what it costs, keep looking.

What to ask before you hire one

• Have they run finance inside a business, not just audited or advised on one? Running it is a different job.
• How will they work with your accountant and bookkeeper? A good FD fits around the people you already have rather than replacing them.
• What will you get each month? A short pack you can read quickly, a monthly review, an updated cash forecast. Get it in writing.
• Is it a fixed price? Open-ended billing is how small businesses end up wary of outside help.
• What happens in the first 30 days? You should see something useful quickly, not a long report.
• How do you stop? You should be able to end it without a fight once you've got what you need.

The short version

If you're the person doing the finance job at 10pm, the role already exists in your business. The question is whether the right person is doing it. Our money and strategy page explains how part-time MD and Finance Director support works with us, and what it covers.