What is a finance director and what do they do?

Traditionally, the finance director (FD) is the most senior finance professional in an organisation and will typically sit on an organisation’s board of directors. However, recent trends have seen this most senior role commonly retitled chief financial officer (CFO) with the title of finance director offered to senior finance professionals in a division, subsidiary or territory

A finance director in the traditional sense (or CFO) assumes a leading strategic role in influencing the future direction of an organisation. They provide financial leadership and help to align business and finance strategy to grow the company. They often drive change management or business improvement initiatives within the organisation. These professionals must also perform effective risk management and ensure compliance with financial regulations as well as building and maintain strong relationships with lenders, banks, investors and other financial institutions.

Where the title of finance director reflects a senior finance professional in a division, subsidiary or territory, the roles and responsibilities are very similar, but with far less requirement to liaise with shareholders or raise capital for the group. These positions remain strategic in nature but may have more operational accountability.

Typically finance directors in this structure will be responsible for ensuring the finance operation in their area is efficient and effective. They have primary responsibility for planning, implementing, managing and controlling all financial-related activities of the business, including business planning, budgeting and forecasting.

Key responsibilities

Responsibilities will vary, but examples include:

  • Advising the CEO and Senior Management Team on all matters relating to financial performance and provide guidance on financial strategy
  • Implementing robust financial systems and developing policies and procedures to ensure effective and efficient financial management within the company
  • Leading the budgeting, forecasting and planning process
  • Controlling all financial and accountancy matters including month end reports, management accounts, cash flow management, statutory accounts, presentation of management information and KPIs
  • Ensuring legal and regulatory documentation is filed, and monitoring internal controls and compliance with laws and regulations
  • Recommending funding sources for investment programmes and calculate the likely return on investment
  • Evaluating the financial potential and risk of company activities such as investments and merger and acquisition plans
  • Managing the company’s liquidity, ensuring that it always has access to cash and sources of credit
  • Monitoring external contracts and services provided by suppliers
  • Coordinating corporate finance, debt, taxation, equity and acquisitions
  • Directing and controlling finance staff to ensure that they are appropriately motivated

Why are they important?

Whether the most senior finance professional in a business or whether the finance head of a division, subsidiary or territory, the finance director uses their financial expertise to create financial success for the company and its stakeholders. Finance directors are responsible for ensuring that the organisation employs robust financial process and controls and play a key role in mentoring, coaching and advising fellow directors in all financial matters, particularly those who do not have a good understanding of numbers

Skills needed for this role

Finance directors must have excellent leadership and management skills, along with outstanding written and verbal communication skills and an ability to influence. Experience with senior level accountancy is essential with good commercial and business awareness. Finance directors must be proactive with an analytical mind and the ability to think strategically and solve problems.

Strategic Professional Options examinations linked to this role

Advanced Financial Management

Advanced Performance Mangagement

Career opportunities presented by this role

Divisional finance directors can be promoted to CFO of the organisation and those in the more traditional FD role may see this as a step to becoming a CEO or chairman of an organisation. For others, globalisation of business often provides the opportunity to do a greater variety of work internationally and at a more senior level than could have been achieved in a head office.

Competencies

High level competencies required include:

  • Audit and assurance

    A. Advises on and communicates effectively the role and scope of audit and assurance engagements to relevant stakeholders.

    B. Applies regulatory, legal, professional and ethical standards relating to audit and assurance engagements.

    C. Plans and prepares for audit and assurance engagements.

    D. Performs effective audit, and assurance engagements.

    E. Reviews and reports on the findings of audit and assurance engagements.

    F. Guiding efficient and effective operations.

  • Corporate and business reporting

    A. Prepares financial statements, corporate financial and integrated reports for external stakeholders using appropriate technology.

    B. Leads effective decision making through analysing, evaluating and communicating performance and position of entities.

    C. Prepares financial statements for groups of entities using appropriate technologies.

    D. Monitors, critically evaluates, and advises on the relevant accounting standards, regulations, conceptual and financial reporting frameworks.

  • Data, digital and technology

    A. Identifies strategic options to add value, using data and technology.

    B. Analyses and evaluates data using appropriate technologies and tools.

    C. Applies technologies to visualise data clearly and effectively.

    D. Applies scepticism and ethical judgement to the use of data and data technology.

  • Financial management

    A. Links developments in global trade, markets, business practices and the economic environment to required improvements in the financial and risk management of an organisation.

    B. Advises on business asset valuations, capital projects and investments using appropriate analytical qualitative and quantitative techniques.

    C. Identifies, evaluates and advises on alternative sources of business finance and different ways of raising finance.

    D. Communicates and advises on the impact on financial decision making on current developments in regulation, governance and ethics.

    E. Assesses and advises on appropriate strategies to manage business and organisational performance regarding business and finance risk and effectively communicates the impact.

     

  • Governance, risk and control

    A. Evaluates organisational structures and governance to protect the long-term interests of stakeholders.

    B. Recommends appropriate strategies to ensure adherence to governance structures and application of best practice internal controls.

    C. Identifies and manages risk appropriately.

    D. Uses risk management for the best interests of an organisation and its stakeholders.

    E. Monitors and applies relevant legislation, policies and procedures.

  • Leadership and management

    A. Applies appropriate leadership strategies to effectively deliver business objectives.

    B. Leads, motivates and manages people to optimise performance and effectiveness.

    C. Collaborates, supports and works to achieve the objectives of the organisation, applying appropriate digital technologies.

    D. Acts proactively and thinks strategically, in anticipating organisational needs, recognising the wider business environment and dynamics.

  • Management accounting

    A. Applies development and performance management, in the wider business and technological environment, within the context of strategic planning and implementation.

    B. Directs organisational performance through the selection and measurement of financial and non-financial performance indicators.

    C. Collaborates on the key tactical and organisational areas of budgeting and control, capital investments, people and resource management.

    D. Consults on the design and use of current and emerging technology and information systems to improve strategic decision-making and organisational performance.

  • Stakeholder relationship management

    A. Positively develops relationships with internal and external stakeholders.

    B. Communicates and gains commitment from internal and external stakeholder.

    C. Uses emerging technologies to collaborate and communicate effectively with stakeholders.

    D. Applies professional and ethical judgement when engaging with stakeholders.

    E. Aligns organisational strategic objectives with stakeholder needs and manages expectations.

  • Strategy and innovation

    A. Applies business acumen and commercial awareness to deliver business objectives.

    B. Recommends a range of suitable strategic options from which to develop sustainable plans and objectives.

    C. Evaluates, justifies and implements suitable strategic options.

    D. Adopts and applies innovative methods to implement strategy and manages change.

  • Taxation

    A. Communicates knowledge of the operation and scope of the tax system, obligations of taxpayers, and the implications of non-compliance and advises on tax planning.

    B. Advises ethically on strategic tax plans and computes the tax liabilities of individuals.

    C. Advises ethically on strategic tax plans and computes the corporation tax liabilities of individual companies and groups of companies.

    D. Explains and computes the effects of value added tax (VAT) / goods and services tax (GST) and indirect tax on incorporated and unincorporated businesses and advises appropriately.