News and Articles
It has now been 18 months since we set up our business and welcomed our first Janus client. We thought it would be useful to look back and reflect on the key things we have learnt – for ourselves but also after feedback from their clients.
So here are our Top Tips for building an effective SME finance function.
•
Two heads really are better than one
– We are so pleased that we are doing this together. By having two people across an account, we can offer seamless cover for our clients. It is not very often that one of us is not around to take a call and work on anything that crops up so that the ‘part-time’ problem is eliminated. It is also really useful to have a sounding board for and second opinion on everything from recruitment to designing management accounts. Better ideas and solutions always result from a collaborative process.
• Use your FD as trusted adviser, rather than just an accountant – A good FD is so much more than an accountant. Since we started Janus, we’ve got into and advised on a wide range of areas. Our clients refer to us as their “trusted advisers”. As well as the “givens” of day-to-day finance management, monthly reporting and year end procedures, we’ve also helped clients to straighten out their insurance cover and gaps, negotiated contracts, recruited staff and introduced professional advisers and lawyers. We’ve provided key advice and information to enable a client to extract themselves from an onerous supplier contract – saving them £700k per year and we’ve helped work through multiple Covid-19 problems from advising on furloughing to talking to potential funders and we’ve always been available with a friendly ear and wise counsel during a time of trouble.
• Wide experience helps spread best practice – Where things work well at one client or we see an approach that works well elsewhere, we can help to pass that on: be that R&D tax claim approach; technical accounting issues or the latest intel on furlough changes.
• Always start with good basics and building blocks - Never underestimate the time needed to understand the business and then design a good chart of accounts and structure. It is a great investment and is never time wasted. From experience this needs 3-4 iterations to get right. Once solid, it acts as your base to build a good Budget, from which all other reports and monthly information can hang off.
• Invest in good quality accounting staff – One mistake we often see is that the accounting function starts off as something else that fills round other jobs -the “Office Manager Plus” approach. Or we hear “Our receptionist does our bookkeeping – it can’t be that difficult surely?”. Well yes it can – good accounting starts with good bookkeeping. It’s a big mistake to under invest in this area. You wouldn’t get an untrained person to drive a forklift, so why do the same with your accountant? We help to employ good quality accounting staff that can work well with our clients (and us!) and we manage and mentor the staff we have helped to employ.
• High street accountants won’t understand your business – We see this a lot. A firm is employed to “do the accounts” for £200 per month. They may only visit the office once or not at all. For the founder, job done – a tick in the box. Again, how difficult can it be? But, as the business grows, the same £200 per month applies but the service is not growing with you. Unsurprisingly, the accounts are not very good and make little sense – “we hear a lot “these guys just don’t understand our business”. Buy cheap – buy twice.
• Focus on cashflow – Cash is king – especially in these troubled times. 13-week cashflows – updated weekly and reviewed regularly – are vital.
• Don’t sweat the small stuff – Experienced advisers can help put problems into context. With over 60 years’ combined experience there is not much we have not seen before or addressed in the past. Very little phases us and nothing panics us – even a global pandemic!
• Trust is important – Relationships are better if they are long term. It is no good having an FD for a couple of months. There is zero point. For that reason, we find that working on a retainer basis for a fixed price works best and gives client’s budget certainty. We do more work at the start as an investment, as we get to know our clients and our clients benefit greatly from that investment further down the line.
• Scale is important – Everyone needs some element of an FD, but normally owners and founders can substitute in initial stages of set up. However once scale starts to build, (typically at the £2m - £3m turnover level) owners struggle to “get their arms around the business” and start to need more sophisticated systems, controls and reports. This is a good time to look into bringing in an FD.
• Keep it simple and don’t reinvent the wheel – You don’t need to reinvent double entry bookkeeping – there is no need for impenetrable titanium powered spreadsheets in place of an accounting system that costs £25 per month!
• Keep it online – It works best if clients can access tools online via a web browser without the need for complex software.
• You don’t need to be in the office as long as you communicate – We like to meet clients at least weekly but in times of crisis we have met multiple times per day. Communication is key to ensuring you are making the most of your FD but - as we’ve all just learned – that doesn’t have to be in the office.
We hope you find our musings on our first 18 months helpful. If you think your business could benefit from a part-time FD or you know someone who would, please do get in touch with either of us to discuss your needs further. We would love to hear from you for an introductory call or virtual coffee!
Hilary@Janusfd.com Nigel@Janusfd.com
• Use your FD as trusted adviser, rather than just an accountant – A good FD is so much more than an accountant. Since we started Janus, we’ve got into and advised on a wide range of areas. Our clients refer to us as their “trusted advisers”. As well as the “givens” of day-to-day finance management, monthly reporting and year end procedures, we’ve also helped clients to straighten out their insurance cover and gaps, negotiated contracts, recruited staff and introduced professional advisers and lawyers. We’ve provided key advice and information to enable a client to extract themselves from an onerous supplier contract – saving them £700k per year and we’ve helped work through multiple Covid-19 problems from advising on furloughing to talking to potential funders and we’ve always been available with a friendly ear and wise counsel during a time of trouble.
• Wide experience helps spread best practice – Where things work well at one client or we see an approach that works well elsewhere, we can help to pass that on: be that R&D tax claim approach; technical accounting issues or the latest intel on furlough changes.
• Always start with good basics and building blocks - Never underestimate the time needed to understand the business and then design a good chart of accounts and structure. It is a great investment and is never time wasted. From experience this needs 3-4 iterations to get right. Once solid, it acts as your base to build a good Budget, from which all other reports and monthly information can hang off.
• Invest in good quality accounting staff – One mistake we often see is that the accounting function starts off as something else that fills round other jobs -the “Office Manager Plus” approach. Or we hear “Our receptionist does our bookkeeping – it can’t be that difficult surely?”. Well yes it can – good accounting starts with good bookkeeping. It’s a big mistake to under invest in this area. You wouldn’t get an untrained person to drive a forklift, so why do the same with your accountant? We help to employ good quality accounting staff that can work well with our clients (and us!) and we manage and mentor the staff we have helped to employ.
• High street accountants won’t understand your business – We see this a lot. A firm is employed to “do the accounts” for £200 per month. They may only visit the office once or not at all. For the founder, job done – a tick in the box. Again, how difficult can it be? But, as the business grows, the same £200 per month applies but the service is not growing with you. Unsurprisingly, the accounts are not very good and make little sense – “we hear a lot “these guys just don’t understand our business”. Buy cheap – buy twice.
• Focus on cashflow – Cash is king – especially in these troubled times. 13-week cashflows – updated weekly and reviewed regularly – are vital.
• Don’t sweat the small stuff – Experienced advisers can help put problems into context. With over 60 years’ combined experience there is not much we have not seen before or addressed in the past. Very little phases us and nothing panics us – even a global pandemic!
• Trust is important – Relationships are better if they are long term. It is no good having an FD for a couple of months. There is zero point. For that reason, we find that working on a retainer basis for a fixed price works best and gives client’s budget certainty. We do more work at the start as an investment, as we get to know our clients and our clients benefit greatly from that investment further down the line.
• Scale is important – Everyone needs some element of an FD, but normally owners and founders can substitute in initial stages of set up. However once scale starts to build, (typically at the £2m - £3m turnover level) owners struggle to “get their arms around the business” and start to need more sophisticated systems, controls and reports. This is a good time to look into bringing in an FD.
• Keep it simple and don’t reinvent the wheel – You don’t need to reinvent double entry bookkeeping – there is no need for impenetrable titanium powered spreadsheets in place of an accounting system that costs £25 per month!
• Keep it online – It works best if clients can access tools online via a web browser without the need for complex software.
• You don’t need to be in the office as long as you communicate – We like to meet clients at least weekly but in times of crisis we have met multiple times per day. Communication is key to ensuring you are making the most of your FD but - as we’ve all just learned – that doesn’t have to be in the office.
We hope you find our musings on our first 18 months helpful. If you think your business could benefit from a part-time FD or you know someone who would, please do get in touch with either of us to discuss your needs further. We would love to hear from you for an introductory call or virtual coffee!
Hilary@Janusfd.com Nigel@Janusfd.com
Feb 2021