Why every SME should have a Finance Director

With key technical knowledge and experience, FDs can drive business growth, far beyond just managing the financial records and keeping the books. As a strategic leader and trusted advisor, FDs can help businesses secure the right funding to fuel their growth ambitions, adding immense value to the company’s decision-making process.

While larger businesses have the resources to employ a full-time FD, many SMEs often do not have the budget for this. As a result, many business owners take on this specialist role themselves with support from an external accountant. But there are limitations with this approach and financial planning and strategy can suffer as a result.

Flexible FDs or ‘Fractional’ FDs can be an affordable solution for business owners looking to bring on board a trusted advisor.

We look at why having a FD is so important to SMEs.

Responsibilities of a Finance Director

At the core, the responsibilities of a Finance Director include managing financial operations, ensuring compliance with tax laws, and maintaining cash flow. However, their role extends beyond these traditional duties. These days a modern FD can:
• Oversee financial planning and analysis
• Manage risk and compliance
• Facilitate strategic investment decisions
• Ensure efficient capital structure management
• Build and maintain relationships with stakeholders, including investors and lenders

Fulfilling these responsibilities ensures the financial health of the company and prepares it to tackle challenges like securing financing for growth.

The Trusted Advisor: The FD as a Strategic Partner

Being a trusted advisor means more than offering basic financial guidance. A Finance Director should be deeply integrated into the company's leadership, providing insights that steer the business toward long-term success. This advisory role focuses on translating financial data into actionable strategies, helping business owners make informed decisions.

For instance, an FD can identify the right time for a company to seek funding and advise on the most appropriate financial instruments—whether it’s debt, equity, or alternative sources.
By understanding the business’s goals and financial landscape, the FD can present funding solutions that align with the company’s growth trajectory.

This deep engagement is what makes a Finance Director more than just a "numbers person"—they become a strategic partner in the business.

Going Beyond the Role of a Finance Controller

While a finance controller focuses on ensuring accurate financial reporting and adherence to regulations, a modern FD goes a step further by shaping the company’s financial strategy. Finance Directors can have a forward-looking role, often involved in forecasting, identifying growth opportunities, and preparing the company for long-term sustainability.

For example, a traditional controller might be responsible for closing the books or managing payroll, but an FD will analyse these numbers to drive broader business decisions—such as expanding into new markets or developing product lines.

This proactive, strategic approach is critical when seeking funding, as it positions the company more favourably with potential investors and lenders.

How a Strategic Finance Director Can Help Grow Your Business

A strategic FD is pivotal to helping businesses secure the right kind of funding. Here's how:

Access to Alternative Financing: FDs today are experts at navigating an increasingly complex funding landscape. With traditional bank loans becoming harder to obtain for SMEs, Finance Directors are now looking at alternative financing solutions, such as alternative lenders like SME Capital, private equity, or crowdfunding platforms. This ability to source non-traditional funding can be a game-changer, especially for businesses with limited collateral
Improved Business Planning: A finance director helps craft detailed financial plans, which are essential when approaching lenders or investors. A well-thought-out financial plan includes robust forecasting, which showcases a company’s future cash flow, growth potential, and profitability. This level of preparedness increases the chances of obtaining financing on favourable terms
Relationship Building: A strategic FD doesn’t just interact with numbers; they build relationships with key stakeholders. Whether it’s fostering relationships with alternative lenders or private investors, an FD’s ability to cultivate trust is critical. This relationship-building can be crucial in ensuring the company has access to funding when it’s most needed
Risk Management: By identifying potential risks and putting mitigation strategies in place, an FD ensures the company is not only prepared for growth but also insulated against financial shocks. This could involve stress-testing the business for potential downturns or advising on debt restructuring to free up capital
Investor Confidence: Having a professional FD at the helm signals to investors and lenders that the business is in capable hands. An FD's presence offers an added layer of assurance that the company is managing its finances prudently, making it a safer bet for investment

About SME Capital

SME Capital was founded to support the growing number of SMEs who face difficulty or frustration in accessing capital through traditional methods. We understand the importance of real and trusted relationships in the SME lending market and have dedicated Regional Directors based across the UK.

By combining traditional lending expertise with the latest in data analytics, we are supporting established UK SMEs with their long-term objectives and business ambitions.

Why every SME business should have a Finance Director