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The Finance Director's Role on the Board

Axiom-e's role

Because we operate as portfolio Finance Directors - or sometimes Non-Executive Directors - our role at Board Meetings is in large measure that of a Non-Executive Director. It is often during Board Meetings that the added-value contribution of an axiom-e director is highlighted.

Non-Executive Directors

As the CIMA report Non-Executive Directors - their value to management says:
The non-executive director in a smaller company can add enormous value. An experienced independent voice can help a small or growing company to avoid pitfalls and to make better decisions that enable that company to prosper and succeed. The non-executive director should be viewed as a sensible investment decision.
During their growth smaller companies need sound, independent business advice. Non-executive directors are well placed to provide this. As the companies develop and become more relevant to the 'public interest', the guardianship role of non-executive directors becomes more relevant.
The primary added value of non-executives to a smaller company will initially be business expertise and advice. As the company grows, it will also benefit from more specific support on, for example, finance, marketing and research. Financially expert non-executive directors have a contribution to make in helping smaller companies avoid potential over-trading. They can ensure that they receive adequate and timely information both to run their business and to meet legal requirements.
The role of the non-executive director in growing smaller companies can include:
  • Business advice based on experience and knowledge
  • Financial expertise, particularly for management purposes but also in terms of meeting statutory requirements
  • Control and management practice
  • Guardianship

The benefit of financial skills

Given where our clients are in their business life-cycle, it is not surprising that the Directors of several of them have relatively narrow skills focused on technology or selling. We often find that our broader-based complementary commercial skills and awareness are required to drive the business effectively towards its strategic goals. Because each of axiom-e's portfolio Directors has been Finance Director and Company Secretary of at least one company and has gained wide experience in several companies, we are able to complement the skills and knowledge of our clients' other directors thereby enabling synergies to arise. Apart from helping to improve general corporate management, the broad-based experience of our staff enables us to:
  • act as a sounding-board for the Managing Director/CEO and the rest of the Board
  • question the Board's activities and decision-making processes
  • introduce a different way of thinking, usually more focused on longer-term objectives but which still considers what is necessary to keep going in the short-term
Corporate Governance

During their time with several companies our staff have:

  • substantially improved the structure and processes of Board and Management Teams to ensure compliance with good practice and regulations.
The increased focus on corporate governance and the emphasised role of Non -Executive Directors following a succession of well-publicised corporate failures is discussed in CIMA's March 2003 report The Role of the Non-Executive Director: Making Corporate Governance Work which "...provides an overview of recent corporate governance developments, as well as some pointers as to how accountants and finance professionals can contribute to the effectiveness of their boards."

Strategic financial input

According to a survey reported in the Times on 13th December 2004:
  • Only a third of chief financial officers in Europe and the US provide strategy advice to their chief executives.
  • CFO Research Services which carried out the survey...found that most of its respondents were too busy conducting operational analysis to focus on strategy matters.
  • Two in three respondents saw their primary responsibility as setting and monitoring revenues, costs and profits and admitted to getting bogged down in low-value activities."
By contrast, Axiom-e focuses on higher-value strategic financial management and can provide assistance whether or not a client has a Finance Director or CFO in place.

Importantly, we focus on the key areas regarded as part of the role of the Finance Director rather than (or in addition to) that of the Finance Manager or Financial Controller.

Gaining the axiom-edge

To find out how axiom-e can help your company get its corporate governance right and so give you the axiom-edge, please contact us. 

For more information on corporate governance and the management of companies, click here.