What costs are involved with bringing in a Finance Director?

When a business first starts out, investing in a Finance Director (FD) may not be a priority. However, as a business grows, outsourcing FD tasks often works well. In this blog, we discuss the costs involved with bringing in a Finance Director.

Although an in-house FD may not be essential immediately, there usually comes a time when a company’s financial growth and complexity of operations make having an FD in place a necessity. If you feel that your business has reached this point, you may be wondering how much it will cost to bring an FD into your organisation. We will consider the costs involved, starting with exploring whether a company needs to hire an FD.

Does your company need to bring in a Finance Director?

Growing a business to its full potential is almost impossible without having a dedicated senior finance professional on board. CEOs have their own role to carry out, and there comes a point when they need support with aspects like cash flow, capital management, and monitoring KPIs.

If your company has reached a point where the complexity of its operations necessitates the full concentration of your CEO on strategic and planning concerns, it’s probably time to advertise for an FD. Hiring an in-house FD enhances strategic planning, reduces financial risks, and drives the organisation’s financial success.

How much does an FD cost?

Average salary estimates for FDs in the UK vary. However, if you take an estimate of £90,000 as a base to work from, you can expect the actual cost of bringing in an FD to be around £145,000. This is not an exact figure, but it gives you a good idea of the expense involved. As you can see, the cost of an in-house FD is far more than just their base salary. There are several other factors to consider.

FD bonuses, incentives, and benefits

When you advertise for an FD, the package will include incentives. The actual incentives are your decision. Common incentives and benefits offered include health insurance, paid additional leave, and a retirement plan. These incentives often equate to around 20-30% of the individual’s base salary.

Cost of recruitment

Recruitment is costly, although it’s a good investment if it brings the right person into your organisation. The costs you can expect to incur during the recruitment process include,

• Recruitment agency fees
• Advertising expenses
• Travel and accommodation for candidates attending interviews

Onboarding and training process for your new FD

The costs of initial orientation and training include the required materials and the time investment of HR and other individuals involved with the process. External training may also be needed. Reduced productivity while the new FD integrates into the business may also be a cost.

Necessary office equipment

Any FD you bring into your organisation will require technology and other equipment to perform their duties. Items needed all have an associated cost. They include,

• Office furniture
• PC or laptop
• Other technology, such as a smartphone
• Software licences

Costs associated with candidate taking the role

If you want to hire the right person as an FD for your company, you may want to cover any relocation costs for the successful candidate. These costs include moving, temporary accommodation, and potentially a settling-in allowance.

You can see that the costs involved with bringing in an FD are more than just the basic salary offered. Other associated costs must be accounted for if your company is to hire the right person for the role and ensure the hiring and integration process is seamless and successful.