As a small or medium-sized enterprise (SME) owner, you already understand the importance of having a strong finance team. As your business grows, so should your finance function. At some point, you’ll need someone to take over the financial reigns; someone to become your Finance Director or CFO.
Adding to the team with a strong finance leader is a key decision that will probably have taken you a while to reach. You’ll want to do a thorough job of finding the right person.
When it comes to recruiting your new Finance Director, the interview is, in our opinion, one of the most important parts of the process. This is the moment when you actually meet with your candidates and, hopefully, determine which one is going to join your team. You won’t have hours to spend chatting with them, so it’s important to get the most out of your time together.
You need to know what finance interview questions to ask them.
How to determine their competence with technical matters.
Why they are, or aren’t, a good cultural fit.
What sort of answers to look for.
You won’t be able to ask everything in one interview, so it makes sense to meet with your candidates more than once. While running two sets of interviews does take time, do remember that to get the best idea of your candidates, you need to see them in different ways. A more formal question and answer format provides the ideal opportunity for the candidate to show off their financial savvy. Equally, a more informal, conversational interview allows you to explore those more cultural and soft skills that are vital when it comes to considering ‘fit’.
Next month’s blog will share more ‘soft skill’ finance interview questions. Ones you can use to delve into what makes the candidate tick and how they may behave under pressure.
Here, we share those more technical finance questions which really probe into the heart of your candidate’s approach to the role.
1. Can you give an example of where you have recently used technology to improve a business process?
This question will help you identify if your candidate is focused on improving efficiencies to help grow your company. Or whether they are the kind of finance person who likes to focus on just keeping things ticking over. A candidate who keeps up to date with the latest developments is likely to have the forward-thinking mindset. Just what you need in an FD of an entrepreneurial business.
An example that we love to ask is whether the candidate has any knowledge of Power Query or Power BI. You might not know the “ins and outs” of what these applications can do. But asking the question will show you if the candidate has invested any time in these areas.
2. What KPIs would you expect to see being monitored in this business?
This question is a great one to find out how much the candidate has researched your business in advance of the interview. For example, do they come up with any sector specific KPIs? It also shows you whether they are just focused on financial measures (eg gross profit / margin) or whether they are thinking more commercially.
Our series of blog posts on Key Performance Indicators for different sectors could give you some inspiration here as to what you could be measuring.
3. How do you manage cash flow?
This question appears to be quite straightforward, but actually is a great way for you to see whether your candidate is acting as a Financial Controller or Finance Director. A candidate who says they check the bank account each day (for example, because this job is too important to delegate), is not operating at FD level.
Candidates who speak about reviewing a rolling cash flow forecast (perhaps using an excel model developed by them) which gives them insight to make business decisions are likely to be more what you need.
Finance Directors who monitor cash flow on a 12-week rolling basis will be able to give you advanced warning of where to steer the ship when seas get rough. For example, by recommending obtaining more finance because they anticipate a squeeze in cash flow in a few months’ time.
An additional question to ask here is what they have done when cash flow has been tight in previous companies. The answer to this will tell you if they focus solely on cost cutting or whether they think more commercially. For instance, do they suggest liaising with suppliers to negotiate longer payment terms or a discussion with staff to reduce working hours?
4. How do you keep technically up to date for Continuous Professional Development (CPD) purposes?
All qualified accountants need to stay technically up to date as part of their accountancy body’s regulations. As such they need a certain number of hours (varies per qualification) of structured and unstructured training per year.
The ICAEW for example puts on several training courses each year. A good FD should attend at least one of these every year in addition to doing more unstructured training.
If the candidate gives a vague answer to your interview question, then probe further by asking for specifics. For example, they should keep a record of any CPD.
5. Tell me about a time you made a technical mistake.
Understandably, we all make mistakes. This question helps you see how your candidate will handle the inevitable issues that crop up in a growing business. For instance, will they blame others and make excuses? Or will they take the lead in establishing what went wrong and shoulder responsibility for putting things right?
A candidate who says they never make mistakes (and some do claim this!) is one to be probed further.
It’s also interesting to see whether someone assumes they need to tell you about the biggest technical mistake they made or a trivial one. The former, in our experience, are candidates who have a high moral compass.
6. Please talk me through your budgeting process.
One of the best finance interview questions to see how the candidate approaches budgeting in general. It will also show how they can help you plan for the growth of your business. A good Finance Director will talk with department heads to understand sales targets, marketing plans, capital expenditure and IT requirements. They will then combine this knowledge with historical data to create a much more scientific budget than ‘last year plus 10%.’
7. What challenges is our industry facing?
Many business owners make the mistake of just recruiting people with sector experience. Whilst this is often important in operational and BD roles, the skills of a Finance Director are very transferable across multiple industries.
Asking this question will give you insight into whether a candidate with years of sector experience has kept their finger on the pulse with changes to the industry. It will also give candidates with little sector experience the chance to shine. Especially if they have done their homework. Do they know enough about your business and industry? Do they really care, or have they just skimmed the headlines? Any candidate who offers suggestions to counteract, or even take advantage of, those challenges will give you an indication you have found a commercially focused Finance Director.
And in our experience, these are the ones that growing SME’s should be recruiting.
In our next post, we’ll share the key finance interview questions to help you explore those ‘soft skills.’ This will help you establish if there is a good cultural fit with your future Finance Director.
Of course, the rest of your recruitment process needs to be in good order. This will allow you to recruit the very best leader for your finance team. Knowing the best finance interview questions to ask is a great starting point but you might prefer some assistance. For example, you may choose to hand over the process to a professional and experienced finance headhunter (like us here at Artemis Clarke). Or you might prefer to do the whole recruitment in-house, in which case, these questions will save you a lot of time and potential headaches.
If you do prefer to do the recruiting yourself, our Candidate Assessment Process is an excellent way of benefiting from our recruitment expertise while leaving the ‘fun’ part of recruiting up to you.