In the UK, many businesses seeking an alternative to a permanent Finance Director (FD) must navigate their options. It's essential to recognise that the solution doesn't always involve hiring one outsourced person exclusively for a fixed period. Similarly, finance professionals looking to transition to an outsourced role have flexible choices beyond committing all their hours to a single client on a fixed-term basis.

This is where the distinction between an interim FD and a portfolio FD becomes crucial. An interim FD is typically engaged to work full-time for one client, often for a specific project or to cover an absence. In contrast, a portfolio FD works flexibly across several clients, dedicating fewer hours to each.

At EFM, we have found that the portfolio FD model is highly popular with both our Associates and their clients offering benefits for both. This article explores why the portfolio option often outshines the interim model and how it can benefit businesses and finance professionals alike.

For businesses: portfolio or interim?

While many organisations initially opt for an interim FD, a detailed analysis of their requirements often reveals that this may not be the most cost-effective or efficient solution. In the SME sector, we often find that the FD role often encompasses tasks that could be performed by others in more junior finance roles. For example, a business whose FD went on maternity leave approached us to temporarily replace her with an interim FD. This would have meant paying a day rate to the interim FD in addition to the maternity pay for the incumbent FD.

However, upon reviewing the actual needs of the business, we determined that a portfolio FD could cover the necessary responsibilities with fewer hours, even while serving other clients. The cost savings were significant, and the desired outcomes were achieved, leading the business to choose the portfolio option.

Why interim may not always be the best fit

Cost is not the only consideration when evaluating the interim model. There is often a misunderstanding regarding the motivations of interim FDs. Businesses might see an interim FD as a low-risk initial engagement that could evolve into a permanent role. However, most interim FDs prefer this type of work because it aligns with their career goals and lifestyle preferences; they are not typically looking for a permanent position.

This misalignment can lead to an interim FD not meeting long-term expectations, through no fault of their own.

For FDs: interim or portfolio?

Finance professionals considering outsourced roles can find opportunities and benefits in both interim and portfolio models. The interim model suits those who prefer focusing on one intensive client for a period and often with a break between projects, but this is not the only path.

The portfolio model offers a more entrepreneurial approach, allowing FDs to engage multiple clients across various sectors giving them the opportunity to build a business. This flexibility means you control which clients you work with, how many hours you dedicate, and when and how you work. This can lead to a better work-life balance, providing the freedom to integrate personal and social activities into your schedule.

Single vs. multiple revenue streams

While interim roles can offer high day rates, they usually focus on one client. In contrast, a portfolio career can open multiple revenue streams and often prove more lucrative. For instance, one of our Associates worked only 40 days in portfolio roles last year but earned approximately £50,000. Given that interim day rates in the UK can range from £750 to £950, the potential financial rewards of a portfolio role, if you divide the yearly earnings by the 40 days worked,  are evident

Moreover, the flexibility of a portfolio FD career enhances the value of these earnings. A portfolio career is also not necessarily a final destination; occasionally portfolio FDs may transition into interim roles or return to full-time positions and then back to portfolio, making it a journey with various potential pathways.

Look beyond interim

In conclusion, interim and portfolio FDs offer distinct benefits to businesses seeking outsourced finance expertise and finance professionals providing it. The key is not to default to one option due to familiarity or lack of awareness about the other.

For more information on EFM’s portfolio FD services for businesses or if you are a Finance professional interested in a dynamic and varied portfolio career, please get in touch.