What to Expect from Your Accountant – Part 4: A Non-Executive Director with a Strategic View
Now we’ve established that your accountant has the capability to be proactive, is willing to communicate and encourage you, and can give you independent and objective advice on franchise issues, have you considered that they might be in the perfect position to become a non-executive director in your franchise business?
In the last article of this series, let’s look at what this means for you and your accountant.
What is a non-executive director?
A non-executive director, often abbreviated to NED, is a company board member who’s an independent or external director but is not part of the executive management team.
There are, of course, personal qualities needed to be effective in gaining trust with board members – good communication skills, being well-informed about your company, and have a solid understanding of the issues of your business.
The Corporate Governance Code sets out the standards for good practice for leaders of the board – their accountability, remuneration, their relationship with shareholders, and their overall effectiveness in the role.
The guidance on board effectiveness published by the Financial Reporting Council states that “Non‐executive directors have a responsibility to uphold high standards of integrity and probity.”
It’s important your accountant be all of these when you consider the liability of directors. Even though they are non-executive, they’ll still be held responsible the same as any other director of the franchise business. These potential liabilities can be kept in check by performing their key responsibilities well.
If your accountant fits the bill, and is willing to take on that role, you can expect them to contribute high quality, independent, and objective advice, and demonstrate a high level of integrity. And independence is the key here: they do not have executive responsibilities in your franchise, and are not an employee of it, although they can expect to be paid fees for their role. They should also have the ability to constructively evaluate and challenge the management’s performance at a board meeting.
But I’m too small to have a board
If you’re only just starting your franchise, or are only a small team, having a NED might seem redundant. Yes, John Harvey-Jones (formed CEO of ICI and BBC’s troubleshooter) once said that…
“Every business, no matter the size, should review their business, once a quarter, with a numerate outsider.”
…a numerate outsider….
So, even in a small franchise business, you could ask your accountant to act as a virtual NED once every three months.
An away day to look at the past and how you’re doing against future goals could be just what you need to take your franchise forward and realise your dreams.
Now we’ve come to the end of this series on your accountant’s role in your franchise business, what have these four articles got in common?
Here’s a run-down of all the things you can expect of a good accountant, so that you have confidence in their standards, knowledge, and abilities:
1. Have the skills to educate you
2. Be proactive in nature
3. Establish and build open communication and trust
4. Have a good overarching understanding of your franchise business
5. Have an eye on financial trends and other franchises in your sector
6. And if their personal skills and ability match with the values of your franchise, a place on your board as a non-executive director
Want to know why Franchise Accounting Services is not your average franchise accountants? Visit our website and DOWNLOAD OUR FREE EBOOK, ‘Why Every Accountant is NOT the Same – and Why That Matters for Your Business’.
