Liaising with External Accountants and Auditors

Yes — liaising with your external accountants and auditors is one of the most important roles a fractional Finance Director performs. In fact, the FD typically becomes the primary point of contact between your business and its external advisers, transforming what is often a perfunctory annual exchange into a genuinely productive, year-round professional relationship.

For most SME owners, the relationship with their accountant consists of sending a bundle of records once a year, receiving a set of statutory accounts and a tax return, and writing a cheque. There is rarely a strategic conversation, rarely a proactive planning discussion, and rarely anyone on the business side who is equipped to challenge, question, or extract additional value from the engagement. A fractional FD changes all of that.

The FD as Intelligent Client

The concept of the "intelligent client" is central to how a fractional FD adds value in the accountant and auditor relationship. An intelligent client is not simply a passive recipient of professional advice — they are a commercially informed counterpart who can brief advisers effectively, evaluate the quality of advice received, push back where appropriate, and ensure recommendations are actually implemented.

Most SME owners are not well-positioned to play this role, through no fault of their own. They do not speak the technical language of accountancy, they lack the time to engage deeply with financial professionals, and they have no benchmark against which to assess whether the advice they are receiving is genuinely good. The fractional FD fills this gap entirely.

Briefing Accountants Effectively

One of the most immediate improvements a fractional FD brings is ensuring your accountants are properly briefed. This means providing timely, accurate, well-organised financial information rather than a last-minute box of receipts. It means flagging changes in your business — new revenue streams, capital expenditure, changes in ownership structure — that affect how your accounts should be prepared and what reliefs might be available. It means having a pre-year-end meeting to identify tax planning opportunities before they expire.

Well-briefed accountants do better work, complete it faster, and flag issues proactively rather than reactively. The quality of your statutory accounts, your corporation tax return, and the advice you receive all improve materially when there is a financially sophisticated intermediary on your side.

Managing the Audit Process

If your company is subject to statutory audit — typically required once turnover exceeds £10.2 million, net assets exceed £5.1 million or you have more than 50 employees on a combined basis — the audit process can be a significant drain on management time and a source of considerable cost if not managed well.

A fractional FD manages the audit on your behalf from start to finish. This includes:

• Preparing a comprehensive audit pack in advance, ensuring auditors have everything they need from day one and reducing unnecessary back-and-forth
• Acting as the primary point of contact for audit queries, fielding technical questions and coordinating responses so that your operational management team is not disrupted
• Reviewing the draft accounts critically before they are signed off, challenging accounting treatments and disclosures where necessary
• Managing the management letter — the auditors' report on internal control weaknesses — and ensuring that recommendations are properly addressed
• Monitoring audit fees and ensuring the scope of work is appropriate for the complexity of your business

"Before we had a fractional FD, the audit was a nightmare every year — disruptive, expensive and always revealing surprises. Now it runs like clockwork. The auditors have everything they need, queries are resolved quickly, and we get much cleaner accounts."

Coordinating Specialist Tax Advisers

As your business grows, you will increasingly encounter situations that require specialist tax advice beyond what a general practice accountant provides — R&D tax credits, Employee Management Incentive schemes, Business Asset Disposal Relief, property transactions, international tax structures. Your fractional FD identifies when specialist advice is needed, selects appropriate advisers, briefs them comprehensively, and integrates their recommendations into your broader financial strategy.

This coordination function is particularly valuable because specialist tax advice in isolation can be technically correct but commercially impractical. The FD ensures that any specialist recommendation is stress-tested against your business plan, your cash flow position, and your long-term objectives before it is implemented. For more on how strategic tax planning works in practice, see our article on tax planning and minimising your tax liability.

Reviewing Professional Fees

A fractional FD also brings discipline to the management of your external advisory costs. Professional services fees can escalate significantly if not actively managed. The FD ensures that engagement letters are reviewed carefully, that scope is clearly defined, that additional work requests are properly evaluated, and that you are benchmarking your fees against market rates periodically. In many SME businesses, the FD identifies material savings in external professional costs within the first year of engagement.

When to Consider Changing Your Accountant

One of the more sensitive tasks a fractional FD sometimes undertakes is advising on whether your existing accountancy firm remains the right fit for your business. Many growing businesses remain with their original accountant long after the relationship has ceased to be optimal — typically because the owner lacks the expertise to evaluate alternatives and the process of changing seems daunting.

A fractional FD can assess your current firm objectively, identify gaps in capability or service levels, manage a tender process if a change is warranted, and oversee the transition to a new firm in a way that protects continuity. This is a service that pays for itself many times over when the right firm is identified. If your business is approaching the stage where statutory compliance needs are growing more complex, our article on managing your year-end statutory accounts process explains how the FD's coordination role extends into that area.

The Practical Working Relationship

In practice, the fractional FD typically meets with your external accountants at least twice a year — once before year-end for tax planning, and once after year-end to review the accounts. Between those meetings, the FD maintains an ongoing dialogue as issues arise. For audited companies, the FD is the principal management contact throughout the audit fieldwork period.

This structured, professional relationship replaces the ad hoc, reactive dynamic that characterises most SME relationships with their accountants — and the improvement in the quality and timeliness of the output is typically marked and immediate.