James joined Surf Air last summer as Financial Controller for their new European division, brought on to build the finance function and work alongside the other members of the European exec team to successfully launch their business in Europe later this year. He started his career at Flybe, working in their Strategic Finance team for six years looking at everything from forecasting to M&A opportunities, floating the company on the London Stock Exchange, to management reporting. He then moved to Sky where he was responsible for reporting, analysis and planning of their direct to home subscription revenues (£6bn+) and latterly setting up a new revenue strategy team. Prior to Surf Air he worked at Menzies Aviation looking after FP&A for their European Aviation division before moving up to managing the whole UK aviation finance function.
We sat down with him ahead of his presentation at the FP&A Innovation Summit, taking place in London this February 19-20.
How has the role of the finance function changed over the last decade? What do you see as having been the main drivers behind this?
I see finance as developing into two departments - back office accounting and commercial finance. Technology and outsourcing are playing a big part in accelerating this, with a shift in the balance towards focusing resources to commercial business partnering. I’d caution against mass outsourcing as the value of traditional financial accountants, ledgers and payroll clerks who understand the business and who you can quickly and easily speak to is a huge asset for the rest of finance and the wider business. At Surf Air we don’t have to follow what other airlines do. We question everything. We always look for the best way to do things and never just follow whats been done before. This includes finance, where we are outsourcing our bookkeeping, management accounting and payroll from day 1. We can’t do these functions better ourselves than an expert accounting firm. We’ll continually review this, but my focus can be more on strategy and growing our business, and as we grow, I see more need to grow a team internally to help with this than have an in house payroll or ledgers teams.
Do you think executives' perceptions of finance leaders as accountants still prevent them taking up a role as a strategic partner in their organizations? If so, how can they overcome this?
In my experience, executives initial perception of any finance professional is still as a back office accounting function. However, if you position yourself as a strategic partner and build a strong relationship then over a short period of time you will be a key strategic partner in the business. I’ve worked in organisations where everyone in finance is treated as a business partner and are embedded right into the organisation, to companies where finance is predominantly a back office function but the common theme is that it is your approach as a finance professional and not the organisation that will dictate your role. You cannot argue the value that a strategically minded finance professional brings to an organisation so the opportunity will always be there.
What do you see as being the most important thing to consider when forecasting during a period of sustained growth? What else can finance leaders do to drive growth?
Having models that are flexible, easy to change and that you can audit are key. You will go through tens if not hundreds of iterations of a plan so knowing what is different across each version is critical, especially those that have been presented to your executive team. The underlying growth assumptions you put into the plan are going to be the key driver to the accuracy of the forecast. There is therefore no point in modelling every cost down to the smallest detail. Aim for 90% accuracy with a balance between speed and being able to answer questions on how you’ve built the forecast. As a finance leader, it is important that you understand the business. Spend time with each department (or everyone in the company if its small enough). See the operations, try out the product, chat to people over a coffee about what they do. If you understand the business your forecasts will be better and you will add so much more value. You will see opportunities for growth or optimisation, you’ll get more buy-in from your colleagues in the forecasting process and also gain more respect amongst your colleagues.
What do you see as the finance function’s role in innovation of new products?
This depends on the nature of the organisation, but assuming you are working for an organisation that is innovative or coming up with new ideas, finance should be there as a sounding board. Key tasks are to ground innovations in reality or to help optimise a great product into a profitable one. Be the one to ask the obvious questions, check assumptions, and make sure innovations are deliverable. Don’t stifle innovation but remember your role in delivering value to shareholders and balance risk and reward.
Do you see new technology as having made your life easier, or has it also introduced new complexities? Which technologies do you think will have a major impact on your role this year?
I think you can argue that technology has, on the whole, made finance professionals lives easier. In a large organisation, poor implementation of systems may cause complexities, but on the whole these are outweighed by the efficiencies and additional capabilities the systems deliver. Working for a start-up, the key technological advance I am benefiting from is SaaS and use of the cloud. In Europe we are working from multiple locations but don’t have any servers and hardly any software installed on peoples computers. For a new employee we buy a laptop and a phone, get them on the internet and they are up and running. File sharing is easy, everything is backed-up, security is better than we could implement ourselves and systems are on the whole much easier to use than legacy software that has been developed and updated over many years.
What do you see as the biggest challenge facing the High-Tech industry?
Keeping ahead of the competition in such a fast paced industry, where there is a trend towards offering services and democratising the use of expensive assets through innovative technological solutions is the biggest challenge. There are lots of people out there who realise they can challenge big business and are doing so successfully. Building a sustainable business model that isn’t replicated or superseded is hard. The investment in development and upfront capital required means the high tech industry is high risk and high reward. The challenge for finance here is to mitigate risks whilst not restricting innovation or destroying ideas before they have been given a chance to mature and develop into the next big thing.
What do you foresee being the major risks you face at your company in the near future? What do you think presents the greatest challenges for finance leaders over the next year? Do you have strategies in place to overcome these?
Surf Air is a new concept for the European market and starting an airline isn’t cheap! Our biggest risk is choosing the right routes to launch our product with and then targeting our future growth to build a great network, improve what we offer existing members and attract new members. We’ve never operated in Europe and much of what we are doing hasn’t been done before. Our plans are therefore highly assumption driven. Keeping track of these, adjusting plans quickly to reflect the ups and downs in costs and revenues vs plans but keep in line with strategic goals whilst setting up processes and reporting for the first time will be a huge challenge. At Surf Air, we have built a great highly experienced team who understand the industry and have a real passion for what we do. We know there will be challenges, but we are well prepared and equipped to deal with them.
You can hear from other industry leading finance leaders like James at the FP&A Innovation Summit. View the agenda here.