Outsourcing - put simply - is looking outside of your organization for expertise. Organizations will often bring in external resources for knowledge in areas such as finance, law, HR, or payroll. This article will discuss the potential benefits of outsourcing the accounting and finance functions.
Expertise
Experts are often much more efficient at providing and performing functions vs. those same functions being handled by a business owner or hired staff. For example, in the area of finance, an experienced, outsourced finance expert (i.e. CFO or Controller) will be able to look at a set of key metrics or Key Performance Indicators (KPIs) and know the degree to which relevant measures such as payroll, debt and capital ratios line up with peers. Experts can assess key questions such as whether a business is efficient with debt or whether it is leveraging its capital or assets efficiently. Businesses can benefit from the many years of relevant experience that experts bring to the table and this proficiency saves everybody time. The most successful business leaders surround themselves with experts in areas where they do not have specific knowledge and, with outsourcing, a virtual board of directors can provide wise and insightful counsel and partnership.
At BST’s Virtual Accounting Solutions (VAS), we advise businesses on what a healthy balance sheet looks like, how to maximize the value of a company, how to maximize cash flows, or how to shrink the cash cycle. While many business owners can figure out or learn about those essential areas, is that really the best use of their time or should they be out marketing their product and growing their company?
Spend more time working in your business, not on it
There often comes a time when business owners realize they need more expertise and are not saving the time they envisioned when a bookkeeper was brought on board. When a business owner begins to start spending nights analyzing their cash flow, they may realize that their hired staff may lack the experience of knowledge to perform more advanced financial analytics. This is not the highest and best use of the owner’s time and prohibits that owner from allocating more time to strategic matters.
Saving money and time
Typically, outsourcing will save expenditures on payroll taxes, benefits, managerial oversight and overhead (office space, equipment, and technology.) With outsourcing, businesses can find it to be financially rewarding because they are only paying for the services needed and not the burden of costs associated with full-time staff. Outsourcing provides the “right-fit” level of a fractional share of a CFO, bookkeeper, or controller to whatever degree a business may need.
Additional savings can be realized as businesses that outsource can gain access to a state-of-the-art technology platform that is managed by a team that is highly trained and certified in that technology. So, in-house investments in technology procurement and maintenance are not required.
Risk Management
Some businesses are subject to regulatory boards or oversight and proper financial reporting must be done in accordance with a board, agency, or bank lending committee. The stakes are simply too high to have incomplete or inadequate financial records required in these situations. The bookkeeper that has been with a business since day one may not be up to the task of preparing a financial package as he/she may not possess the knowledge, experience, or tools.
Properly constructed financial data could enable a business to be in a better position for funding in the form of loans or working with its investors in terms of either increasing their confidence or positioning the company better for increased investments.
Loss of Control?
A common fear surrounding outsourcing is that a business will cede or lose control. That notion is 100% false. Businesses have always had, and will continue, to have control over their operations, cash, and decision making. At VAS, we actively work with our clients to make sure that cash flows are maximized, and processes are followed, and every invoice is approved by somebody with check signing authorization prior to payment. Financial statements are reviewed with business owners for approval before they are sent to a bank, board, agency, or regulator. Control continues to reside 100% with the business and, with outsourcing, financial roles are performed in a more efficient and effective manner.
Peace of Mind
For businesses that choose to outsource, they can experience peace of mind knowing that their finances are being handled by an expert. In addition, there is an ease by which processes are performed through automation and streamlining. Peace of mind comes through a collaborative approach featuring monthly management meetings, weekly touchpoints, and accessing insightful metrics via custom dashboard reporting. Finally, there is confidence in knowing that everything is accurate and accounted for.
We actively work together with you to make informed, confident decisions. Let us know how we can help you. Reach us at 518-459-6700 or at bstco.com.
