In prior blog posts, we have discussed the Benefits of Outsourcing, the Economics of Outsourcing, and Metrics that Matter. In and through these blogs, we have articulated a rationale for utilizing outsourcing – specifically accounting and finance – within an organization. In this article, we will share five additional and compelling reasons to demonstrate how outsourcing enables an organization to best utilize its resources.
1. Best Use of Owner’s or Entrepreneur’s Time
As we all know, time is a precious commodity and it feels like there is less time to do all the work which requires attention. For emerging businesses, there may be no one to handle the accounting function so, by default, the owner or entrepreneur steps in and handles it. And, as is often the case, the accounting function is handled in the owner’s “free-time” often between 9 pm and midnight. Is it the best use of the owner’s time to make sure all their bills are paid or figure out where the revenue is going? Shouldn’t owners allocate their limited time to working on growing their business vs. working in the details of their business?
2. Reduction of Errors
Errors happen. Forward-thinking business operators need to consider ways in which errors can be minimized. As noted above, owners may address the accounting function during their spare time and, unless proper focus and attention is applied, errors may occur. In addition, accounting is a skilled profession and there are many complexities and nuances that go way beyond the posting of debits and credits. The erroneous coding or posting of an item can lead to a waste of time or money. While owners are likely to be highly skilled in producing the goods or services offered by its business, they simply may not have the skill level (or experience) to properly handle their accounting.
Another situation arises when an organization may have an improperly skilled bookkeeper to handle its transactional requirements. While that bookkeeper may be proficient in the basics, they may not have the skills or experience to address more advanced functions properly and adequately such as cash flow analysis or evaluating balance sheet items. This lack of skill, applied inappropriately, may lead to costly errors.
3. Access to Contemporary Technology
Technology, especially around accounting, is constantly changing and evolving for the better. Keeping up with ever changing technology can be a full-time challenge for many organizations. The time and cost associated with software acquisition, maintenance, and server environments is significant. The challenge is that organizations, especially those that are growing and dynamic, do require the features and functionality offered by today's contemporary accounting solutions. These cloud-based technologies provide real time data, prescriptive analytics, and mission critical dashboards. By utilizing outsourcing for accounting, an organization need not be concerned about keeping pace with technology because the outsourcing provider manages that activity on an ongoing basis.
4. Access to Expertise
The cost to hire a qualified CFO or controller can be quite substantial. In most cases, organizations must hire a full-time resource to secure a properly qualified person but may not need a full-time resource. Growing organizations require the skills that controllers and CFO's bring to the accounting process including cash flow analysis, budget analysis and comparative analytics. Other areas of expertise may include succession planning, mergers, managing and maintaining banking relationships, sales tax filings, and tax return compliance. By outsourcing the CFO or Controller function, an organization can gain access to deeply skilled and knowledgeable resources that bring a required level of insight. In addition, outsourced CFO's and controllers often have specific industry insights and a sense of comparative metrics and performance and will bring that knowledge base to a client organization. Examples of this may include financial ratios, break even analysis, and capital analysis.
5. Finding Time to Work on Your Business (or your life)
Through outsourcing, business owners often find that they are getting back 8 to 12 hours per week of time that had been spent on handling the accounting function of their business. This period of time can be used on discovering ways in which to produce more revenue, enhance service to clients, or help to develop the people within their organization. And, in some cases, these 8 to 12 hours per week can simply be used by the owner to relax, recuperate, or focus on family and other non-work-related activities.
We would welcome the opportunity to explore whether outsourcing accounting makes sense for your business.