Your Accounting and Finance Function – Own It or Outsource It?

June 17, 2022

By Marc Mallory and Dave Finger

It was a moment many business owners dread. A privately held company’s longtime controller gave notice. With only one other accounting person on staff, the owner was left scrambling for a fix until a new controller could be hired.

The owner reviewed the job responsibilities and realized 80% of the controller’s work consisted of staff-level tasks, so he quickly found two people with the right skills to tackle these functions. The kicker? He brought in outsourced accounting professionals to do the job.

Fast forward seven years, and the company has grown from a $5 million business to a $25 million business. The original outsourcing support team remains, but has grown to four people … and they never hired a full-time controller to replace the one who left years ago.

What would you do in that situation? And how do you know if outsourced finance and accounting services is right for you?

What is business operations outsourcing?

Outsourced finance and accounting professionals help direct the financial processes that would typically be done by your own employees. The services can vary in scope, from completely taking over a department and its day-to-day functions to supplementing a current need or creating a virtual accounting department.

Outsourced finance and accounting options

• Support to meet your staff accounting needs can help you invoice customers, pay bills, manage vendors, review financial records, process payroll, and provide web-based accounting systems.
• Gaining controller-level knowledge and guidance helps you focus on your core business by providing trend analysis, forecasting, budgeting, and finance department assessments.
• Access to CFO-level insights and experience can assist with growth initiatives, capital planning, board governance, contract review, and strategic planning.
• Full-service outsourcing firms can also provide access to tax and wealth advisors to help with business succession, individual tax planning, personal financial planning, and insurance and risk management.

Once outsourced services are in place, they can be adjusted as your business ebbs and flows. As sales increase or a new project materializes, your services can match your needs by adjusting your outsourced accounting professionals. Hopefully it wouldn’t be the case, but if your sales decrease, Scale back your outsourcing services to reduce costs and match your current volume. With that flexibility, you can respond to changing market demands and customer needs quickly.

Benefits of outsourcing your finance department

One of the biggest advantages of outsourced support is customizing a high functioning team with additional knowledge and resources. Outsourced professionals who understand industry-specific operations and common practices can often enhance processes and productivity as well as complement the current team. Their financial reporting capabilities are typically up to date with industry standards and use the latest technology. Often this focus can help highlight your organization’s needs and growth opportunities.

For privately held businesses and nonprofit organizations, bringing in outsourced support allows you to segregate duties without hiring additional staff. A team with multiple layers and several sets of eyes looking at the numbers can enhance internal controls and reduce its risk. For publicly traded companies with full accounting departments, bringing in additional resources can help you transition through times of peak workload.

When should you bring in additional accounting help?

For many businesses, the finance and accounting functions are often managed behind the scenes and are not linked to a core competency of the business or the customer experience. When performing well, the accounting function contributes significantly to your operational performance, yet the time spent on it internally may be out of balance to the value it brings. In many situations, the current professionals may not have the experience required to support the business goals. Outsourcing can be a way to enhance your resources or help internal team members gain the knowledge and training needed so you can focus on growing your business.

For instance, in one start-up company, the owner’s relative was overseeing the accounting work and paid the bills, but did not provide financial reporting. As a result, the owner did not have a good grasp on how much cash was needed on hand or how much they needed to borrow to meet the demands of her growing business. In this case, replacing the relative with a staff accountant-level team member once per week and a controller-level professional one day per week (who could have appropriate interaction and collaborative discussions with the owner) created a clearer financial picture and provided insight to help the company grow.

Calming concerns about outsourced assistance

If you’re used to having your accountant sitting next to you, it can be difficult to visualize any other way. Some leaders fear they’ll lose control if they don’t have internal employees managing the accounting function. But good outsourced professionals don’t feel like a third party. They join management meetings, participate in video calls, and create solid relationships. They’re like part of the team.

For some organizations, there is also a perceived risk that using an outsourced professional will be costly; however, the cost is often comparable to the cost of having a full-time employee. Just imagine the indirect cost and managerial cost of a full-time employee, benefits, unemployment taxes, and other direct costs related to salary.

Also, outsourcing is not only about the cost incurred, but the value of your time and the value the outsourced team can bring. You can also avoid the cost, stress, and gap in support you might have when dealing with turnover on your internal team.

How to start with outsourced professionals

Often the biggest challenge of outsourcing your accounting and finance duties is determining which tasks could be accomplished with external professionals. Identifying your core needs and the time and resources it takes to do those tasks will help you compare your current state to what outsourced professionals may be able to provide. If you’re not sure where to start, a business opportunity assessment can help you uncover your sticking points. Once you know what you need, you can turn to the task of finding the right people to work with.

How we can help

CLA provides full- or part-time outsourced finance and accounting services for your organization. Our experienced accountants work exclusively within the industry on finance and accounting services. We pride ourselves on clear communication and providing insights and value beyond a clean and understandable financial statement. We want to be a resource that offers you information can use to make better business decisions.

For more information on outsourced finance and accounting services, contact Dave Finger at dave.finger@CLAconnect.com or 612-256-8303.

 The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CliftonLarsonAllen) to the reader. For more information, visit CLAconnect.com.

 CLA exists to create opportunities for our clients, our people, and our communities through industry-focused wealth advisory, digital, audit, tax, consulting, and outsourcing services. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.