Finance as a Service: The Benefits of Outsourced Finance and Accounting

Every company’s financial transactions must be processed without any fraud or error, and the company should be able to close books on time, create financial statements, and provide accurate investor reporting. However, that cannot be done if the financial leadership (or anyone else doing the work) are getting sucked into details and other tactical matters.

That is where the Finance as a Service model comes into play because it is more than mere outsourcing your back-office or non-core functions. Small and medium-sized businesses today need confidence, quality insight, timeliness, and reliability of financial performance. However, there are always some challenges along the road. Building out an optimized in-house finance and accounting function can cost a great deal of time and money.

On the other hand, owners and CEOs need everything that they’ve experienced in a larger company, such as business intelligence, elevated financial management, business strategy cadence, and timely financials. But since building an entire in-house finance team is riddled with challenges, they lose the big picture and end up working in the business (not on it).

How Can Finance as a Service Companies Help?

To address these challenges, what small and medium-sized companies need is to integrate their financial, accounting, and business strategy streams. That is exactly what outsourced financial services or FaaS providers offer, and the advantages of outsourcing finance and accounting tasks are:

  • Being able to focus on execution and business continuity
  • Getting a full-scale service of an entire in-house finance department at a fraction of the price
  • Consolidating all value streams under one roof

Many are familiar with outsourced accounting, but a Finance as a Service (FaaS) company is not like a typical outsource finance and accounting firm because FaaS companies leverage standard operating procedures, scalable systems, and advanced cloud software. That makes them agile enough to meet the needs of any unique business while providing easy-to-read financial dashboards along with statutory and custom reporting.

Is Finance as a Service Right for Your Company?

The companies that can benefit from the FaaS model the most include:

  1. Startups, small, and medium-sized businesses: This model is perfect for companies with straightforward accounting needs and lower transaction volumes but want the ability to easily scale as their business develops. FaaS providers offer support in performing daily bookkeeping functions and provide expert assistance to address a business’ daily needs.
  2. Scaled and emerging growth companies. Next, the FaaS model suits organizations with complex accounting needs and higher transaction volumes, which requires a deeper level of financial expertise. Finance as a Service providers offer a wide range of controller-level and transaction processing services. All that is done in close coordination with the company’s tax advisor and CPA to ensure proper tax planning and compliance are in order. It comes as an excellent alternative to staffing an in-house finance and accounting team that’s turnkey for your fractional or in-house CFO.
  3. Scaled, emerging growth, and startups (PE or VC-sponsored). FaaS providers also offer executive-level access and CFO services for the most comprehensive financial management partnership to your company. For example, Consero offers a virtual CFO that will work closely with your board, investors, and leadership team to provide meaningful financial advisory and reporting for corporate and capital transactions.

The Benefits of Finance as a Service

FaaS (Finance as a Service) and partnering with outsourced finance and accounting service providers can bring many benefits to all types of businesses, and the core benefits that make companies keep using the FaaS model include:

1. Cost savings

By signing up for FaaS services instead of building an in-house finance department can bring 30-40% cost savings. And even as companies continue to grow and develop, those savings can last indefinitely because:

  • Many manual activities get automated
  • FaaS providers are capable of addressing companies’ unique needs and can determine the best processes for each one of their clients
  • FaaS providers have a bigger pool of trained and skilled finance experts your company can tap into
  • Improved financial reporting

When a company has a controller or accountant but doesn’t have a CFO, their reporting is rarely up to the level it needs. In other words, improved reporting and data are essential for any type of business because data, analytics, and metrics are used to drive company growth. That also allows owners and CEOs to understand what is going on with the business and where it stands financially. The data is used to bring better decisions that will improve the company. With a FaaS provider, companies won’t feel the lack of analytics and metrics because the provider will leverage enterprise-level finance and accounting software to provide better data and reporting in an easy-to-read format.

2. Scalability

FaaS providers are appropriately structured and can give you the right level of resources for a specific task. By helping you set up the right systems and getting you streamlined and on the same process, FaaS providers can quickly jump in and help, allowing your company to be scalable (more than it would be with an in-house department).

3. CFO support

In case your company doesn’t have a Chief Financial Officer (CFO), your FaaS provider can offer one. For example, Consero offers CFO support – a financial expert who becomes part of your  team and is there to provide financial guidance. That’s why many companies consider the FaaS model as CFO insurance. Since the FaaS model takes care of daily back-office repetitive tasks and reduces your time needed with tactical administration, providing your financial leadership with more time for deep analysis of the numbers. The CFO comes into play to help you focus on the growth of the business and more strategic aspects of the job.

4. Improving financial visibility

Using paper-based systems and collecting and analyzing data on spreadsheets increases the chance of human error and is very time-consuming. As your company grows and evolves, CEOs and stakholders need to be able to see the dependencies and interactions of all business segments. In other words, they must get a clear picture of their business as a whole.

The FaaS model allows companies to get financial reports in a unified and easy-to-read form that clearly presents the opportunities ahead as well as current challenges. Improved financial visibility will help companies:

  • Understand your current financial position and cash flows
  • Track ongoing account profitability and monitor customer acquisition costs
  • Demonstrate performance gains to investors
  • Detect frauds and errors faster
  • Improve the accuracy of your business forecasts, predictions, and goals
  • Evaluate service line performance in real-time
  • Make strategic business decisions with more confidence

With improved financial visibility through financial management guidance and connected data, your company will be able to mitigate risks and build a long-term strategy for the future. It will give you a birds-eye view of the entire company’s performance as well as the ability to zoom in on the details. Otherwise, depending on data stored in multiple disconnected systems prevents you from getting a view of unified information, which is required for bringing data-informed decisions. Oftentimes, there’s not enough time to piece the data together, so CEOs bring business decisions based on their gut feelings. Better financial visibility is crucial to be able to understand what is happening across the entire business.

5. Speed to optimization

When business leaders are focused on growing a company as quickly as possible, it is often the finance and accounting department that hinders their company’s growth. This happens because:

  • CFO splitting time between tactical & strategic initiatives
  • The finance and accounting department employees don’t have the right skills
  • The department hasn’t set up the right systems or doesn’t have processes that will help them achieve exponential growth
  • Inability to produce timely and audit-ready financials
  • Inability to produce forward-looking projections
  • F&A organization operating with manual, error-prone processes

Whenever there is a problem in the finance and accounting department, companies often follow the same procedure – they hire a finance team that researches systems and pick the one the fits best. Next, they configure the system, implement it, and train all the employees to use it. This process takes longer to achieve because most organizations need 18-24 months to optimize their finance function. And to get to the final point of implementation, a lot of time and energy needs to be spent, which takes away from the management of daily operations and other core functions.

With the FaaS model, you can optimize your finance function in up to 60 days, making the FaaS solution more cost-effective and less time-consuming than an in-house department.

6. Reduce fraud and increase efficiency

In a growing enterprise, trying to improve productivity and control while using paper-based processes and various apps can be a challenge. On the other hand, reducing the risk of fraud and errors is essential, but difficult when you have several employees entering data manually into several different systems. Instead of spending their time on value-adding activities, they are wasting their time.

The Finance as a Service solution brings integration in financial management systems, which can help reduce duplicate listings and repetitive tasks, allowing staff to handle higher transaction volumes.

What consolidated data means? Moving to a consolidated financial platform that unifies your financial data and eliminates paper-based processes will improve financial reporting, expedite collections, and reduce the chance of fraud. Furthermore, segregation of duties and critical performance metrics are also supported by integrated financial management, which leaves your staff with more time and energy to focus on core tasks and value-adding work.

7. Prioritize growth by reducing distractions

Business leaders should be concerned with finding ways to differentiate the business, distinguish it from the competition, improve customer experience, learn continuously, etc. If they try to deal with finance tasks at the same time, it will eat up much of their time they could have spent on core issues that affect the long-term success of the company. The FaaS model helps reduce distractions like these, allowing them to focus on identifying opportunities and stay alert for any red flags.

8. Executing with confidence

Without solid financial management guidance, business owners can neither monitor nor guide their company’s strategic directions. To execute with confidence, you need accurate financial visualizations and models, including:

  • Tracking budgets and forecasts to keep the organization on course
  • Identify simple mistakes by employees or vendors missing deadlines
  • Provide visibility into cash flows
  • Recognize early-stage strategic mistakes

With proper financial reporting, you will be able to execute with confidence.

Addressing Tactical Challenges with Finance as a Service

Tactical challenges of the finance function include finding and hiring the right employees for the department, training them, and making sure that there’s not just one person capable of performing one function. Whenever you are hiring, onboarding, training, and performing other tasks related to people management – there are a lot of inefficiencies.

Another challenge includes technology, which is advancing exponentially and at a rapid pace. Just like in many other sectors, the tech landscape within the finance world is changing quickly, and companies must keep track of them. Utilizing the right technology can bring a huge competitive advantage, especially to startups and small businesses, because technology can provide enterprise-level capabilities that small businesses could have only dream about having in the past. The truth is that CFOs often waste much of their time thinking about which software to use, how to deploy it, and what if it gets implemented improperly.

Every company uses some kind of technology tool as a general ledger as well as other technology tools for electronic payment processing, accounts receivable processing, budget and forecasting, etc. All these are separate tools, meaning that information collected by all of them is disparate and needs to be unified in order to create a complete financial report. Furthermore, researching for the right tools and implementing them takes time and effort that business owners, CEOs, and managers should spend on core business tasks. Those financial tools are built with finance and accounting professionals in mind, so non-financials find it difficult to interpret the data. Eventually, the lack of transparency between key business stakeholders and the finance function leads to a wide array of issues.

How Consero Can Help

With Consero’s Finance as a Service, you will be able to strategically outsource your financial and accounting departments but still maintain a core finance team. This key strategic approach to financial management will provide financial experts who are experienced enough to support your finance department with discretion, wisdom, and accuracy.

Our services can help you bridge the gap between your company’s financial numbers and goals (a problem which is often the cause of business failures). By increasing financial visibility, you will be able to monitor performance and measure progress accurately. Also, you’ll be able to assess risk in all potential scenarios, meet challenges head-on, work to create new opportunities, and overcome obstacles to business growth.

Finance as a Service also removes the hassle of technology research and hiring people. Typically, the research occurs over and over again, causing so many inefficiencies in buying software and hiring – whenever a new company gets launched, one of the things we always see is recreating the finance and accounting processes and procedures. Companies always start from scratch when designing their accounts payable process. Consero is already equipped with top-of-the-line technology and has a team of financial experts that have successfully implemented software and surgically mapped processes hundreds of times.

Since we provide the staff and technology that work to provide accurate information and easy-to-read reporting, companies don’t have to design their finance and accounting processes from the ground up. The system is already in place, and our clients only need to plug into it. By hopping onto the “financial vehicle” where the whole system is already up-and-running can be implemented in 1-2 months and save you up to 18 months. This will free up the CEO’s and CFO’s time to deal with more important business areas. Our Finance as a Service platform will collect huge amounts of data, while our AI-powered technology will make sure that all of it is up-to-date, accurate, and produced in an automated and efficient way. The reports delivered are created in a way that every non-financial and general business person can read and make sense of it.

In addition to all this, our clients will get access to SIMPL – our aggregation platform that combines transaction details, support documents, real-time information, and financial dashboards in one place. We are living in times when people want something that grants them access to the latest information via a smartphone, and SIMPL was developed to cater to this need.

Finance as a Service – The Future of the Corporate Finance Function

What stalls growth and obstructs progress? Outdated systems, inefficient processes, and wrong people. For most startups and SMBs, the finance and accounting department cannot deliver accurate information and clear insight into business performance. Without it, leaders cannot bring the right decisions to guide their company’s development. Strategic finance is the secret ingredient used by high-growth companies where decision outcomes have a long-lasting impact.

To be able to respond to a rapidly-changing business environment, business leaders need a forward-looking reporting, clear view into financial data, and the right perspective of performance metrics. But they also have to stay on top of things like cash flow management, invoice processing, and document automation – all while adhering to compliance policies.

This is why finance and accounting outsourcing proves to be a cost effective solution to meeting the specific requirements of every finance department. Unlike typical outsourced accounting, which only allows you to move some of the non-core business processes to your finance and accounting partner, Finance as a Service is a model that goes beyond that. FaaS delivers integrated advanced technology, process automation, data analysis expertise, strategic CFO guidance, and business process engineers.

Consero FaaS: Disrupting the Outdated Traditional F&A Model

  • Cash to GAAP conversion
  • Clean-up work
  • Interim oversight & support
  • Accounting software Implementation

Build it Yourself Solution

  • CFO / Interim CFO
  • Consultants / VARs

Consero FaaS Solution

  • CFO / Interim CFO
  • or Consero Interim CFO
  • Consero Setup/Transformation
Ongoing F&A
  • Monthly financials
  • Daily accounting support
  • Management reporting
  • Integrate add-on acquisitions

Build it Yourself Solution

  • CFO
  • Controllers & Accounting Team
  • Enterprise Accounting Applications

Consero FaaS Solution

  • CFO
  • or Consero Fractional CFO
  • Consero FaaS Enterprise F&A Software and Services

New PE Platform Investment F&A Challenges

Founder Owned Company Accounting:
  • Existing accounting done on a cash/hybrid basis
  • Run on SMB accounting software and other disparate applications
  • Inability to produce auditable financials
  • Lack of know-how to develop projections & KPIs
  • No consistency/structure to customer contracts
  • Underqualified staff
  • Non-scalable manual processes
Carve-Out Accounting:
  • Required to move off parent company accounting applications in a timely fashion
  • Have to build an entire F&A team
  • No documented operational policies and procedures
To Optimized Finance & Accounting:
  • Monthly financials available in 5-10 business days
  • Audit and diligence ready support details
  • Integrated enterprise grade accounting software
  • Budget and forecast reporting
  • Business KPIs
  • Efficient & scalable processes for rolling in add-ons