The Benefits of FaaS During Times of High Volatility and Uncertainty

The Benefits of FaaS During Times of High Volatility and Uncertainty

The current market climate is as volatile and uncertain as it has been at any time since the Great Recession of 2008-2009. On top of 40-year inflation highs and soaring interest rates, we’re now facing uncertainty in the banking sector with the collapse of three U.S. banks over just five days in March.

Silvergate Bank and Signature Bank failed mainly due to turbulence in the cryptocurrency markets, while Silicon Valley Bank failed after a run that was triggered when it sold its Treasury bond portfolio. SVB was the second-largest bank failure in U.S. history and the largest since the financial crisis. 

Boost Efficiency, Control Costs with FaaS

In the face of so much volatility and uncertainty, it’s more important than ever for companies to increase efficiency and control costs. One way to do this is to adopt the Finance as a Service, or FaaS, model for outsourcing finance and accounting.

With FaaS, companies outsource their finance and accounting function to a third-party partner. Finance is now the second most outsourced business function behind information technology and ahead of payroll and customer service. Nearly half (44%) of businesses now outsource their finance function.1 The global market for FaaS is projected to grow from $37.9 billion in 2020 to $53.4 billion by 2026.

FaaS is a modern alternative to building an in-house finance and accounting team. It delivers greater financial visibility and improved operational scalability, along with a lower and more predictable cost structure. Studies have shown that using FaaS can lower the cost of the finance function by between 30% and 40% compared to the fully loaded costs associated with staffing an internal finance department.

How FaaS Works

Finance as a Service is sometimes confused with outsourced accounting. However, FaaS offers a much more comprehensive approach to financial and accounting management, along with greater transparency and rigor. 

FaaS provides a full suite of staff, services and software that’s capable of managing a business’ entire finance and accounting operation, including processing transactions and customer payments, paying vendors and producing monthly financials. In other words, FaaS is a one-stop finance and accounting services shop.

FaaS offers a single, self-serve software interface that provides clarity and transparency. Knowledge isn’t concentrated with a single individual who is the only one who can access relevant financial and accounting data. Instead, this data can be easily provide access to anyone on the team with department-level visibility when needed. 

FaaS operates on a subscription-based pricing model with flexible and transparent pricing, which makes it easy to forecast costs as the company’s needs change in the future. FaaS service providers charge based on the technology utilized and service offered. This way, businesses know exactly what they’re paying for and how their costs will rise or fall as they scale up or down.

Five Benefits of FaaS

FaaS allows companies to quickly scale up the finance function, standardize reporting across portfolio companies and reduce costs. Here are five key benefits of FaaS:

  1. Cost savings — FaaS eliminates the high cost of hiring, training and retaining in-house staff. As noted, using FaaS instead of building an in-house finance department can result in cost savings of between 30% and 40%. In addition, FaaS automates many manual activities while improving financial reporting.
  2. Time savings — Since the finance function can run with minimal oversight, CFOs and other finance executives can spend their time focusing on high-impact business development initiatives and strategic activities that lead to company growth. In a study conducted by Consero Global, finance leaders whose companies switched to FaaS saved an average of 17 hours per week that they could spend on more strategic initiatives with high impact.
  3. Scalability — The FaaS model allows companies to quickly scale up the finance function as needs arise. FaaS providers can deliver the right level of support and resources for the specific tasks required to grow along with your company’s needs.  
  4. Less exposure to labor volatility — The labor shortage is especially acute in the finance and accounting industry, where highly sought-after employees can pick and choose from the best jobs. With FaaS, companies don’t have to worry about the headaches caused by constant turnover among finance and accounting staff. 
  5. Standardized reporting and improved financial visibility — This enables companies to quickly and accurately assess the financial health of their portfolios and better understand financial metrics across time periods. With FaaS, companies receive financial reports in a unified and easy-to-read format that clearly presents both opportunities and challenges for the business and makes it easy to understand the current financial and cash flow position.

FaaS from Consero Global

Consero offers Finance as a Service via a fully managed software platform that’s equipped with pre-integrated, enterprise-grade finance and accounting software, featuring digital processes and workflows. With Consero’s cloud-based finance and accounting solution, you can complete a full digital transformation in 30 to 90 days — much less time than it would take to build an in-house finance and accounting function.

We can help you realize the many benefits of using the Finance as a Service model. Schedule a 20-minute introductory call to discuss your needs in more detail.

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