The Ultimate Guide to Finance as a Service

The Ultimate Guide to Finance as a Service

Every business’s financial transactions need to be processed without the risk of either error or fraud. They also need to condition their daily financial and accounting activities, in the form of creating financial statements, closing books on time, or providing accurate reporting, among others. Yet, if the financial leaders are constantly drawn into the company’s other details, the business often misses tackling these matters effectively.

This is where Finance as a Service (FaaS) comes into play. More than outsourcing back-office and other non-core finance functions, FaaS can provide organizations with enhanced reliability, timeliness, and quality insight into their financial performance. To achieve a similar level of financial management as a multinational enterprise, small and mid-sized organizations have to integrate their financial, accounting, and business strategy streams. That is precisely what FaaS has to offer. It provides middle-market businesses with an enhanced ability to:

  • Focus on execution and business continuity.
  • Consolidate all of their value streams.
  • Gain access to the services of an entire finance team at only a fraction of the cost in terms of overhead costs.

FaaS providers use scalable systems, standard operating procedures, and advanced cloud software, which increases business agility enough to meet any company’s unique needs while also providing them with easy-to-read dashboards alongside custom reporting.

And in light of the COVID-19 pandemic, businesses, while having to contend with various uncertainties, also have the opportunity to build a stronger organization overall. There are several ways that companies can make a nimbler finance function that can support a more informed decision-making process. That said, below are some of the biggest challenges that finance teams have to deal with during Covid-19 and beyond.

The Challenges That Lead to Inefficient Processes

The Covid-19 pandemic has had a significant impact on finance and accounting functions that are not entirely centralized and rely heavily on manual processes. Chief Financial Officers (CFOs) have been experiencing challenges when it comes to:

  • Limited access to actionable real-time financial data – When dealing with decentralized systems, putting the correct information together often needs to be done by hand. As such, leadership stakeholders often have to work with outdated information, which can generate limited results.
  • Inefficient on-premise systems – With more people working remotely, it has become increasingly challenging to access slow on-premise financial management systems that were not originally designed to support today’s business continuity.
  • Cash constraints – Accelerating cash is also a priority for all organizations, no matter their size or industry. Leading functions are often focused on high fixed finance operation costs with little money available for capital expenditure. Businesses can face additional challenges if their working capital is further locked into accounts receivable and accounts payable.
  • Staff management – Whether or not the current pandemic affected their demand, companies have still faced additional challenges in protecting their employees from infection, facilitating remote work, and more. This was particularly difficult if their existing infrastructure was unable to support these changes.
  • Various operational inefficiencies – Legacy enterprise resource planning systems, poor service placement design, and different siloed processes make it increasingly difficult for businesses to improve their productivity and operating efficiency.

That said, how can finance functions outsourced through Finance as a Service help build business resilience and improve business performance?

The Usefulness of Finance as a Service

Through FaaS, CFOs and their finance teams can design fast responses to emerging organizational needs, generating valuable insight to improve their decision-making process. As an agile and future-oriented service, FaaS combines the best existing finance operations management practices with advanced finance and accounting technology in the form of artificial intelligence, machine learning, automation, and cloud-based ERPs, to achieve their desired goals.

In doing so, companies can achieve faster access to working capital, real-time and accurate forecasts, lower operating costs, and more. It can also help companies standardize many of their repetitive and time-consuming manual processes.

FaaS can also help CFOs by:

  • Providing real-time financial data – By consolidating data sources with reporting systems, CFOs have access to a single source of truth that increases the speed and quality of insights, improves cash flow, planning, forecasting, and performance management.
  • Digital processes & technologies – Unlike on-premise systems, cloud-based tech is far easier to access remotely.
  • Minimal cash outlay – FaaS will reduce the fixed finance operating costs. This means that companies have more cash in hand to increase their ROI.

It’s also important to mention that there was increased demand from both CFOs and the accounting department for more strategy and innovation. This was even before the onset of Covid-19. Senior executives no longer need to spend their working hours on grunt work, especially since today’s digital technology can automate most of these processes.

Traditional finance and accounting processes are quickly becoming obsolete. As such, finance leaders who continue using outdated systems will be placing their organizations at risk. The CFOs’ reputation rides on their ability to plan and implement strategies to drive the company forward. They should be driving innovation and safeguarding their organization against future uncertainties. CFOs can’t afford to waste their valuable time on daily repetitive tasks instead of focusing on client relationships, business intelligence, wealth management, strategy implementation, and more.

Therefore, the future of finance and accounting will be dictated largely by outsourcing through FaaS. It helps lower operating costs, get access to top finance talent, state-of-the-art technology and the experience of finance and accounting professionals.

Is Outsourcing With Finance as a Service Right for Everybody

A common misconception is that businesses would lose control of their department by outsourcing their finance and accounting processes. Yet, when implemented correctly, outsourcing means that an organization will gain a strategic partner capable of supporting the existing finance team while also filling any current operational gaps.

As such, the types of companies that can benefit the most from a FaaS model include:

  • SMEs – This model perfectly fits companies with precise accounting needs and growing transaction volumes. This includes startups and small and medium-sized enterprises (SMEs) that also want to have the ability to quickly and effectively scale their operations as their business develops.
  • Emerging growth organizations – The FaaS model also works for companies with complex accounting needs and high transaction volumes, requiring a more in-depth financial know-how. FaaS providers offer a wide range of transaction processing and controller-level services.
  • Companies sponsored by Private Equity or Venture Capital FaaS are also excellent for providing executive-level access to CFO services for the most comprehensive financial management partnership in financial guidance and financial reporting for corporate and capital transactions.

Signs You Need Finance as a Service

Several telltale signs often indicate the need for modernizing the finance and accounting function and looking to a Finance as a Service partner. Among these, we can include the following:

  • Too much overhead – When companies have difficulty managing their in-house team’s overhead, outsourcing finance and accounting services may be beneficial. Outsourced teams can generate timely financial statements to improve financial visibility and reflect the company’s progress. Outsourcing also eliminates the need for in-house management of hiring, training and other similar time-consuming disruptions.
  • Outdated technology – As mentioned, FaaS providers will also provide you with a competitive advantage by using their advanced technology. Those who cannot afford to make such an investment will still have access to cloud-based finance and accounting software to provide accurate financials delivered in real-time.
  • Work efficiency – When the quality of the work has to suffer, be it in terms of overall performance or the number and frequency of errors, FaaS can be a worthy option to consider. The quality of work can result from unqualified personnel or staff members who have too much on their plate. In either way, finance as a service is there to see it through.

What Are The Challenges of Outsourcing With FaaS?

Before businesses start considering outsourcing their finance and accounting operations, they should be aware of the potential challenges while undergoing this process.

Knowing What Services to Outsource

One of the most common challenges of outsourcing with a FaaS provider is knowing which services should be outsourced in the first place. Business owners should define which of these processes and associated activities need to be outsourced.

It’s essential to keep in mind that finance and accounting operations are often decentralized to the different business units within an organization. For an effective outsourcing operation to take hold, both similarities and differences between these business units must be identified to know which processes to standardize.

Complying With Regulations

One major issue that often prevents companies from outsourcing their finance and accounting processes is their perceived risk related to regulatory compliance of HIPPA, ERISA, or SOX. And while some FaaS providers will charge extra for this type of service, more professional providers will already have it built into their packages as a basic offering.

It should go without saying that there needs to be absolute clarity when it comes to outsourcing governance. It’s also in the service provider’s own best interest to assist their clients in meeting these regulatory requirements as quickly and as effectively as possible.

Soft ROI

Another common challenge encountered when outsourcing finance and accounting processes are seeing all of the benefits of outsourcing. Some finance and accounting managers have difficulty accurately estimating their operating costs. And switching from outdated systems that are over-reliant on paper-based processes and spreadsheets will have a cost, in terms of both time and money.

That said, it isn’t easy to quantify the added value of internal resource redeployment to facilitate timely and accurate business analysis. This is the type of “soft” ROI that can’t be quantified directly but still needs to be considered, nonetheless.

Organizational Readiness

Another challenge that can be encountered when wanting to outsource with FaaS is the lack of cultural readiness in accepting external finance providers. With limited outsourcing experience, organizations have a tough time in accepting a third party having access to their systems or believe their commitment to providing high levels of service.

In a recent interview with Robert Alvarez, CFO of BigCommerce (BIGC) and two-time winner of the CFO of the Year award, he stated “When I suggest Consero’s Finance as a Service model to someone, I stress that they need to treat them as part of their in-house team, and not merely an outsourced provider.” Bringing your FaaS partner into your company culture becomes an important piece for success.

How to Choose an Ideal FaaS Outsourcing Provider

Since every business is unique, there is no one-size-fits-all approach to the situation. There are, however, several factors that need to be considered when it comes to finding the best Finance as a Service partner capable of meeting all of your needs and requirements.

  • Determine Your Needs – The first thing that needs to be considered is your own needs as a business. They need to determine if they also need Financial Planning,& Analysis, Controller Services, and/or CFO consulting, aside from their accounting core functions.
  • Their Technical Know-how – Professional outsourcing providers need to explain their methodology when it comes to project management, tracking results, resolving issues, and more. This will help you understand the process and how everything will be handled. Additionally, they should have a business continuity plan that will ensure uninterrupted services.
  • Vision Alignment – Another factor that needs to be considered is how well the FaaS provider aligns with your core business objectives. The best situation is when the provider is willing to provide a high level of visibility through regular financial reporting.
  • Communication – Likewise, businesses need to talk with the finance provider to determine their availability during predetermined times. This is particularly true if they are operating in different time zones and both teams need to determine if and when working hours alone to minimize any communication gaps.
  • Their Technology – Outsourced service providers need to have the right technology capable of tackling any financial and accounting responsibilities that may appear. It’s only through advanced software and IT infrastructures such as reliable networks and integrations that they can cover all of your needs and expectations.
  • Their Reputation – Last but not least, businesses should check their future provider’s reputation by looking up online client reviews, references, and testimonials. Check out reviews from companies in your industry and which may have similar needs to your own.

How Consero Global Can Help

Consero Global is one such Finance as a Service provider that can strategically outsource your finance and accounting functions while also allowing you to maintain your strategic financial leadership. Our services help cover any gaps between your financial numbers and your goals – which is a common problem that often leads to business failures.

By increasing your financial visibility, you will also be able to measure progress and monitor performance accurately and in real-time. You’ll also be able to assess the risk in all conceivable scenarios, meet challenges head-on, and overcome any obstacles that stand between you and your business growth.

Finance as a Service also removes the hassle and overhead costs associated with technology research and searching for, hiring, onboarding, and training people. Since Consero is already equipped with state-of-the-art technology and has a team of financial experts, there is no need for our customers to go through the trial-and-error grinding process associated with finding the right team and tools needed to get the job done. We’ve done it hundreds of times, so you don’t have to.

Since we provide both the staff and technology, businesses don’t have to design and document their finance and accounting processes from the ground up, which can take up to 12-18+ months in some cases. We can have everything up and running in one or two months, on average.

In addition, you will have access to our aggregation platform – SIMPL – which combines transaction details, real-time data, support documents, and financial dashboards under the same roof. This data can be accessed remotely by anyone authorized with an internet connection.

Business leaders need forward-looking financial reporting capabilities, clear and real-time financial data, and the right perspective into key performance indicators to respond rapidly to any unforeseen situation. Business leaders will also have to stay on top of their invoice processing, cash flow management, and document automation, among other such processes, while adhering to compliance policies.

This is why finance and accounting outsourcing is a cost-effective solution to meeting the specific requirements of every finance department out there. And unlike your typical outsourced accounting, which is only about moving some non-core business processes to a third party, FaaS is a model that provides far more than that. Finance as a Service delivers integrated advanced technology, process automation, strategic CFO guidance, business strategy cadence, data analysis expertise, 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