Growing businesses typically stay lean by having the founders and core team take on all the finance and accounting work. As operations expand, businesses quickly find these processes and systems won’t scale to support growth.
Outsourcing finance and accounting can be an efficient and cost-effective strategy to free business leaders from spending too much time and money on tedious, manual tasks and neglecting aspects of their business that demand attention.
With the right third-party partner, outsourcing can offer far more benefits beyond simple cost-cutting measures. To help you decide if outsourcing is right for your business, we’ll cover the top reasons why companies outsource to fill the gaps in finance and accounting.
1. Reduced Overhead
Outsourcing accounting operations can significantly reduce the financial burden of building an in-house department.
Hiring in-house salaried finance and accounting includes fulfilling payroll and budgeting for benefits like medical insurance, taxes, vacation, sick leave, and retirement plan contributions.
Building an in-house team also means spending time and money on reviewing applications, screening resumes, and interviewing candidates. Finding the right candidate alone is challenging, with 84% of CFOs facing a shortage of financial professionals. Once someone is hired, they also have to be onboarded and trained, which costs roughly 2% to 5% of revenues per hire.
When you outsource, you get a full professional-grade finance department ready from day one for roughly the cost of a full-time accountant. F&A providers also operate on a variable and service-based pricing model that scales up or down as your business changes, so you have a lower, more predictable cost structure.
2. Access to Advanced Software and Systems
Startups typically begin on basic accounting software like QuickBooks, which require manual recording of all financial records and transactional processes. As companies’ operations mature, they need to upgrade to accounting software that can efficiently handle the growing complexities of the business.
Advanced accounting software that is AI-powered and cloud-based can be costly to own. Beyond purchasing the software, there are also the costs of maintaining the hardware in-house, which typically means hiring for IT support.
When you turn to outsourcing with a Finance as a Service (FaaS) company, you benefit from advanced technology, tools, and systems without having to purchase or maintain them.
For example, Consero’s SIMPL platform is accessible through the cloud and provides you with immediate access to your financial data whenever you need it, including:
- Current cash position
- Accounts receivable & accounts payable balances and details
- Invoices
- Interactive monthly financials
- Custom financial reports
- Graphical trends for revenue and spending
- Status of finance team deliverables
With real-time, automated reporting, you can monitor developments as they happen, which will lead to better decision-making.
3. Unlimited Global Talent Pool
Outsourcing allows you to access the best minds in the finance and accounting industry. Hiring an in-house finance team means you’re limited to highly skilled applicants who are from your area or are willing to relocate to your office.
With outsourcing, you can strategically design a team made up of financial experts that are proficient in their specific fields. Instead of being limited by geography, you can tap into a massive talent pool of financing professionals from around the world.
4. Speed to Optimization
Companies and their investors want to grow as quickly as possible. However, the finance and accounting department hinders that growth when its processes and systems weren’t built to scale with the business.
When there is a problem in this department, many organizations try to upgrade their available systems, which usually takes between 18-24 months to select, configure, implement, integrate, and train staff to use the system.
The FaaS model will help you optimize your finance function within 30-90 days, rapidly accelerating your time to market. FaaS providers already have the finance processes and systems fully implemented, and they can deploy them more cost-effectively and efficiently than an in-house team could.
5. Quickly Establish Internal Controls and Compliance
Growing businesses often have one person or a very small team handling bookkeeping and accounting. This lack of oversight creates an environment for mistakes or fraud.
An outsourced finance and accounting team will quickly establish internal controls that mitigate risk and separate finance and accounting duties. With a third-party reviewing your money through an impartial standard of checks and balances, you will decrease the risk of internal fraud and improve compliance.
As industry experts, third-party accounting and finance service providers stay on top of trends and changes in tax and regulatory laws. Not only will they complete your finance and accounting operations, but they will ensure you stay compliant.
6. Reliability and Efficiency
With an experienced FaaS provider, you can expect faster turnaround time in the preparation of accounting documents, as finance experts help ensure your books are audit-ready.
Outsourced professionals also guarantee accuracy which all but eliminates mistakes and potentially fraudulent activities.
According to Consero’s latest survey of investor-backed CFOs, 53% report improved financial reporting accuracy and consistency as a benefit of working with a finance partner.
With clean and timely financial reporting, executive leadership can gain better visibility and insights into the company’s financial health to make more accurate decisions to drive the business forward.
7. Ability to Maintain Strategic Focus
Outsourcing the finance department frees leadership and the core team to focus on high-value initiatives that will drive the business forward. In fact, 51% of financial leaders cite the time savings as a key benefit of working with an F&A partner.
Leveraging third parties to handle the finance and accounting duties that must be done, but are not growth drivers, relieves executives, senior management, and other team members from the drudgery of mundane work.
The services provided can include handling the month-end close, financial due diligence, general ledger cleanup, FP&A, and cash management.
8. Greater Flexibility and Scalability
Outsourcing accounting offers a unique ability to scale up or down as needed, and rapidly respond to any evolving business needs.
If your business is seasonal you can add resources to handle increases or decreases in accounts receivables or accounts payable. With the accounting provider handling peripheral activities, your team can shift their focus and energy to providing a more efficient service to your clients.
Or perhaps you have an opportunity to make a strategic acquisition, but lack a CFO to oversee the transaction. Outsourcing enables you to hire a seasoned fractional CFO to oversee the pre- and post-acquisition process, without committing to hiring a full-time CFO.
9. On-Demand Expertise
One of the key reasons to outsource your finance and accounting department is to have financial experts cover the core functions that your team can’t.
For example, not all companies can afford a C-level executive leading their finance department. Through outsourcing, you can leverage CFO consulting services that can provide a fractional CFO with extensive expertise and knowledge to help your company meet its organizational needs.
If your company already has an in-house CFO but lacks an experienced team to support them, an outsourced accounting service provider can help the CFO with a proficient team that is equipped to provide a full range of finance and accounting functions, such as bookkeeping and back-office support.
You can also outsource controller services if you lack controllers that can provide accurate audit reports, financial analysis, and compliance management.
Outsourcing: A strategic advantage
Outsourcing your organization’s finance and accounting keeps you competitive, compliant, and on the path towards business growth.
That’s why hundreds of investor-backed CEOs and CFOs have partnered with Consero to streamline their finance and accounting departments. With nearly two decades of financial transformation expertise, we have flexible, tailored solutions to meet your needs at every stage of growth.
Our proven Finance as a Service (FaaS) model provides the systems, processes, and people to quickly operationalize your finance function to produce reliable, board-level reporting powered by our AI-enhanced platform.
If you prefer your existing tech stack, we have the expertise to work within your existing system and general ledger. Through Consero’s FlexFinance service, we can manage the back-office F&A function from end-to-end process, including closing the books. When you need skilled talent, we can supplement your F&A team via our FlexResources.
Request a consultation to learn more about how we can get your finances up and running.