Picture this scenario: Jean has served as your bookkeeper for nearly 10 years. She’s smart, dependable, efficient. Thanks to her attention to detail, your balance sheet is always in order, you’ve never missed payroll, and you’ve passed every audit with flying colors. By most measures, Jean is a fine accountant who performs her job admirably, the kind of worker any owner of a closely held business would love to have on his or her team.
But is she strategic? Does Jean have the specialized skills, knowledge, and experience to transition from being a reactive, compliance-focused steward of financial reporting to a proactive, performance-driven advisor who can use your company’s financials in a powerful way to drive your business forward?
For all of the qualities Jean possesses, and important as she may be to your organization, chances are the answer is no.
By no means does this suggest you should consider replacing Jean; she carries out duties that are essential to the ongoing sustainability of your business. That said, if you’re looking to grow your company or execute other “big picture” initiatives, you may want to consider bringing in additional help for your accounting function to augment what Jean does. It’s a trend that’s growing, as more organizations turn to professional financial services firms for outsourced accounting and CFO services rather than taking on the hassle and expense of hiring for these positions.
While there’s no playbook to determine when it makes the most sense to outsource, companies often look for outside guidance when they have needs that change on a regular basis. So if you find yourself wishing at certain times of the month or year that you had additional accounting or finance bandwidth, those could be ideal times to consider outsourcing to support those ebbs and flows. Similarly, if you’re contemplating particular transactions where you know you’ll need a certain skill set that you don’t currently have on staff or would be cost prohibitive to add, outsourcing may offer a viable solution.
When and where your business is in its life cycle also plays a role in determining if outsourced accounting or CFO help would be a good move for your enterprise. Going to market, staffing up, opening a new location, adding (or eliminating) a product line—these are just a few of the instances when sophisticated financial services, reporting, and analysis can play a key role in the execution of your strategy.
Of course, some business owners seek third-party help when they’re struggling in certain areas. The most common accounting and finance issues include:
Cash flow. Few things keep small business owners up at night like worrying about cash flow. Are you putting your money to work in an appropriate way and preparing for and managing the times when cash is limited? Have you initiated any processes or procedures to navigate these low points? Is there anything that could be done differently within your billing or payment cycles to help ease financial burdens? These are just a few of the questions an outsourced accounting advisor can help companies address.
Margins. Many closely held businesses struggle to understand (or objectively measure) which of their products and services are truly performing well—and which ones aren’t. However, the ability to track, analyze, and document margins by project or service line is critical to determining where to invest time and resources. Financial services professionals have the tools and experience to help business owners see, at a glance, where their profits are greatest while identifying areas for improvement.
Overhead. Nothing erodes profits like uncontrolled overhead. Utilizing data to compare operating expenditures at other companies in an industry, outsourced accounting specialists can work with closely held businesses to identify ways to reduce overhead, improve efficiencies, and optimize profitability.
The list could go on, but what matters more is determining whether or not an outsourced business solutions partner makes sense for your specific situation. No one but you can honestly answer that question, but if you’re looking for a partner to outsource some of these specialized services so you can concentrate on ways to enhance the customer experience or achieve other professional or personal goals, here are a few things to consider:
Access. The best outsourcing relationships are those in which the advisor works closely with you throughout the life of the engagement rather than trying to sell you a “solution” grounded solely in technology or handing you off from one person to the next in his or her organization once he or she has won your business.
Responsiveness. Advisors who truly care about you and helping your company succeed are readily available to answer questions, offer (candid) suggestions, and respond to your needs promptly. Sure, there will be times when they’ll be in meetings, helping other clients, or otherwise occupied and not immediately reachable; however, the most effective business advisors make it a priority to quickly respond to your requests and go to great lengths to make you feel like you’re their most important customer.
Depth of resources. In business, change is constant and complex. Outsourced providers without the resources to anticipate and quickly adapt to marketplace transformations or address new challenges that could arise during the course of your relationship may not be able to deliver a full spectrum of services or the type of value-added, metrics-based solutions you want or need.
Industry specialization. This almost goes without saying, but the most effective and productive advisors are those who have “been there, done that.” Engaging a professional financial services firm that has experience in your industry and with your type of organization can help you identify challenges and opportunities, providing an array of competitive advantages.
Outsourcing is certainly no panacea and isn’t a fit for every company. However, when approached strategically and entered into with an experienced, knowledgeable specialist who provides a clear understanding of expectations, deliverables, and likely outcomes before the engagement begins, it can enhance value and yield returns that far exceed the cost of any services.
JJ Littrell, CPA, is the leader of the Accelerate practice for the Charlotte, North Carolina, office of Elliott Davis. She can be reached at firstname.lastname@example.org.