The decision to outsource accounting should never be taken lightly. Most leaders of growing businesses do recognise when the finance function is not as effective or as efficient as they need it to be. They also know when the time is right to consider outsourcing, but often they find it difficult to rationalise their decision – a huge stumbling block which may prevent a company from scaling.
Why does signing a cheque deliver higher value to the SME?
Benefits of outsource accounting
Finding the right partner is crucial to realise the benefits of outsourcing your accounts. Outsource accounting allows the company’s management team to stay focussed on growing the business.
- Through a tightly defined service level agreement (SLA) finance becomes more accountable (performance is continually measured against the SLA) and gains greater visibility.
- It provides access to quality data faster, whilst it’s still relevant, enabling quicker, and therefore better, decision-making.
- HR headaches (recruiting, training, managing and appraising) become the outsourcer’s problem.
- Blending resources to provide the right skill sets also becomes the outsourcer’s problem – worry about over, or under-utilisation of staff becomes a thing of the past. If you need 10% of an FD’s time, 50% of a financial controller’s time but 120% of an accounts assistant’s that’s exactly what your outsourcer will provide.
- Cost savings go beyond employee costs – outsource accounting frees up costly office space and management overhead too.
- The outsourcer is forced to focus on streamlining your processes and procedures.
- The service can flex up and down as the company grows and contracts, so the cost of finance can be variable.
- You will gain access to a source of high calibre finance professionals, a knowledge bank of best practise, as well as lessons learnt from other clients in similar sectors/situations.
Mitigating the Risks of outsource accounting
Of course, there are risks but with the right partner these are easily mitigated, and the questions, often raised before taking the decision to outsource, easily answered:
“Will outsourcing my accounting interrupt my business?”
Any change carries a risk of business interruption. An experienced outsourced accounting provider will have a well-established and fine-tuned process of set-up and transition. Make sure you understand what they are before your commit.
The process of defining the SLA itself often brings efficiencies which far outweigh any disruption.
“What if the outsourcer does not have the skills to deliver the quality of service required?”
A successful and well regarded outsourcer who specialises in scaling businesses will have a very broad skill set and a large pool of professionals. They will have different resources for companies at start up, in growth and for those looking for funding or preparing to exit. A good outsourcer should also allow you to TUPE existing staff across to the new team if you wish to.
“Will lower quality staff be used?”
It’s now all in the SLA, which focuses on the work being delivered to quality and timescales, NOT on the individual doing the work. A top rate outsourcer will select the team carefully and want you to meet the team before the transition begins.
“The team isn’t permanently based on site; will this affect quality and communication?”
We live in a virtual and collaborative world. An experienced outsourcer will have robust processes and systems underpinning their service to facilitate communication. They should also allow you to choose to have the team based on-site for part of the time if you prefer this. Any onsite time should, however, be scheduled, focussed and lead to improved efficiency.
“If the outsourcer under-prices the contract will I constantly be asked for money?”
Again, the key here is defining an appropriate SLA and agreeing a contract in the spirit of value for money and not simply cost.
“Who manages the contract and relationship if I have no finance staff?”
One of the major benefits of outsource accounting is that the senior management team now own the relationship with finance and will drive the SLA thereby ensuring they get what they need to grow the business. You will interact on a daily basis with your designated finance team.
“Do I need to change the way I work with Finance?”
In some ways, yes. Interaction and deliverables are more planned and scheduled. To achieve additional cost savings some current deliverables or ‘nice to haves’ will have lower priority to ‘must haves’. We see this prioritisation of requirements and expectation as a positive, but client expectation may need to change in a managed way.
“What happens if volumes decrease? Am I locked into a non-commercial contract?”
One of the major benefits of outsource accounting is that your provider is that they can flex the contract up or down, so you are never locked into a non-commercial contract.
Isosceles are business and corporate advisors to ambitious companies – M&A advisory, outsourced accounting and outsourced HR.
