By: Lauren Clawson, CPA
As a business owner, you may occasionally be troubled by seeming incongruities in your company’s financial performance. Maybe sales are up but profits are down and there never seems to be enough cash on hand. Or productivity has improved, and goods are being shipped faster, but cash flow isn’t as strong as it should be.
Many smaller businesses don’t have the internal accounting staff needed to analyze financial and operational data, find where the weaknesses lie and prescribe a course of action that effectively improves performance.
But in today’s business environment, such analytical ability is critical to remaining financially healthy and competitive. Moreover, it maximizes the value of real-time data generated by today’s digital accounting platforms, enabling business owners to make good, timely business decisions.
Outsourced Accounting Services
An outsourced accounting partner can help steer a small or medium-sized business in the right direction, providing analysis and guidance that is tailored to each company’s needs. Key to the relationship between an outsourced accounting provider and business owner is a long-term partnership aimed at growing and improving the business and making sure it succeeds.
The outsourced accounting provider essentially becomes the company’s back office, billing their clients, running their payroll, running their cash flow planning and preparing for tax season, so the owners can concentrate on running their businesses.
Business owners often dip their toe into the outsourced world slowly with day-to-day financial management services like accounts payable, accounts receivable and monthly reconciliation services. As the outsourced provider gains deeper knowledge and understanding of how the business is run, the relationship can evolve into more high-level advisory services. This gives a small or medium-sized company the benefit of fractional controller or CFO-level advisory services, without the cost of full-time professionals in those positions.
Operational and Strategic Advisory
Clients often are surprised that their accountants can help them with operational or strategic challenges based on their financial data, and that’s where the real value of outsourced accounting services comes in. It gives the smaller business owner a day-to-day advisor and sounding board to help run the company.
Sometimes owners get lost in the details of running their businesses and don’t have time to look at the trends that are impacting their industries and customer groups. An outsourced accounting team can use analytic tools to help identify and implement real solutions for change. They may find the reason you’re losing money is that you have quality control problems, with too much product being returned. They might also measure the positive impact improving customer collections by just one day can have on your cash flow. Once an owner understands where the pain points are, solutions can be put in place.
How to Outsource Effectively
If you’re considering outsourcing some or all your organization’s finance functions, here are a few best practices:
- Find a provider who is experienced in your space. If you own a small or medium-sized business, seek an accounting and advisory provider that specializes in small business accounting. The same applies to not-for-profits.
- Consider which finance functions you want to outsource first. Many organizations start by outsourcing accounts payable and accounts receivable, then move on to more functions.
- Before engaging outsourced accounting services, ask how your provider works with clients like your organization.
- How will they work with your internal finance staff or with you directly?
- How often will they be in communication?
- What are their procedures for dealing with problems that may arise?
- What are their billing practices, and how will they handle additional billings that may arise from unexpected problems?
- What will their monthly reports look like?
Contact your KRD advisor for a consultation. KRD’s Client Accounting and Advisory Services professionals work with small and medium-sized businesses just like yours and will put together a menu of services tailored to your needs.
