Three Big Reasons to Consider Outsourcing Finance and Accounting

June 6, 2022 ROARK

Are you a business owner and just need better financial information so you can make better decisions so you can grow your company profitably? If you run a business anywhere from a startup to a business with revenue up to $20 million, you'll want to consider looking at outsourcing finance and accounting.

Today we're going to talk about three big reasons why you should really consider outsourcing your finance and accounting. There are three big reasons. However, the order of importance or impact will depend on the company and what its needs are.

So let's look at these three big reasons.

Reason #1: Better Service

Let's start with better service and how expertise plays a role.

Access to Expertise

With outsourcing, a business owner gets access to CPAs and MBAs. They're across different roles in finance and accounting, from senior level all the way through CFO level.

They've had several years of past experience with different companies and different roles in an organization from a Staff Accountant all the way up to Controller and Chief Financial Officer. So you get all that knowledge to help you with your company.

Deep Industry Experience

Business owners will be happy to access different people from different industries.

For example in manufacturing it will be important to work with individuals with inventory experience, Cost of Goods Sold (COGS), Building Bill of Materials(BOMs), and understanding of how to work in that environment. In Construction, teams will work with WIP schedules. Non-profits need net asset experience in grant writing and those types of things. This is in addition to typical work to get you on-time accurate information because you're not having to worry about your internal team being stretched too thin.

While outsourcing finance and accounting, you'll have a team that is fractional where they're specifically working with you for those different tasks at that specific time. So it's much more efficient to work in that way.

And that leads business owners to get better service.

Reason #2: More Affordable

I think this one is probably one of the bigger ones, even, especially right now in the economy right now is "more affordable", especially with what you're seeing in the industry. It's expensive to hire and onboard a permanent controller or permanent CFO, especially with how dynamic it is when trying to attract and hire a new employee where they often have multiple offers or interviewing with multiple companies.

Hiring just a leader will be costly as you'll be paying a significant amount in total compensation - whereas if you're outsourcing you have one low monthly fee.

The monthly fee is recurring and you'll know exactly what you're paying every month. You don't have to worry about benefits, overhead, or the burden of all of those types of costs. You eliminate the need to staff an entire team because you can basically get all these different positions at a fraction, right? So instead of one person, you get an entire team for the price of what you would normally pay for one Full-Time Employee (FTE).

Additionally, you're only utilizing the hours that you really need versus you having an inside Controller or Accounting Manager and you're spending all their time which could be working on other things such as being on YouTube, running around at the coffee bar, or other downtimes that you're paying for.

You're not paying for that when you're outsourcing, you're only paying for the work that they're doing.

Companies need more than a Bookkeeper.

At the smaller end of that startup to $20 million in revenue range, business owners often think they can just get away with hiring a bookkeeper. They're thinking they're getting a real value for it, but they come to find out that when they end up needing a review or an audit, they weren't getting the level of service that they really needed.

And they didn't realize it. Sometimes you don't know what you don't know especially in some of these smaller businesses. So they're dealing with errors or finding out they didn't do accounting properly. They're just categorizing the regular banking transactions on QuickBooks and just pulling in those transactions from the bank and they're just plugging it wherever. And they're not really thinking about it. And they're not thinking about the consequences of those transactions. And also whether there are accruals or revenue recognition, there are so many things that you have to consider when you're doing the accounting that many times the bookkeepers just don't know because that's not their level. That's not their skill set. Many times they're not degreed, they don't have a CPA license, and they don't have an MBA. So really at the end of the day, you're going to end up paying even more than you would have because now you're needing to get additional support either from your CPA firm, that's doing the review and audit, and many times that's difficult for them. Or now you've got to actually find someone to run in and like help you at the last minute and try to fix something.

Reason #3: Eliminate Turnover

Eliminating turnover is big when it comes to your finance and accounting teams. You don't have to worry about key employees leaving and becoming worried about your team, whether you're going to get your bills paid, whether the cash is collected, and sending out the invoices. You also don't have to worry about losing tribal knowledge.

That is so important that you have a team. You're not hiring just one person. It's not stuck in someone's email. A team such as ours at ROARK, who are outsourced finance and accounting teams, usually has a place where they keep all the documents and have training. They have people that are cross-trained. So you're not just getting one person, you're hiring a team. You don't have to worry about losing tribal knowledge from a single person. It's a big difference. Imagine not having to worry like, oh my gosh, did they save these files? Or where did they save this or that? We see that a lot. Often, when we come in, our clients explain that they don't know where key documents or information were saved. Or it may have been on their desktop. Or It got destroyed. Or even - I've been trying to find it in their emails but it's just not there. Whereas when you're outsourcing, you have this entire team. Everything is tracked, it's reviewed, and you as a business owner have easy access at any point to jump in and take a look at what your files are.

There are many benefits to outsourcing your finance.  However, we've found these are the three big reasons to consider outsourcing your finance and accounting: Better service, More Affordable and Eliminate Turnover.

If you're a company and you're in that Startup to $20 million and you're interested in exploring what outsourced finance and accounting might do for your business,  please contact us at ROARK. 


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