Should You Outsource Finance Functions for Your Small Business?

One absolute must for running a small business is competent financial management. Without it, you risk everything you’ve worked so hard to build. Depending on the size of your business, its assets and cash flow, you have a range of options for who can handle your finances. As a sole proprietor you might rely on just a CPA to file your taxes, or if you’re an enterprise, you may add a CFO to your payroll. There are many options in between, including outsourcing financial duties. Learn the factors you should consider when deciding whether to outsource finance.

What Kind of Financial Help Do You Need?

Every business needs some form of finance professional, whether it’s a bookkeeper, accountant or controller. With under $50 million in revenue you probably need one or a combination of these professionals. It’s generally larger companies who employ a CFO, but mid-sized ones can benefit too.

An important distinction to remember about a CFO versus those other financial roles is that a CFO takes a more holistic view of your business and looks at your future. Meanwhile bookkeepers, accountants and controllers focus mainly on the past. Their training makes them generally conservative and risk averse. 

Some businesses may have a controller or similar role and a CFO, which some have neither. So which category does your company fall into?

Deciding Factors

If you have only one or two employees, you may opt to manage your finances yourself, especially if you have past experience doing so or a penchant for figures. Remember, however, that tracking expenses and income is more than math. It’s important to monitor market trends, keep up with changes to the tax code, and know how to estimate your tax bill. Entrepreneurs and CEOs typically lack the time and ability to manage all of that. A business advisor or other outside professional is almost always necessary for any business.

There are certain times in the life of your business where financial guidance becomes even more important, such as when:

• You’re hiring payroll employees for the first time
• A recession is underway or on the horizon
• Your company is in a period of rapid growth
• There’s a merger or acquisition in your future
• You’re nearing retirement
• You plan to sell soon

If you find yourself in any of these scenarios, locate trustworthy financial assistance right away. Once you’ve decided that you need financial help and what kind you need, it’s time to decide whether you staff that position or outsource. 

Benefits of Outsourcing Small Business Finance

More often than not, outsourcing is the best option. Outsourcing finance tasks can take many forms. It can range from meeting with a business advisor once a month or quarter, or retaining a fractional CFO. Whatever scale of help you need, there are several benefits of outsourcing.

• It’s scalable: As your business grows and needs change, you can add services or increase the frequency of meetings and reports.
• It saves money: When you hire someone in-house you need to fund not only their salary but insurance, benefits and onboarding. Adding employees also increases operating costs and overhead, especially if they work on-site.
• You avoid downtime: An in-house accountant or CFO has to take time off now and then, and if they leave your company, there will be downtime while you replace them. An outsourced financial professional, who is part of a firm, will have a team to back them up so you’re never left in the lurch.
• You get trustworthy expertise: When you hire someone yourself, it’s up to you to vet their skills and qualifications. If you’re not a financial professional yourself, it can be hard to know what to look for. Let an outside firm qualify the person for you instead.

Financial Professional Must-Haves

Speaking of knowing what to look for in a finance professional, here are a few “must-haves.”

• Responsiveness: Look for a business advisor, CPA or CFO who will answer your calls in a timely manner. Ask about their typical turn-around time, especially for urgent matters, and whether they have other team members to respond right away if they, themselves, are unavailable.
• Certifications: You will want to look for a licensed CPA (certified public accountant) or EA (enrolled agent). Also, ask about the person’s education and experience with businesses like yours or in your industry.
• Visionary thinking: Your business needs more than just a number cruncher. Look for someone capable of seeing the big picture while also keeping track of the details — looking forward as well as back.
• Analytical ability: In a related area, your CFO or business advisor should not only report on the numbers, but analyze them, make projections and give advice. Any accounting software program can generate reports, but only a qualified professional will put them to their best use.

A Business Advisor Can Meet Your Financial Demands

A business advisor can meet all of your financial needs, similar to an in-house CFO but with greater flexibility and at a cost savings over creating a senior staff position. Think of a business advisory firm as an extension of your company. They should predict your tax bill as accurately as possible so that you can plan and also spot opportunities to reduce costs or maximize investments across all aspects of your business.

If you’re looking for a business advisor in the Tampa Bay area to assist with your business finances, contact Business Advisory and Accounting Partners today.