Is Outsourced Accounting a Solution for Your Company?

cfo

Departure of a CFO or Controller Often Triggers Need

By Michelle Ryan, CPA

A chief financial officer’s retirement is usually cause for celebration in honor of longstanding contributions to a company’s success. But it also may trigger a crisis for the company owner, who finds that the market for finance talent is extremely competitive, and qualified candidates scarce.

The departure of long-term employees often is a turning point for many companies that leads to innovative realignment in finance departments and implementation of outsourced accounting services.

Consider these examples:

Bookkeeper overwhelmed

A restaurant with a catering division found that its rapid growth was straining the abilities of its full-time bookkeeper. With the increase in revenues and payroll, the company needed skills that were more analytical than transactional. The restaurant owner was familiar with outsourced accounting services and considered outsourcing a few hours a week of controller-level work. When the bookkeeper unexpectedly decided to retire, the company did a comprehensive analysis of its staffing needs and outsourced all its finance and accounting functions.

The ability to mix and match skill levels and services made outsourcing a more viable option than hiring another full-time bookkeeper or controller. With outsourcing, the restaurant was able to get the bookkeeping services it needed, as well as a few hours a week of payroll and controller-level services.

CFO departure

A construction company with a Payroll Protection Program loan lost its CFO at a time when record-keeping and analysis of the business’ operations were critically important. Loan forgiveness will require an understanding of the PPP program’s regulations regarding employee headcounts, and the CEO needs someone who can step in quickly to assess the company’s financial management.

The CEO knows his company’s overhead is too high in relation to its field labor and is looking for opportunities to become more efficient. Complicating matters is the fact that the company’s financial data resides in Excel spreadsheets; there has been no migration to a robust accounting system that would be more appropriate for a company of this size.

The CEO is reevaluating the CFO position and considering outsourced controller services to provide the analytical skills needed to help identify the best way to ensure PPP loan forgiveness and to develop a longer-term plan to upgrade the company’s accounting software. Also important to the CEO is the need for controller-level analysis of technology solutions that help automate processes historically done by an accounting employee to keep their business operating as lean as possible.

Controller leaves amid COVID-19 crisis

A small distillery retooled to produce hand sanitizer as the COVID-19 crisis took hold. Before long, the company was shipping truckloads of hand sanitizer every day and quickly growing its revenues and customer base. The company owners quickly realized their current accounting team could not scale rapidly enough to support their rapid growth.

The founder’s reaction was simple: “I’m an operations person, not accounting and finance. I need someone who can fill that role and who can help me position the company for this market that is expanding.”

The company is now realizing the benefits of a fractional controller – a professional who devotes the hours needed each week to keep the company on a smooth track.

Outsourced accounting - interim or permanent?

For some companies, outsourcing their CFO or controller functions is a temporary solution until they find the right candidate to fill a full-time position. For others, it’s a long-term solution that respects their need for fractional services. With the growing acceptance of remote work and “gig”-style work arrangements, outsourced accounting is rapidly being viewed by large and small businesses as a solution to their finance department staffing.

For many companies, outsourcing some or all of their accounting functions enables them to bypass the increasingly difficult process of searching, recruiting, hiring and training new finance department employees. Skilled professionals at the CFO and controller level, as well as bookkeeping and AR/AP functions, are getting more difficult to find, especially in smaller cities and rural areas. Moreover, outsourcing these functions saves companies the costs of fringe benefits.

Outsourced accounting professionals bring a unique perspective to the table for their clients. They have worked with many different companies and, therefore, bring the experience of seeing how solutions work in different environments. They also have an eye on current technology solutions that re-envision accounting processes and enable automation and real time reporting. All businesses are unique, but when it comes to the accounting space, they also have a lot of common needs.

ABBB’s advisors are ready to discuss how outsourced accounting can fill your company’s finance department needs.