Most growing companies eventually reach a point where the finance function no longer fits the business. The monthly close keeps slipping. Invoices pile up because there simply aren’t enough hands in the back office. A lender, an investor or a new private equity owner asks for a forecast, and no one internally has the time or the experience to build one. It’s common for a company’s financial needs and resources to ebb and flow, leaving you without the complete, in-house finance team you need when you need it.
The good news is none of those problems require a full-time hire. The outsourced accounting and finance services of today have expanded well beyond bookkeeping, enabling companies to find exactly as much help as they need — from transaction processing to a seasoned CFO. The challenge is knowing which service level fits, especially when terms such as managed accounting, outsourced controller and outsourced CFO are used interchangeably. Below outlines how the options differ and how to tell where your business belongs.
The most basic form of financial support comes in the form of managed accounting services. Professionals focused in this area assist with your day-to-day accounting functions, including:
Accounts payable is often one of the primary areas requiring support. An outside team can process invoices on your behalf, with your team retaining authority to initiate and approve payments. Organizations typically turn to this level of support when they don't have the manpower for the volume of work, or if they don’t have enough work to justify a full-time employee.
Overall, the managed accounting services model is fully customizable. You can engage an outsourced resource for as much or as little as needed, and for whatever duration you feel is best.
While managed accounting services help build the foundation and backbone of an organization’s finance function, outsourced controllers perform the necessary oversight to ensure your finance and accounting processes are operating efficiently and consistently.
Professionals who provide controllership services take ownership over the completeness and accuracy of your general ledger. They ensure books are closed properly, financial statements are accurate, and compliance reports, such as annual reports and tax returns, are filed timely.
If your business is less confident in its strategic direction, outsourced CFO services might be something to consider. These professionals provide high-level financial expertise and leadership, focusing on tasks such as:
An outsourced CFO typically also serves as an adviser or sounding board to the CEO and board of directors, providing peace of mind your company is addressing its financial needs and making sound strategic decisions.
Each model provides a unique solution and, therefore, meets distinct needs. Below are common examples of need-based scenarios for each area.
When you need:
When you need:
When you need:
Outsourced accounting and financial services tend to be à la carte, which means you are not required to start at the beginning and work your way up. You can select one service, anywhere on the spectrum, or use a combination of all three. And remember, you are hiring a team, not simply a seat. One of the underappreciated advantages of outsourcing is staffing flexibility. Engagements are typically staffed with lower-level professionals who handle the transactional work; a manager who reviews it; and a partner who provides oversight, meets with ownership and attends board meetings.
One final point worth making: outsourcing is industry agnostic. Not-for-profits, insurance companies, manufacturers and professional services firms all face versions of the same challenge, and the framework above applies regardless of the sector.
Contact Todd Scherrer or a member of your service team to discuss this topic further.
In this blog Cohen & Co is not rendering legal, accounting, investment, tax or other professional advice. Rather, the information contained in this blog is for general informational purposes only. Any decisions or actions based on the general information contained in this blog should be made or taken only after a detailed review of the specific facts, circumstances and current law with your professional advisers.