As a business grows, managing its finances can become increasingly time-consuming.
Tasks such as processing invoices, paying suppliers, chasing customers and keeping financial records up to date can quickly become evening or weekend jobs for the business owner.
In our latest podcast, Graeme is joined by Accounts Manager Lisa and Senior Management Accountant Emily to discuss how an outsourced finance function works, the benefits it can offer and how it compares with recruiting an internal finance team.
You can watch the full conversation on YouTube here:
What is an outsourced finance function?
Most people associate accountants with year-end accounts, tax returns and compliance.
An outsourced finance function provides more regular support with the day-to-day financial management of a business.
This could include processing sales and purchase invoices, reconciling bank accounts, managing supplier payments, supporting credit control and preparing management reports.
The level of support can be adapted depending on what the business needs.
The cost of recruiting internally
One of the main topics discussed in the episode is the cost and difficulty of recruiting the right finance professional.
The cost goes beyond the person’s salary. Businesses may also need to consider employer National Insurance, pension contributions, recruitment costs and training.
It can also be difficult to find one person with experience across bookkeeping, payroll, management accounts, forecasting and higher-level financial advice.
With an outsourced finance function, businesses can access a wider team with different levels of experience, allowing each task to be handled by the right person.
Cover throughout the year
Relying on one internal employee can create problems if they are unavailable.
A holiday may leave the business without finance support for several weeks, while sickness or maternity leave could create a much longer gap.
An outsourced service provides access to a wider team, helping ensure that invoices, payments and financial reporting continue throughout the year.
Better processes and technology
The team also discuss how cloud-based systems such as Dext and Xero can make financial processes more efficient.
Invoices can be uploaded digitally, transactions can be processed and bank accounts can be reconciled without the business and accountant needing to be in the same location.
The outsourced team can also introduce more structured processes, such as regular payment runs and clearer approval systems.
This can help businesses manage cash flow and reduce the risk of errors or duplicate payments.
More useful financial information
Once the financial records are accurate and up to date, the team can prepare regular management accounts.
These can show profitability, margins, debtors, creditors and other important performance information.
The figures can then be used to produce budgets, cash flow forecasts and financial projections.
As Graeme explains in the episode, this gives business owners the opportunity to make decisions using current information rather than waiting until the year-end accounts are prepared.
Giving business owners their time back
Emily explains that clients often describe outsourcing their finance work as taking a weight off their shoulders.
Instead of spending evenings processing invoices, reconciling the bank or organising supplier payments, they can focus on running the business or spend more time with their family.
There is also reassurance in knowing that the work is being completed correctly and that reliable financial information is available when it is needed.
Is it only for large businesses?
A key message from the episode is that outsourced finance support is not only for large companies.
It could help a small business owner who no longer has time to manage the finances personally.
It could also support an established business that is struggling to recruit, has recently lost a finance employee or needs additional expertise.
The service can then scale as the business grows, from basic bookkeeping support through to management reporting, forecasting and strategic advice.
The key message
The main takeaway from this episode is that recruiting an internal finance team is not the only option available to growing businesses.
An outsourced finance function can provide access to a wider range of expertise, reliable year-round cover and more up-to-date financial information.
It can also give business owners more time to concentrate on running and growing their company.
🎧 To hear the full discussion and learn more about how an outsourced finance function could support your business, watch the full podcast episode here:
