Outsourcing Financial Expertise

Business Insights

When is the right time in the life cycle of your business to consider bringing in external help?

As a business grows the business owner is often so busy being the sole point of reference for every decision that it can become difficult for them to take a step back from the coal face, to take an overview of their business finances in order make plans for the future.

Finance is obviously a key aspect of running a successful business; after all business is about money, making a profit and seeing your business grow. Yet business finance can be one of the areas business owners find particularly difficult and time consuming to manage.  

Most owner managers or SME MD’s find that a well-structured finance function, which takes care of strategy on the one hand and mundane details on the other, is key to the successful running of their business. Yet, without someone with financial expertise it is almost impossible for the business owner to avoid becoming enmeshed in that side of the business. Payroll, issuing invoices, chasing slow payers, reconciling accounts and stock levels can all take substantial amounts of time away from actually building the business.

It can be lonely at the top, after all, as the owner, the “buck stops with you”. There comes a stage in all scaling businesses when the owner needs help. Ideally from a Finance Director, however for a small or growing business, to bring someone on board full time with the relevant expertise is too costly.

The answer is a part time Finance Director, whereby you gain the services of a highly experienced and well qualified person capable of managing all the financial functions, with planning, budgetary and strategic expertise, but at a fraction of the cost of actually employing them full time.

Many small business owners, having built up the business from scratch, can be reluctant to relinquish any part of the control of their business’ finances and unwilling to open their books to a third party.  Such business owners need to consider whether they have the necessary skills and expertise to keep up with the many changes resulting from recent legislation, or whether it would be better to outsource to someone with the specialist knowledge and skills who could do the same job, or better, in a more cost effective way?

The main consideration must be “What are the benefits to me and my business if I outsource my accountancy and financial functions?” Will I be able to use the time saved more profitably? Perhaps through spending more time promoting the business, networking, building stronger relationships with customers, sourcing new lines or suppliers, and in general, doing what you do well, focussing on the sharp end of your business?

An outsourced FD will provide the expertise to help you grow and run your business on tap, just when you need it, and only as much as you need it, especially when planning ahead or filing accounts.  Limited companies are obliged by law to prepare a set of financial accounts each year and to file a copy with Companies House. There are statutory penalties for late or incorrect filing, for which the directors are liable, although small and medium-sized companies are allowed to file accounts with certain information omitted, your outsourced FD will be able to advise.

Management accounts are one of the most important financial tools in a business owner’s armoury, and while there is no legal requirement to prepare them, it is hard to run a business effectively without them. Most companies produce them regularly - e.g. monthly or quarterly.

Management accounts usually contain elements such as:

  • the sales process - such as pricing, distribution and debtors
  • the purchasing process - such as stock records and creditors
  • the fixed asset register - details of all fixed assets, including identification numbers, cost and date of purchase, etc
  • employee records

Here again, it is your outsourced FD who will use them to work with you to help you plan your business and make decisions about key areas such as sales, margins and stock. They will help you make timely and meaningful management decisions about your business.

The level of costs will, vary depending on the services to be provided, and the chosen firm. Making a decision on price rather than capability and reputation can be a costly mistake, especially as the provider might not be qualified to provide certain services and you may not receive the right service or advice on time.

Making the right choice of outsourced financial expertise provider will save time and money, avoid incurring penalties for late filing or non-compliance, and free your time up for more profitable activities, costs on running your accounting and payroll practices in house saved and the cost of outsourcing is, of course, tax deductible.

Outsourcing makes sense.