Why Dollars Aren’t the Only Reasons to OutsourceAugust 25, 2015
The Limits of In-House: Why Dollars Aren’t the Only Reason You Should Outsource Your Accounting & Finance Function
It’s a question common to every business owner who is fortunate enough to realize initial startup success: How do I best manage the constantly growing needs and demands within my accounting and finance function?
The good news, for those asking the question, is that your options for moving forward are both limited and straightforward. You can continue down the path of keeping the accounting and finance function in-house and launch the recruiting efforts to bring a full-time employee on board; or you can outsource the related tasks and processes in its entirety to an outsourced financial services provider.
Most business owners certainly understand the annual cost savings typically involved with outsourcing (with savings primarily driven by the increased costs of supporting a full-time employee, including salary, benefits, taxes, technology and office space) and the ultimate ability then to apply such savings into other key functions of the business, including business development or other growth-related initiatives. I would contend, however, that the greater benefit of outsourcing rests not so much in that which can be quantified (in this case, dollars to the bottom line), but in that which cannot – namely, the ability to leverage a team of resources.
Stated differently, should you desire to keep management of the accounting and finance function in-house and move forward with the hiring of an FTE, you are essentially availing your company to the experience, expertise and skill-set specific to that particular FTE only. What is more, after factoring for company holidays, paid time off and other administrative activities, you realize that not only are you paying for a singular set of experiences, a singular set of expertise and a singular set of skill-sets, but you are doing so in a manner that inherently leads to well less than 100% utilization for that access.
In comparison, outsourcing those same processes and tasks to an outsourced financial services provider means you now have access to a team of resources that would typically represent the entire aspect of a company’s internal finance function. Specifically, this team of resources approach yields two distinct advantages:
1. Allows for the ability to leverage against multiple skill-sets, relationships and niche expertise – meaning you are no longer limited to the scope and experience of a singular FTE; and
2. Allows for continual augmentation that can be applied against any incremental and ongoing needs that may arise.
As your company continues to grow and experience success within the marketplace, the benefits of outsourcing ultimately wane and the need to hire a team of accounting and finance resources to corporately “represent the face of Finance” becomes evident. While the timing of such a transition from outsource to in-house is unique to each company, what is more certain is that until that point is reached, the benefits of outsourcing far outweigh the alternative, and not from a dollars perspective alone.