Outsource Finance & Accounting

Should you build your own finance team?
Leverage interim and fractional models?
Or, fully outsource Finance and Accounting functions?

/ Finance / Outsource Finance & Accounting

Create an expert team to establish best practices, systems and controls that support growth

Should You Outsource Finance & Accounting Functions?

With rapidly changing business models and dynamics, companies are keenly aware that expert financial management and skills must be represented on their team.

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of finance leaders reported challenges finding skilled professionals today
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Average CFO base + bonus: Association for Financial Professionals

Fundamental Finance & Accounting Functions

Finance and accounting have to perform some fundamental functions to support a business.  They include:

  • Accounts Payable (AP) – Software and systems include invoice creation and capture, payment approvals and authorization processes. Transactions are recorded in the accounts payable and general ledger tables.

  • Accounts Receivable (AR) – Software and systems include tracking customer credits for payments and purchases. Also recorded on the general ledger.

  • Bank Reconciliations – This matches credits and debits. The net benefit is to identify any gaps in entries and to correct discrepancies.

  • Billing and Invoicing – Creates invoices, forwards bills and records information in the accounting system.

  • Expense Tracking – Records the total expenses incurred in a business. Software applications increasingly allow users to submit expenses by via a mobile app.

  • Financial Reporting – Reports within financial reporting can include but are not limited to sales reports, AR/AP, balance sheets and cash flow analysis.

  • General Ledger – Lists the accounts payable and accounts receivable information in a table. It also summarizes assets, equity, expense, and revenue information for each account.
  • Project Accounting – This tracks different, client-facing activities, such as incurred costs, expenses, billable hours, and client payments.

Finance & Accounting Warnings

The following are 10 warning signs indicating that finance and accounting functions are not performing optimally:

  • Finance and operating data to support the day-to-day business decisions is not available
  • Management operating processes are barely working or showing signs of strain

  • Monthly reporting is delivered later and later each month

  • Numbers cannot be trusted because of excessive corrections and errors

  • Numbers are not used because they are not relevant to the business decisions of managers

  • Accounting team is struggling to provide the metrics/KPI’s required by managers

  • Budgeting and forecasting is late or not occurring at all

  • Company was historically profitable but profits are now declining and cash is getting tight

  • Company needs to raise capital and recognizes the next round will be from more savvy investors

  • A more disciplined approach to strategic planning with an underlying financial model is needed.

How to Configure a Finance Team

How you configure that team of experts can have a number of options. 

A fully staffed Finance & Accounting team may have an executive tier of professionals including a CFO, VP of Finance, Treasurer and Controller.  A team would also include a management tier with a Director of Treasury/Finance and Accounting Manager, and a staff tier with a senior accountant and an accountant.  Also included might be Assistant Controllers, an Accounts Payable/Receivables professional.

 

Executive

  • CFO
  • VP of Finance
  • Treasurer
  • Controller

Management

  • Director of Treasury/Finance
  • Director of Financial Planning & Analysis
  • Accounting Manager

Staff

  • Senior Accountant
  • Accountant II
  • AR/AP

Startup and Early-Stage Finance Teams

Startups and early-stage companies will do with fewer resources at first and build their team.  That initial configuration may be a CFO and Controller, plus an accountant.

This would not include audit and tax services. According to industry associations, loaded salaries (base plus bonus, excluding benefits) for a CFO, Controller and Staff Accountant is approximately $510,000.

Conversely, outsourcing finance and accounting functions using a fractional CFO with project-based resources can be as little as 25-50% of a full-time resources.

Small company finance team

Build or Rent a Finance Team?

The competition for accounting and finance talent is fierce. A Robert Half survey of 2,000 finance leaders in the U.S. found that 91% of them struggled to find the right talent, particularly staff and senior accountants.

Accessing the right talent is also more expensive today. Total compensation and pay raises for CFOs and finance staffs are increasing more rapidly than ever, according to CFO Magazine and a survey of 3,700 finance professionals conducted by the Association for Financial Professionals. Average CFO compensation now exceeds $300,000.

According to the Association of Financial Professionals, a VP of Finance’s base and bonus compensation is more than $240,000 on average, a Controller is more than $150,000 and Directors of Finance can be more than $175,000.

Learn More about Outsourced Financed and Accounting Options

Larger enterprises — generally $50M in annual revenue and more — typically need an in-house, fully staffed accounting and finance team. The “Build” model.

However, a new labor model in accounting and finance is emerging which can be constructed from a combination of full-time employees, fractional employees, interim leadership and managed services. This is a hybrid build/rent model.

Determining the right configuration for your organization is what TechCXO helps companies do.

Our seasoned finance executives, former CFOs, Chief Accounting / Administrative Officers (CAOs), Controllers and Treasurers, bring independent perspectives and practical solutions based on real industry experience. Whether clients need a sounding board for critical decisions, interim leadership to bridge a period of transition or crisis or they would like to outsource their finance and accounting functions, TechCXO helps identify and overcome roadblocks and achieve results faster.

Case Study

Questions? Call Us or Email

If you’ve never outsourced or used executives on demand before, you’re sure to have a lot of questions. Don’t worry, we’re more than happy to answer them all.
And we know everything there is to know about this unique model. Schedule a call with us or send an email now.