Costs of Outsourcing Controller Services for Small Businesses

Think about your company for a second. It’s thriving and revenue is coming in, but amongst all the growth, there are questions about your future. You find yourself wondering what to do about financial decisions like are you pricing your jobs right. Is it time to hire more staff?

You have the cash flow but should you spend the money? When is it the right time? Which clients and services are the most profitable? Which teams should get more people? What marketing spend will provide the most ROI and drive growth?

There are a lot of tough questions to answer. Successful businesses need to see beyond just selling more business and hiring additional employees.

Before you make big decisions, are you receiving meaningful, timely and accurate financials about your business? If not, you are probably wondering whether the foundation is already get to the next level by being set to make smart business decisions.

Your business might have a person with the title of controller who’s in charge of creating reports and analyzing data that helps guide the business through critical changes. If they are a true controller, they review information that a bookkeeper or accountant provides to predict future information for a business or company.

If you don’t have a controller, or the person with that title isn’t providing you with the relevant information you need to make data driven decisions, outsourcing controller services might be a smart move for your business. By outsourcing your controller services, you could gain much higher levels of reporting and analysis.

Outsourced Controller Services vs. Traditional Controllers

A traditional Controller is different from what an outsourced controller services offer your business. Either way, a true controller is a degreed accountant who manages accountants and bookkeepers on their team. For a small company where a full charge bookkeeper is the sole member of the accounting team, managing data entry, account reconciliation, and providing reports to their CFO or CEO, there’s also a material weakness in internal controls. One person should not pay the bills and reconcile the bank account.

Outsourcing your controller services allows a company to pick and choose services that a controller would provide. It’s important to distinguish between the CFO and Controller function. The CFO looks forward, the controller looks back.   But a good team works together to use the history to predict the future.

Sometimes the business has needs that require someone to be in-house who knows everything from the ground up. Then you need to find a flexible outsourced provided to complement your in-house staff. You don’t need to outsource everything. However, outsourcing allows for increased accounting expertise in areas such as job costing, month-end accruals, revenue recognition and more.

Why Your Business Should Outsource Controller Services

The four primary reasons companies are choosing to switch to outsourced controller services are confidentiality, turnover rate, single-point-of-failure, and cost. Outsourcing controller services can help consolidate tasks, increase efficiency and produce more accurate results for your business.

1.     Outsourced Controller Services Allows for Confidentiality

Most small business experience is a lack of separation between departments. When employees work close to the accounting department, confidential information has the capability to get in the wrong hands. If this happens, information could get shared that is detrimental to an employee or the business.

Avoid the potential risk and liability of data sharing by outsourcing your controller services.

2.     Control Turnover Rate by Outsourcing Controller Services

Many companies have regular turnover in the bookkeeping, accounting or controller positions. Why? It’s not a core competency of the management team.  The time and money that goes into finding and training someone to fill a position really adds up if you are filling a position every two years. By outsourcing, you eliminate the hassle of posting the job, interviewing, and training a new employee.

Outsourcing controller services allows you to focus on making money because you have someone you can rely on day in and day out. You can trust the results they produce and have comfort knowing you always have access to financial intelligence.

3.     Outsourcing Controller Services Stops Single-Point-of-Failure

A single point of failure is when one person is in charge of a function or process, and when they aren’t there, the duties don’t get accomplished. And when the bookkeeping isn’t completed, billing doesn’t get done and cash flow suffers.

If your accountant or controller goes on vacation for two weeks, who will complete their work when they are gone? If they were to quit, is there a system in place for someone to pick up where they left off? By outsourcing your company’s controller services, there’s no risk involved. It all just happens.

Controller services go beyond just bookkeeping and accounting, they provide critical oversight and account management ensuring the right policies and procedures get implemented and timely accurate financials are produced. A good accounting system with a good controller should help you make more money.

4.     Outsourcing Controller Services Cost Less Than a Full-Time Controller

Employing a controller is expensive.  If you have an in-house controller providing the desired results for your company, then you might not need to make any changes by outsourcing their duties. Just make sure it makes financial sense, and you have the right person in that seat.

However, make sure you aren’t paying your full time controller for part time controller work. You don’t want to pay a controller salary to do the bookkeeping, accounting, and controller duties. You will end up paying too much for the routine jobs they are performing.

If your company doesn’t have enough work for a full time controller, outsourcing can be a solution. Outsourcing allows for as much or little work to get accomplished per your company needs.

Outsourcing controller services fees typically start at Rs 25,000 per month. The oversight provided and the improved reporting package delivered will usually be well worth the price. Fees are dependent on the needs and size of your business. At the end of the day, outsourcing will be cheaper than a full charge in-house controller for most businesses.

PAYG Strategic Consulting is well equipped to serve as your outsourced controller service department. We provide outstanding client service with a India based team of a bookkeeper, staff accountant and accounting manager who provide the expertise you need to run your business. Put your numbers to work!

The Role of the CFO in Small Business

Whose job is it to make sense of all of the business numbers?

It isn’t the bookkeeper’s job. This is a clerical function. It isn’t the accountant’s job. That is to make sure that the bookkeeping is accurate, that records reconcile and financial reports are completed on time. It must be the Chief Financial Officer’s (CFO), whose primary responsibility is to manage financial risk by analyzing the data, developing proactive strategies and tracking performance outcomes.

But who really needs a CFO? Everyone knows that only large companies have CFOs.

Actually, this perception is not true. In fact, there are few businesses of any size that can afford NOT to have a CFO! Having a CFO on your management team will help you with:

  • Creating Your Business Strategy
  • Financial Modeling and Analysis
  • Performance Monitoring
  • Maintaining the Business Dashboard
  • Budget Deviation Analysis
  • Refining Strategy and Managing Change

Each of these functions must be performed on a routine and timely basis regardless of what size your business is. These functions also require specific skills, knowledge and experience to be effective. For most smaller firms, they are not functions that are performed on a full-time basis.

Securing this level of talent is going to cost a lot – – or is it?

Welcome to the age of the part-time CFO, a talent pool of senior level strategic planning and financial management expertise that is available when you need it, how you need it and where you need it. In addition, because the CFO’s primary contribution results in improved business performance, the cost is often more than covered by the resulting savings and increased profitability.

Did you know?

“…that PAYG Strategic Consulting offers part-time expertise in helping organizations with financial modeling, performance measurement, expense control, acquiring funding, risk management, mergers, acquisitions, divestitures and business management information systems?

Launched in 2012 and expanding throughout India the firm specializes in working with small and mid-sized firms that will benefit from the finance and strategic planning expertise without the full-time staffing expense. Contact PAYG Strategic Consulting for more information at ajit@mypayg.com.”

 

https://www.toptal.com/finance/business-plan-consultants/how-great-business-plan-consultants-create-value

3 Signs You Need A Cfo Role In Your Small Business

CEOs and business owners: do you need a CFO? Can you afford not to have one? These are the three signs to watch out for:

1. Your growth (or lack of growth) is out of control

Here are two scenarios:

  1. Your revenue has increased faster than you were prepared for. You’re quickly realising that your financials are becoming too complex for your company’s accountant to handle.
  2. You’ve seen a downturn in a successful enterprise. You need to make a turnaround to assure the business’ survival.

These scenarios are as different as different can be. But they have one thing in common: your growth is out of control. Either scenario is a sign you need a CFO.

If you’re a victim of your own success and are seeing your growth spiralling beyond expectations (e.g. 20 to 25 per cent year-on-year increases in revenue), a CFO can put the policies and strategies in place to ensure that you remain legally compliant with your new revenue streams as well as capitalise on your expanded turnover.

If you need a quick turnaround for your business, a CFO identifies where you are leaking capital and, more importantly, helps you devise a strategy to plug those gaps and ensure your enterprise isn’t driven into the ground.

In short, if your growth is out of control, you need a CFO.

2. Your business has become too complex to handle

You have too many staff. Your revenue streams are too complicated or too numerous. You are investigating new markets, perhaps overseas, and you need tax and legal advice. In any business life cycle, there comes a point when complexity becomes a burden.

A CFO lifts that burden. They have the skillset and experience required to ensure company efficiency. They can revamp your accounting processes, develop reports and forecasts to make sense of the variety of data now available, and perhaps most importantly, they can take command of the financial aspects of your business at every level.

In any business life cycle, there comes a point when complexity becomes a burden.

Usually this complexity is tied to revenue, but there are exceptions: a business with a $20,000,000 revenue that sells over 5,000 different products in multiple physical stores will almost certainly need a CFO. But a business with the same level of revenue with only 10 products and a single physical location may not. Complexity comes in many forms.

 

In short, if you are noticing your business is creaking under its own weight, you need a CFO.

 

3. Your strategy is no longer keeping up with your business

Many businesses start by hiring a bookkeeper. Eventually, they move on to a company accountant, and then on to a financial controller. The progression at these levels is quite simple: bookkeepers close books, accountants provide additional complexity, and controllers can provide reporting. But there’s one thing that a CFO does that these financial professionals don’t: strategy.

Rather than relying on lag metrics alone, CFOs can forecast and budget; they can strategise and provide insights into your business: what you need to do to keep growing.

This is why hiring a CFO is often seen as a watershed moment for a business. It’s a sign that you’re ready to become a leader in your industry. Leaders need forward-thinking strategy. A CFO provides that.

In short, if your strategy is no longer adequate, you need a CFO.

Summary

To summarise, if you are experiencing:

  • Fast or slow growth,
  • High levels of complexity,
  • Increased company size,
  • The need for increased strategy, or,
  • The desire to become a leader in your industry,

Then you need a CFO, contact us at ajit@mypayg.com to get more details how you can bridge the gap