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!

Impact of mismanaged finance for SMEs and Entrepreneurs

Good financial management is the bedrock for profitability in any business. But as start-ups or smaller businesses begin to grow, it is common for their accounting systems and processes to fail to scale and evolve at the same rate.

When your internal accounts processes don’t grow alongside the rest of the business, mismanaged finance will almost certainly be just around the corner. And this ineffectual management of your financial procedures can have a highly negative impact on the future success and prosperity of your business.

So how do you spot a mismanaged finance issue? And when you have, how do you put resolutions in place to cure the problem and minimise any negative impact?

What’s causing mismanagement of your finances?

As with any business issue, your first step is always to identify the root cause of your mismanaged finance and to understand how it has happened.

Every business has its unique organisational quirks and specific ways of setting up a financial model. But there are some common causes of mismanaged finance that you should consider when reviewing the cause of your financial mess.

  • Are you too busy? – When you’re drowning in the everyday minutiae of running the business, it is tempting to put off your finance responsibilities until another day. Pushing back those accounting tasks and reviews ‘until the weekend’ may sound tempting, but the more you push back, the slower and less responsive your financial management will become.
  • Are your resources constrained? – If you cannot afford to hire senior financial people for your the team, you will not have the personnel or the resources to deal with the bigger financial picture. And if your external accountant is focused primarily on hygiene and compliance tasks, they won’t be proactive enough to help you provide a resolution either. Contact PAYG for a cost efficient solution.
  • Is there a lack of discipline in your processes? – Your financial model and system has to be clearly defined to work effectively. If there are blurred lines between your business and personal finances, for example, this makes the job of managing your company financials far more complex and difficult.
  • Is there a lack of know-how? – Finance can get complicated, so it is vital to have the right experience and capability to deal with running an evolving financial system. The number of cloud-based accounting solutions and FinTech tools on the market is also growing, so a familiarity and understanding of your chosen software is also a fundamental need.

What effect can mismanaged finances have?

Why is mismanaged finance such an important issue to resolve quickly and effectively? In short, if you and your management team are not in full control of your finances then you are not truly in control of the business as a whole.

So, how does this lack of financial control manifest itself?

If your financial information is poor, you don’t have the hard data you need to manage your business and key drivers effectively. Without these numbers at your fingertips, you cannot make informed decisions, your forecasting and projections are incomplete and you will fail to act on potential opportunities.

You are also more likely to have cash-flow problems when mismanaged finance rears its ugly head. Negative cash flow is one of the biggest causes for new or smaller businesses failing within the first couple of years. In recent research by CB Insights, 29% of failed start-up founders blamed their failure on a lack of good cash flow. So improving your overview of liquidity, and having the required cash in the business at the right time, helps to secure your long-term future.

A poor grasp of your financial management can also impact directly on you as a director of the company. If compliance rules are not stuck to, and financial deadlines are not met, this will mean fines for the business (and possibly for you personally) as well as a huge amount of stress and worry piled onto your shoulders.

In an online age where information is so readily available to banks, investors and creditors, poor compliance results and fines can have a destructive effect on your credit rating and attractiveness to investors – so making sure the financial compliance boxes are ticked is a vital part of your director responsibilities.

And finally, there is the potential for your mismanaged finances to lead to a lack of agility, and a consequent inability to grab the opportunities that are out there in the market.

With all the advantages of the cloud, automation and software control, there has never been a better time to run a business. But if your business information is not timely and accurate, you simply cannot act quickly enough to make the most of the opportunities that present themselves.

How to get back in control

We have seen how mismanaged finance can happen, and how this impacts on you, your business and your potential longer-term success.

So, if your business is experiencing any of these integral finance issues, how do you go about resolving the problem and getting back control of your accounting and financial destiny? Contact PAYG Consulting now!!

  • Put a price on your time – know your worth as the MD or CEO and weigh up the cost (both in time and money) of you dealing personally with the business’ financial issues. If you get involved in executing a complex financial resolution, this will eat into your business time and may well be something your not qualified to do well. Engaging a finance professional to sort out the problem is likely to be a better option.
  • Look forwards not backwards – a cloud accounting system is an excellent way to improve your financial overview. Put the right systems in place from the start, before you get too busy, and you can avoid getting into a mess, while also getting access to incredibly detailed financial reporting and forecasting. Use your data well and get projects and forecasts to help your future strategic decisions and planning.
  • Take stock and fix the mess – if you’ve been through your finances and found a mess, it is vital to take control and fix any issues. Do not be tempted to just ‘fix and move on’: it’s vital to also review and update the processes that lead to this mess and to ensure it cannot happen again.
  • Invest time now to save time later – to get the machinery of the business working like clockwork, you need to schedule a realistic amount of time to work on the problem. Setting aside a big enough window from the outset will save you a lot of time, stress and hassle later down the line. And ensure you have the best systems, tools and people in place to crack the problem, or it will cost you more when extra resources have to be brought in later.

Solve your mismanaged finance issues

At PAYG Strategic Consulting, we know the financial challenges you face as a business owner. So we can help you to strengthen your internal processes and controls, make better use of cloud accounting and provide the help and guidance needed to turn around those mismanaged finance problems

Reach us at ajit@mypayg.com | +91 9819 2200 26