At TGG, we meet business owners everyday that are reluctant to outsource their accounting and financial functions because they think it will reduce visibility into the financial health of their business.
At the same time, they’re struggling with accounting and reporting issues–even when they have someone on staff to handle bookkeeping.
Large companies benefit from accounting and finance departments that have several layers of expertise at their disposal.
It’s usually too costly for small businesses to staff an entire finance department. But they can emulate this model by using an experienced, outsourced accounting service that provides the right expertise at the right times.
You might be surprised to know that this does not necessarily mean getting rid of your current staff.
Accounting for small business can mean different things at different times in your company’s growth and it’s important to have the right expertise on hand.
Here are the most common questions we hear when small businesses are considering outsourced accounting services.
Do I need to let all of my staff go if I outsource my finance department?
Absolutely not. Often businesses simply need additional help; they are not looking to replace anyone.
Between fully outsourcing or partially outsourcing your accounting, there is generally an option that will work for your business.
There are two general models for implementing outsourced accounting services:
- Fully Outsourced. Your outsourced accounting firm handles everything. If you’re cramped for space or your current employees aren’t a good match with your current and/or future needs, this may be the right solution.
- Hybrid Model. You may want to keep either one or two employees to handle higher volume roles, such as invoicing or accounts payable. TGG can help provide management and training for these employees. We can also offer reviews, checks and balances, and policy/procedure implementation to help your business improve and grow.
When you’re considering outsourced accounting services versus hiring in house, take into account how much time you’re spending on these activities today. Could you be spending more time running your business, hiring the right people, or even selling to customers?
Don’t I need my CFO/Controller/Accounting Department sitting next to me?
Contrary to popular belief, you don’t need your accountant in the room next to you in order to keep a pulse on the financial well-being of your business.
In the modern technology and communication era, outsourced accounting is a highly viable option for any firm.
You probably outsource certain parts of your IT, marketing, or sales departments. There is no difference in the decision to outsource those areas of your business and outsourcing the accounting/finance function.
Outsourcing does not mean that your advising team will not be present. Business owners often think that once they outsource, they’ll lose visibility and accountability.
If your outsourced team is truly set up to be a natural extension of your business, they may work onsite on a regular basis or on a remote schedule that fits best for your business. Either option (on-site or remote) typically results in more accountability and higher-quality deliverables.
Another related misconception is that an outsourced accounting service will not always be available. Most experienced outsourced accounting firms will be on-call just as an in-house hire.
At TGG, we are on call and available anytime a situation or crisis arises. Furthermore, we have the ability to fill gaps that an in-house accounting role may not be able to cover during paid leave or vacation times.
Won’t it cost my business more to outsource accounting?
Every client is different, but generally it is cheaper than having an in-house accounting team. An outside accounting service can provide greater expertise, accuracy, timeliness and flexibility.
Not only will information be more accurate, but it will also be provided more quickly with an outsourced accounting team.
The key determinants of cost are:
- the defined role(s)
- transactional volume, and
- the size and type of the business
There is a difference in cost and amount of work between a 10-person company doing 100 transactions per month utilizing a hybrid model and a 60-person company doing 10,000 transactions per month utilizing a full-service model.
Additionally, you can choose which type of billing method would be most efficient for your business. There are generally two options for billing: a monthly fixed fee (or retainer) or hourly billing. This gives business owners flexibility and predictability.
Why haven’t I heard of outsourced accounting services for small business before?
It’s still fairly new. Outsourced accounting, as a full service model, didn’t really exist ten years ago when TGG first started. ‘Fractional’ or ‘part-time’ CFOs became popular before outsourced accounting services were developed.
People acted as part-time bookkeepers or CFOs working with multiple businesses. This was not a complete solution and left a lot of loose ends.
Today you can get a fully integrated solution through an outsourced accounting firm providing all of the services that your business requires. A full-service firm can provide resources and knowledge that an individual in-house cannot match.
Big companies have full finance departments with CFOs, controllers, accountants and assistants managing the accounting, financial reporting and analysis.
Small businesses also benefit from having specialized departments, but without having to pay for that level of staffing commitment. It allows the work to be done at the right level by the right person.
Hiring outside assistance for marketing, sales, IT, HR, etc. seems to be more common but outside accounting seemed to lag a bit. However, the public is becoming more and more aware of the benefits of outside accounting services.
Meet Your Scalable Finance and Accounting Department
At TGG, we integrate the resources of a full accounting team, including a fractional CFO, within your culture to best understand your goals and objectives.
You get the benefit of increased oversight and accuracy of your financial reporting, access to experts that have seen it all and know how to handle financial nuances across industries, as well as an efficient process for managing your finances.
Depending on your unique needs, we staff up to four levels of highly trained professionals (CFO, Controller, Accounting Manager and Staff Accountants). Each level serves a specific purpose to deliver accounting best practices and business strategies to give small businesses peace of mind, improve their profitability and help them grow.
If you’re a small to mid-sized business, we’d love to speak with you about how TGG’s outsourced accounting and business advisory services work as a natural extension of your business. Let us help you improve profitability and build a scalable company.