How Outsourcing Finance Function Saves You More Than Just Money

Discussing financial report with external expert

When considering hiring external help for your small business's finance tasks, it's common to first think about the money it can save. Yet, this decision goes beyond merely reducing expenses. It holds greater significance for numerous business owners, with nearly half (48%) of the UK's companies now opting to outsource their work.

In this article, we explore how entrusting your financial operations to external experts can save you more than just money, including time, resources, and the hassle of managing complex financial tasks.

Let’s jump right in.

1. Enhanced Focus on Core Business Activities

At the heart of the argument for outsourcing is the opportunity for SMEs to realign their focus towards core activities that drive growth and value.

Data shows seven out of ten UK businesses delegated their work to external parties. The motivations for outsourcing varied among these companies: 70% aimed to cut costs, 50% sought to transform their business, and another 50% aimed to enhance the quality of their services.

By entrusting financial tasks—ranging from accounting and payroll to financial analysis and reporting—to external specialists, companies can liberate internal resources. Strategic reallocation allows for a sharper focus on areas such as product development, customer service, and market expansion.

The resulting concentration on core competencies not only propels business growth but also strengthens competitive advantage in the marketplace.

2. Access to Specialised Expertise and Technology

Outsourcing financial functions offers businesses direct access to high-level expertise and cutting-edge technology without the substantial investment typically required.

External financial service providers specialise in their field and continuously update their skills and technology to stay competitive. This means that businesses benefit from advanced financial systems, analytics tools, and compliance software, ensuring accuracy, efficiency, and adherence to the latest regulatory standards.

Access to such specialised resources can significantly enhance decision-making, risk management, and strategic planning.

3. Improved Scalability and Flexibility

A study conducted by Opinium and LiveArea in 2020 forecasted the rise of outsourcing as a strategic response to the COVID-19 pandemic. As of now, this prediction holds true, with a significant portion of UK companies—nearly one-third—having integrated outsourcing into their operations to bolster agility and resilience.

Market conditions and business needs are ever-changing, requiring a level of flexibility and scalability that can be challenging to achieve with in-house financial departments.

Outsourcing provides a solution by offering flexible services that can be scaled up or down based on the business's evolving requirements. This agility enables companies to efficiently manage growth phases, seasonal revenue fluctuations, or unexpected downturns, ensuring that the finance function's capacity always aligns with the company's current needs.

4. Enhanced Risk Management

Risk management is a critical concern for businesses, encompassing financial, compliance, and operational risks. Outsourcing finance functions to experienced providers can mitigate these risks through a combination of expert knowledge, robust internal controls, and adherence to best practices.

External providers are adept at identifying potential risks early and implementing preventive measures, thereby reducing the likelihood of financial discrepancies, fraud, and non-compliance with regulations. This proactive approach can give you peace of mind.

5. Financial Insight and Strategic Support

Beyond the operational aspects of financial management, outsourcing firms often provide valuable strategic insights. Leveraging their broad experience across multiple industries, these providers can offer fresh perspectives and benchmarking data, facilitating more informed decision-making.

This strategic support can be pivotal for businesses looking to optimise their financial performance, explore new markets, or undergo transformations. The external financial advisors can act as strategic partners, aiding in the formulation and execution of financial strategies that align with the company's long-term goals. Plus, it’s always good to have somebody on your side who has your best interest at heart.

6. Cost Efficiency and Operational Savings

While the focus of this article extends beyond cost savings, the financial efficiencies achieved through outsourcing cannot be overlooked. The reduction in operational costs is multifaceted, encompassing savings on employee salaries, benefits, training, and infrastructure.

Additionally, the variable cost structure of outsourcing services—paying only for what is needed when it's needed—allows for more predictable and often reduced financial outlay. These savings can then be redirected towards investments in core business areas, further driving growth and profitability.

Statistics on outsourcing from a report by Deloitte revealed that among businesses intending to ramp up their outsourcing initiatives, 70% identified cost reduction as their main driving factor.

7. Continuous Improvement and Innovation

Staying ahead of changes in the markets, financial regulations, technology, and everything else in between is crucial for maintaining relevance and a competitive edge. However, trying to manage this internally can be expensive and time-consuming. You might find yourself needing to invest in staff training, pulling your finance team away from their core business activities to undergo this training.

Outsourcing your finance functions to experts who are dedicated to embracing the newest technologies and methodologies can bring a culture of innovation into your organisation without breaking the bank.

External experts put money into research and development to make their services better, giving their clients the perks of these advancements. This partnership creates a more flexible and dynamic way of handling finances, pushing for constant growth, and keeping up with the ever-changing needs of the market.

Key Takeaways

In conclusion, the outsourcing of finance functions represents a strategic decision that offers SMEs benefits extending far beyond the traditional view of cost savings.

From enabling a sharper focus on core activities and accessing specialised expertise to improving scalability, risk management, and fostering innovation, the advantages are comprehensive.

As you navigate the complexities of the modern market, the thoughtful outsourcing of financial functions emerges as a key enabler of sustainable growth and long-term success.

At Sanay, we're here to guide you through this transformative journey, opening doors to new levels of efficiency, insight, and strategic edge. We partner with ambitious businesses across all sectors, offering a complete suite of outsourced financial services. From virtual bookkeeping to financial controlling and comprehensive finance department functions, our expertise is designed to elevate your business.

Contact us today to explore how we can bring value to your business and support your growth.