When is the right time to outsource your finance function?

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Outsourced Finance Department

Running a start-up, small- or a medium-sized business is a lot of hard work. You are bound to be caught up in a multitude of business processes which can make it tough to focus on the core vision of your company. A key mistake most entrepreneurs make is not asking for help on time. Delegating certain jobs offer key advantages to you and your growing team. The number of hours in your day are not growing as rapidly as your business, so it is important to sit down and identify what areas of work that does not offer any key competitive advantage to your business. All the processes that do not offer your business any competitive advantage should be outsourced. Outsourcing your finance function is one of them.
“A common cause of entrepreneurial failure is poor cash flow management, so it's fitting that one of the best positions to outsource is the bookkeeper role. In fact, bringing in an outsourced financial analyst could be the best business decision you ever make.” Says Rhett Power.
It absolutely makes sense! Any small or medium business is going to face a lot of cash crunch since the processes are still falling in place. To dedicate time and resources for recovery and timely payments is a task by itself; something that usually falls on the shoulders of the business owners themselves.
It is important to understand you are the master of your business and you are the only one who can lead it to success. At the same time, you will need someone who brings the expertise for that industry and who are equally involved and invested in your growth. Who better than someone who understands the numbers game and has deep knowledge of your industry?
Outsourced financial partners will make time to help you or any non-finance person understand what precisely went wrong as opposed to simply handing over reports. They will find ways to increase revenue and reduce costs. In case you have hired them in a financially stable environment, they will help you develop a business strategy to stay that way.
It is time to outsource your finance function when:
a) You do not have the important reports and you are not a finance person yourself.
As emphasised earlier, there are chances you might be a knowledgeable person in your industry, but once you realise you do not have the right reports every week/month to make important business decisions, it is time to outsource your finance function so there is someone who sends you the necessary information on time.

b) Your business needs the help of a full-service finance department, but you cannot afford to hire a whole team. As your business enters the growth phase, there will be many processes that will need your time and attention. Hiring several people with different skill sets to make a full finance department might not justify the jobs list. Outsourcing helps you reduce your costs for this department. You only outsource deliverables and pay accordingly.

c) You need help understanding your reports
You might have figured out a way to use a smart accounting software. And therefore, now have reports generating right on time. Are you able to interpret them correctly? Better question still – are you able to understand all that is there to help you take calculated and better business decisions? Decisions that will help you save money and cut down your costs within your business. That is ideally what a finance department needs to do. That is what your outsourced finance partner will do.

d) Identifying opportunities
Businesswise, you will always be on top of your processes. Getting someone who collaborates with you to simplify other linked business processes, identify areas of opportunities that save time and therefore money for your company as a whole, is extremely key for a growing business. Any business in its growth stage will be focused on its scalability. To foresee any gaps that might hamper the cash-flow or to see areas of improvement and optimisation for the business comes naturally to a set of experts.

It is not always an easy ride when you decide to outsource your entire finance department. The partner should be able to give you proof of being an involved collaborator contributing to the growth of the business. Evaluating your outsourced finance partner is a matter for a separate read, but what is key to such a decision is transparency. Any finance outsourcing partner that has a proven track record of complete transparency and honesty in their work is a true find!