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What is the typical size of an accounting department for a $5 - $10 million per year company?

Accounting Department Headcount Benchmarks

Answers

Rajeev Seshadri
Title: CFO
Company:
(CFO, ) |

Depends! On number of transactions required to be posted everyday, and how much credit is extended. Also, if a bank/lender is involved, then there is a lot of reporting. If an audit needs to get done, then a plan to factor that level of skill is required. Typically, a Senior Accountant/Controller, a Bookkeeper/accountant. If collections are required, an A/R and possibly an A/P person. That's 4 persons. If Customer service i a different dept, maybe the A/R can be combined there...and so on. All other services can be outsourced as required from time to time.

Irv Williamson
Title: Owner
Company: Growth Guidance Solutions
LinkedIn Profile
(Owner, Growth Guidance Solutions) |

Rejeev is right. The number of transactions is key to determine staffing levels. But I've seen a number of businesses that size do fine with one very good office manager. Also, consider adding a part-time CFO to add real value, especially when professional money (banks, institutional lenders, equity investors, venture capital and other pros) is involved.

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Again agreeing with the "depends" comment;
I would posit 2: If you can share responsibilities between a few people with other day jobs (ref: office manager, in small companies there are many) you can keep a good lid on it. 2 is the effective minimum as you'll want to split posting from approvals. As Rajeev indicates heavy AR/AP can add to this, for example if you've got a few hundred mid-sized customers with payment terms. Consumer or large enterprise customers tend not to consume resources as greedily.

Topic Expert
Lee Andrews
Title: P/T CFO, Business Consultant
Company: Pacific Bag, Inc./Other Clients
(P/T CFO, Business Consultant, Pacific Bag, Inc./Other Clients) |

I will continue the "it depends" theme, but with three examples from recent experiences.

$4mm revenues -- 10 total staff -- uses one F/T bookkeeper (limited skill sets/experience) and a P/T consulting CPA for monthly review, state reports, etc. and me visiting once a quarter for high level oversight/bank relations/planning with CEO.

$20mm revenues -- 41 total staff -- high invoice count and large customer base -- one A/R and collections person, one A/P, payroll and misc accounting person, and a 50% P/T financial overseer.

$5mm revenues -- 35 total staff -- uses one F/T bookkeeper/accountant for everything (not that skilled and it shows. Quite a mess 'cause they don't want to pay for more.)

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

Definitely depends. Although with a support function there is always pressure to get lean and stay lean. Lee's examples are great. Having helped to manage F&A outsourcing business, retail accounting processes require lower level skilled FTEs and tended to be outsourced to us for entire end-to-end Order-To-Cash process. Using an HR example, the benchmark ratio is typically 1 HR FTE for 100 employees. Yet the cost of this fte is "lower" if the 100 employees are mostly non-exempt and problem solving is mostly "tier 1 type" issues (the reverse applies if 100 employees are Investment Bankers, the HR FTE can garner a significantly higher wage). Accounting or finance professional associations have surveys that provide these type of ratios as well.

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