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Which accounting and financial management functions can/should be performed w/o onsite personnel and/or outsourced?

While large companies have complete, inrternally integrated financial teams, with separate departments of specialists performaing the various accounting and financial managment functions, smaller and startup businesses lack the scale and budgets to hire comparable levels of specialized, experienced, and sophisticated financial professionals.  Necessarily, a financial professional in smaller/stsartup companies must perform several/all functions that would each be done by speciallists, even large departments in bigger companies.

What  accounting and financial functions are conducive to and can be effectively performed by automation and outsource providers?

How specific/granular is it appropriate to think about such accounting/financial mangment functions as billing, accounts payable, cash managment, bank account managment, bank relations, payroll, bookkeepoing, financial statements, budgeting. corporate tax planning, regulatory compliance, managerial accounting, etc.?

At what scale is it appropriate/logical to consider these as separate functions that might be provided  by discrete individual third party, nonemployee resources, including accounting/financial mangment software, SaaS providers, outsource companies, and other accoutning automation solutions?

What do you recommend to identify and evaluate responsbile, responsive, cost effective providers of the various accounting and financial mangment functions?

 

 

 

Answers

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

I am of the mind set that every support function can be outsourced and should be outsourced to save money. A few tips - clearly outline your needs; ensure all business continuity and contracts signed; develop vendor key performance measures to track success; and the most important tip - Manage the Vendor and Do not loose control.

Nate Walters
Title: CFO
Company: The Wildlife Gallery, Inc.
(CFO, The Wildlife Gallery, Inc.) |

We are a small-to-mid size company (90-100 employees), I have a 3 person staff. We perform all the daily accounting functions, billing, a/p, a/r. The two areas we outsource are payroll and bank statement reconciliation. I believe it is important to have a third party involved in these areas as it makes fraud very hard, if not impossible. I also have our accounting firm do a few monthly journal entries, not because I couldn't do it but again just to have an extra set of eyes "on the books". Transparency to our shareholders is very important and this is a very simple and inexpensive way to ensure there is no "funny business". Protection of assets is of course a very big responsibility/function of the CFO position.

Monica Patterson
Title: Demand Generation
Company: Sutherland Global Services
(Demand Generation, Sutherland Global Services) |

You ask some excellent questions about what to outsource and what to keep in-house. At Sutherland Global Services, we generally suggest you start with the more transaction-heavy side of the business (AP/AR), implement automation in those areas, and then move to the more complex functions. We also recommend working with a partner who has deep outsourcing experience and expertise, so you are able to optimize your operations. Please see our offering at http://clarity.sutherlandglobal.com, and just let me know if you'd like to schedule a time to talk with one of our Accounting Experts.

Topic Expert
Linda Wright
Title: Consultant
Company: Wright Consulting
(Consultant, Wright Consulting) |

My approach, in the past, paralleled Monica's above to begin. In the end, I think that almost any of the financial functions except budgeting and consolidation can be outsourced. What you need to retain is the oversight of all functions, which of course means having a CFO who has done all of the functions and knows what to check. I also recommend a detailed service level agreement with monthly key performance indicator checks to insure success.

Steve Belnap
Title: CFO
Company: Obeo, Inc.
(CFO, Obeo, Inc.) |

With a small company, I have found it very helpful to outsource tax, internal audit, pre-audit and other needed projects that are done on a limited basis. I am not a proponent of outsourcing AP/AR and other clerical functions with the exception of payroll. In order to keep the price reasonable, my experience has been that the outsourcers will use their least experienced and least expensive resources to perform these functions. Generally, I need to provide them with the same oversight I provide my own employees. I have found it more economical to hire my own part time and experienced clericals to do the clerical functions. Because of the price differential, I can use my own employees for more hours and get more accomplished. I prefer to then use an outsourced professional to help me fill in the gaps on a much more limited and specific purpose.

Harold D. Tamayo
Title: Vice President of Finance
Company: MHA Inc., a Roper Technologies Company
LinkedIn Profile
(Vice President of Finance, MHA Inc., a Roper Technologies Company) |

In my experience, it is best to outsource the purely transactional activities without oversight of the controls aspect of the functions. For example, if you outsource your AP/AR, you need to have the right process and controls in place to manage the customer and suppliers master list AMONG many other things. Also, basic reporting can also be outsourced but the analysis aspect of it has to stay in house to build knowledge. The head of the finance function should look at the real needs of the organization, its core competencies and the cost benefit analysis of the functions that could be outsourced. Also, note that with every change there are disruptions that could also be costly from a financial and company reputation perspective.

Dan McCue
Title: SVP, Finance & Accounting Services
Company: Sutherland Global Services
(SVP, Finance & Accounting Services, Sutherland Global Services) |

When making the decision to outsource, it's typically best to start with high-volume, manual transactions, such as AP and AR. Once you have these running smoothly, you can begin to transition more complex work, depending on the service offering of your Finance & Accounting Outsourcing provider. Something many companies don't often consider is outsourcing very high-level functions, such as FP&A, and this can yield some really compelling, cost effective results, and is certainly something you should consider.

dan rowley
Title: VP, Finance
Company: Sendori
(VP, Finance, Sendori) |

At minimum: tax and audit. Next in line would be AR and/or AP.

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