What are the benefits to outsourcing your businesses’ finance function?

Jon Marchant, Mazars

Jon Marchant, Mazars

Outsourcing within small and medium sized enterprises (SMEs) for IT, facilities and HR has long been common place allowing business owners the time and energy to focus on running their business.

Outsourcing your finance function SMEs can also make great business and commercial sense.

There are without doubt cost advantages but the other benefits around innovation, ease of management and time to focus on the strategic direction of your business also make the consideration of outsourcing finance a compelling proposition.

Cloud accounting software can provide a real time view on business performance, cash flow and business finances. These key metric dashboards will help SMEs work smarter and faster.

Financial outsourcing

The consideration around financial outsourcing are usually driven by a business event “trigger”. A review of the finance function for security and effectiveness, difficulties in recruiting high quality personnel, emergency accounting support required due to leavers, sick leave, maternity etc. or the potential sale of a business.

Each of these events can bring about a need to review the way your finance function operates now and in the future.

The cost savings however cannot be overlooked – the automated processes and ability to tailor the support required on an individual SME business can bring about significant savings. As a rule of thumb you would expect to see at least 25% savings against existing total salary and associated costs of your financial function.

The decision to outsource your finance function may initially seem daunting. These concerns can be overcome by taking some key steps and continually assessing the impact and benefits of this business transformation process.

Firstly the choice of provider is crucial in ensuring the support and technical knowledge required during the process and on delivery are proven and secure. Choosing a provider who has experience within your sector or with your size and type of business is crucial. Ask for recent client testimonials from your provider given that they have already been through this process.

It is vital that your chosen provider clearly scopes the changes and milestones required and with the appropriate technical and legal input to ensure a smooth transition to outsourcing.

Scoping process

This scoping process should assess your existing systems and outputs and enable you to streamline these systems and tailor your outputs for internal management purposes but also for meaningful key metrics and dashboards for third parties (eg. banks, investors etc.)

In addition to the business bookkeeping, accounting and management accounts this service can also provide accurate cash flow forecasting, credit control support and an FD service to support the business.

At Mazars we have seen SME businesses throughout the UK considering this flexible, fixed cost and high quality output model.

These businesses can range from new start up fast growing SMEs through to mature businesses whose finance functions have developed over many years and are no longer fit for purpose.

The technology and support are out there to implement this flexible finance model – this is the future for SME businesses.