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Small Business Finance Blog

Want to gain full control over your firm’s finances but aren’t sure where to start? You’re not alone and you’ve come to the right place. Read on and reach out if we can lend a hand.

9 Advantages of an Outsourced Finance Department

 

If you receive accurate, insightful financial and operating reports each month -- without taking time away from where you need to be adding value -- and that information fuels the decisions that drive your business month after month, then there’s no need to read on.
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However, if you’re like most small business owners (or advisors/investors thereof), real game changing information is as fleeting as time in the day. Yet in today’s world, without great information you’re leaving money on the table, or worse. Consider what you’d do if you knew how the profitability of your last project compared to past efforts or to your other service offerings? Or your next hire - or investment - would pay for itself in 7 months? Can you rest easy knowing your controls will surface when an employee tries to exploit your finances for personal gain? 
 
The answers to these and countless other critical questions only come from a well-oiled finance department. However, it's neither practical nor cost-effective to expect this level of information from your own internal finance group. Outsourcing is the only realistic way to gain ongoing access to great information to enable faster, more informed decisions. Only outsourcing ultimately provides your business with a true advantage over your competition.

To understand how such a finance function differs from yours (a traditional small business finance department), let’s explore each facet of a finance function. If you take a more traditional approach to managing your firm’s finances – such as an in-house bookkeeper or controller - you’ll recognize where it falls short of outsourcing at each step.
 
1. Mindset
Traditional (in-house): Your new bookkeeper arrives on his/her first day, is directed to the vendor invoices, introduced to the customer invoicing process and entrusted with their login credentials for your accounting software. Sleeves are rolled up and transaction entry is underway. Should there be more? Not only should there before more, traditional bookkeeping tackles the task in exactly the wrong order.
 
Driven Insights (outsourced finance department): Driven Insights starts by understanding your short and long-term goals. Your goals help us determine the information you’ll need to hit the milestones en route to achieving them. Your information requirements, in turn, inform the technology, team and process we’ll need to generate it. Only then do we start thinking about data entry and how that ultimately becomes the fuel for smarter, faster decisions.
 
2. Team
Traditional: You’re not alone if you’ve hired a bookkeeper and/or a controller and hope they’ll know what to do. But do they? What questions did you ask during the interview to ensure they’re qualified? What questions did you ask your bookkeeper or controller last month to make certain you can trust the information they produce? Does your bookkeeper have the time to produce what you need or is he or she distracted by other responsibilities such as human resources or office administration tasks? Do they know how to integrate the financials of a business you just acquired?
 
Driven Insights: As Jim Collins wrote in Good to Great, the right people in the right seats on the bus is the critical starting point for making a business great. Driven Insights outfits each client with an accounting team and the oversight to ensure you value the work they provide. The Driven Insights partner who is dedicated to your account hand picks the bookkeeper and controller assigned to your account to ensure your team has the skills, experience and guidance required to equip you with the right information at the right time. That information and the coaching (when required) that accompanies it becomes the cornerstone of the informed decision making that drives your firm’s profitable growth.
 
3. Turnover
Traditional: Bookkeepers and controllers quit, get sick, take vacation and retire. Some even under perform.

Driven Insights: We’re human (we’ll tackle robots in a separate article) so our team isn’t immune from personnel challenges. The difference is we develop and document a standard process for each client and cross-train our staff so a qualified replacement steps in seamlessly as life happens. All the while you can say goodbye to paying for benefits, dealing with inconveniently timed vacations or leaves of absence… and all the related headaches.
 
4. Reporting
Traditional: Most owners revert to their income statement as their sole source of financial information. Do you know what metrics will keep your finger on the pulse of your business? How does your performance compare with your industry peers?
 
Driven Insights: There are so many more sources for critical insights. But you’re not alone if your balance sheet doesn't "speak" to you. Driven Insights produces financial reports that read like a book to a layman - and if desired, coach you where you need to round out your understanding. We also work with you to provide the few key metrics that you need to be watching now, and we evolve these as your business challenges and opportunities change.
 
5. Accuracy
Traditional: Inaccurate financials are downright dangerous. Yet, few small businesses have a trained second set of eyes pour over the financials for errors and omissions. Fewer still have a qualified resource on hand to field a bookkeeper's questions when tricky scenarios surface. What if you made your next hire or big growth investment based a cash flow projection that overstated your cash position because it counted that big receivable twice? Inaccuracies are not only scary to a business owner, they are also embarrassing to put in front of your bank, board or investors. How many mistakes can your stakeholders stomach before their confidence is irreparably shaken? Despite best efforts to prevent errors, mistakes will be made inside even the most carefully designed systems. So a business must have the procedures required to catch errors before they lead to bigger problems.
 
Driven Insights: Driven Insights produces monthly reports and only distributes reports which have been independently reviewed by a trained finance professional who knows where issues may lurk. This is one of many checks and balances Driven Insights institutes and oversees to ensure you can confidently lean on your financials for your decisions.
 
6. Consistency, Timeliness
Traditional: Many companies only produce financial reports annually for tax compliance purposes. Few generate quarterly financials and even fewer create reports and key metrics monthly. Too many changes occur in a quarter, let alone a year, to wait. Business moves too quickly these days and infrequent access to information can be costly.
 
Driven Insights: Your dedicated Driven Insights team produces reports and key performance metrics designed for your business every single month. This means you always have current, useful information at your fingertips to help with your decisions. Consider for a moment the trends, both positive and negative, that surface in any given year. Your mix of services sold might evolve rapidly. Growth of one service offering might mask declines in another. Would you have pursued (or repriced) that new opportunity in March if you knew the January project of similar scope actually lost money? Timely visibility into changes like these allows for mid-course corrections that double down on favorable trends and stem negative trends as they emerge.
 
7. Technology
Traditional: Is your bookkeeper or controller aware of the best accounting software for your business? How about applications that work well with your accounting solution to help gain efficiency? Could you entrust them to research and select the most cost effective time tracking software solution that integrates with your accounting solution? Or do they simply stick with what they know?
 
Driven Insights: Driven Insights stays current with the best-in-class technology, always looking to strike the right balance of price, performance, security and stability. Hit the ground running with best-of-breed technology without the heartburn that comes with finding it and learning it on your own. 
 
8. Advisory
Traditional: Do you call your bookkeeper or controller into your office to discuss that issue that’s been keeping you up at night? Are they a trusted peer? If so, hold on tight to that individual, you’re in the minority.
 
Driven Insights: Our customers call us routinely with these challenges. When can I afford that next hire or growth investment?  How would I pursue an acquisition of a competitor whose owner is approaching retirement? Is that new offering contributing sufficient profit or do we need to revisit the pricing? We become intimately involved with your business and love serving as a sounding board. We’ve worn your shoes. We've sweated key personnel decisions and navigated cash shortfalls. We've bought and sold businesses. We can drive a detailed analysis or just weigh in as needed. Can you say that about your finance team?
 
9. Affordability
Price is the sole category where Driven Insights doesn’t materially deviate from traditional options. Our remote delivery model often replaces a single person with a diverse team. Our technology platform and proprietary procedures allow high value resources to plug in precisely where they add their value. This leaves more cost-effective team members to follow our standardized procedures to shoulder much of the day-to-day workload. The end result is a comparably priced solution that is fundamentally superior to traditional options in every measurable category.  Yet don’t be surprised if Driven Insights actually saves you money relative to your traditional approach. Add up benefits, payroll taxes, time-off coverage, management time and other real costs beyond the salary and you’ll wonder why you haven’t considered a move sooner.

What Now

While you might have a bookkeeper and may even have a controller, look yourself in the mirror and ask if your current finance function is failing you. If any of the above comparisons hold true for you, you’re likely leaving real money on the table and should seriously consider an outsourced finance department.
 
Can you afford to wait to make the switch? Click here to connect with one of our experts and see for yourself what Driven Insight can do for your business.

The Driven Insights Advantage

The Driven Insights team knows how to design, implement, and manage the underlying financial systems so you can focus on helping your business achieve its most critical goals. Driven Insights is experienced in leading businesses on the journey to leveraging financial and operating metrics to accelerate growth. Our bookkeepers and controllers are charged with much more than simply “doing the books” – they ensure each client understands and uses the insights we share. 

See for yourself how an outsourced finance deparment with Driven Insights can provide the insight and control you need to achieve your most critical goals. Contact us at info@driveninsights.com or 888-631-1124.


Dave Robinson

Written by Dave Robinson

Driven Insights founder, author of "Competitive Advantage through Financial Management", writes about informing business decisions.

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