The finance department is often the unsung champion behind many financial projects and challenges. On the flip side, though, the department can feel a lot of heat too. Can you relate to one (or more) of these scenarios?

  • Conversion to a new accounting information system didn’t go as planned and executive management is getting restless for financial reports.
  • The current chief financial officer is retiring. While the search for a replacement is underway, management and the board are concerned they will not find a replacement in a suitable time frame.
  • The auditors are due to start their fieldwork soon, and your finance department is scrambling to get ready.

Often, the heat turns up when staffing goes down. Inevitably, that rising temperature results in even more departures … and the pressure cycle continues. The key to staff retention and financial continuity in the finance function may be in recognizing when it is time to bring in external support. When approached correctly, outsourcing can help address financial challenges such as unplanned transitions, succession planning, and special projects, or can supplement and support an entity’s finance functions.

The Finance Functions Pyramid

Think of your finance department as a pyramid:

  • At the base of the pyramid are transactional functions, such as paying bills, recording cash receipts, and processing payroll. This base of tasks is critical to the long-term sustainability of the business.
  • In the middle of the pyramid exist controllership activities, such as closing the books, reconciling account activity, and preparing basic financial statements.
  • The top of the pyramid is where advanced value-add services reside, such as variance analysis, budgeting, cash forecasting, strategic planning, and grant tracking.

The higher up the finance pyramid, the more specialized support is needed. The beauty of outsourcing is that delegated tasks can fall anywhere within the finance function pyramid. This is especially true when dealing with unexpected financial challenges in which staff may not be able to quickly shift away from regular duties (such as in the unsuccessful software conversion example).

How Can Outsourcing Help?

The shortage of accountants and financial management support is no secret. Therefore, it can be beneficial to have another source who is familiar with your organization. Here are a few other benefits of outsourcing:

  • Expertise – Cost-effective access to specialized expertise and support in the form of subject experts can save time, sanity, and resources.
  • Fresh perspective – When evaluating existing processes or technologies, there’s an opportunity for new eyes from outsourced help to look for efficiencies. Plus, new or existing staff can benefit from the additional education and training.
  • Support – Outsourcing can help fill the gaps of a temporary need or a special project. Existing internal activities can be maintained, with additional support made available for new or challenging functions.
  • Separation of duties – External, specialized help can provide another level of internal control.
Considerations

When vetting providers, we recommend three basic first steps:

  • Ask for a written proposal.
  • Ask for references (and check them!).
  • Verify the entity’s existence.

Why the extra step to verify? If the provider of outsourced assistance is later audited, you want to be sure they will still be around to provide support.

Think of outsourced help as a partnership. To be successful, executive management must be willing to listen to advice and make changes quickly. In addition, staff must be willing to learn and contribute to the process. With these relationships in place, outsourcing can help your entity manage costs, gain the services of highly skilled accounting professionals, and successfully supplement and support your entity’s finance functions.

Suzanne D’Angelo works in the Philadelphia office of Your Part-Time Controller LLC. She can be reached at hello@yptc.com.

Join Suzanne D’Angelo at the PICPA’s CFOs & Controllers Conference held on March 16 and March 23, where she will identify ways organizations can utilize outsourcing to help with internal and external financial challenges.