Is it time to break up with your finance team?

Our prediction In the era of Uber, AirBnb and Airtasker, we live in a world where commoditisation of assets (cars, property and our time respectively) is increasing human output and our return on assets. The finance space is no different and we predict we will very quickly live in a world where the services provided by bookkeepers, tax advisers, Virtual CFOs and corporate advisers will all be delivered as an integrated service – CharterNet Finance Function. Barriers to business are being quickly eroded by technology and the need to stay ahead of the game requires careful allocation of these resources. Outsourced Finance Function services are fast becoming the bespoke, cost effective, accountable and truly value-add solution – redefining what it means to create a quality finance team for your business.   The problem with the status quo Without funding or an existing skillset within the executive team, many SMEs initially employ a bookkeeper or junior accountant to manage routine daily and periodic accounting and financial reporting requirements for the business. Over time, these resources are expanded to accommodate for the growth and complexity of the business. The downside of this typical SME setup is as follows:
  1. Accounting and finance is not your core business. With most finance teams being setup “piecemeal” over time, this lack of structure inherently results in inefficiency – and no real clarity on the true purpose of a finance team (hint: it’s not just to “keep you out of trouble” i.e. ensure bills / staff / ATO get paid).
  2. With the finance team’s haphazard setup and growth over time, costs become prohibitive. There is the hard cost of ongoing wages, and on-costs such as insurances, HR and training which can get into the hundreds of thousands. Then there is the opportunity cost of the business owners’ time for on-boarding new staff members, dealing with staff turnover and absences. These distractions and lack of structure are not conducive to a scalable model ready to accommodate the ever-changing needs of a growing business.
  3. The lack of strategic insight into business performance (its pulse) and proactive advice on how to increase profitability, not simply revenue. Insourced SME finance teams typically don’t have the time, experience or both to provide such analytical insights on a timely basis, so this is often missed.
We often hear from small-medium business owners about the “gulf” that exists between themselves as business owners and their finance team, with reference to a lack of relevant information with which to make timely decisions for the business. Without anyone to generate and interpret meaningful information, targets for business performance cannot be set, let alone monitored and improved. People with broad capabilities that can help fill that gap are hard to find and keep. Ultimately, sourcing this directly can be expensive and as you’ll see, unnecessary.   The new alternative The way forward for smart SMEs has been to incorporate an Outsourced Finance Function model to replace insourced finance teams. The model assumes responsibility for the full suite of finance function responsibilities from the grassroots (bank, creditors, payroll) through to tactical (budgeting, forecasting, monthly reporting vs KPIs and set budgets) to the high level strategic (corporate governance, board reporting, debt and equity funding, M&A). Outsourcing the finance function offers a breadth and depth of expertise beyond what is typically accessible or affordable for a SME. The availability of cloud-based technology and tools allow seamless and transparent work on the company’s books and records. While technology enables our team to work remotely, the ability to foster engagement via regular touch points (calls, meetings, guaranteed turnaround times on reporting and/or fixed time on-site) is still critical to effectiveness of the CharterNet Finance Function model. Also, “cookie cutters be gone”. In an era where customer experience trumps price and product, a finance function solution is required which suits the needs of each individual business. The service suite, deliverables, touch points, engagement teams and any other delivery variables are treated as “modular” and can be added/removed or changed to the needs of each client. Finally, the humanistic and high-touch aspect underpins the service. Through a “continuous engagement” model that maximises touch points, a finance function service can be delivered based on client care and trust, allowing us to immerse ourselves in clients’ businesses and truly add value.