5 Reasons to Outsource Your Finance Functions
The demand to outsource finance functions is increasing in the UK across businesses of all sizes, allowing business owners to focus resource elsewhere. This service is especially useful for SMEs who may not have the means to hire in-house accountants and bookkeepers. In this blog we will take a look at what we mean by outsourcing finance functions, and five reasons why it is a fantastic option for your business.
What is outsourcing in finance?
Outsourcing is the practice of hiring a third party to provide services or perform tasks for your business. Many finance tasks can be outsourced, including bookkeeping, payroll processing, tax preparation, accounts payable and receivable, financial reporting, and data entry. However, the decision to outsource these tasks should be based on factors such as cost, expertise, and the level of control desired by the company.
The myths of outsourcing finance
Outsourcing your finance function can be a brilliant solution for businesses looking to save costs and improve productivity and efficiency within the business. However, there are some myths surrounding outsourcing finance that need to be debunked.
Myth #1: Outsourcing finance is only for large corporations
Reality: Outsourcing finance can benefit businesses of all sizes, from small startups to large corporations. In fact, outsourcing finance can be especially beneficial for small businesses that may not have the resources to hire a full-time finance team.
Myth #2: Outsourcing finance is too expensive
Reality: Outsourcing finance can actually save businesses money in the long run. By outsourcing finance tasks, businesses can reduce overhead costs associated with hiring and training employees, as well as avoid the costs of investing in expensive technology and software.
Myth #3: Outsourcing finance is risky
Reality: Outsourcing finance can actually improve a business's risk management. By outsourcing finance tasks to experts in the field, businesses can ensure that all financial processes are handled accurately and in compliance with regulations.
Myth #4: Outsourcing finance means losing control
Reality: Outsourcing finance tasks does not mean losing control over financial processes. In fact, outsourcing finance can actually provide businesses with greater control and transparency, as they can monitor financial processes in real-time and access detailed reports and analytics.
3 reasons to outsource your finance functions
Access to expertise Providers of outsourcing financial services benefit from having knowledgable experts, usually with more experience than a member of staff you would be in a position to have in-house. This means you are able to reap the benefits of a superior finance expert, without the drawbacks of having to keep them on a payroll.
Finance professionals from outsourcing firms will have experience in all relevant aspects of finance support, such as raising finance or tax specialists. This experience is also usually from across a range of businesses, ensuring the support you receive is the very best available to you.
Cost savings
Outsourcing is a cost saving practice for many reasons, the first of which is due to a reduction in employee costs such as National Insurance, pension contributions and paid-leave. Secondly, you will not have to invest in the training and development if you outsource your financial tasks as opposed to recruiting someone in-house.
Additionally, by outsourcing these financial tasks you are removing the need to recruit vacant finance roles, which can save costs due to recruitment firm fees but also has the benefit of regaining the time you would have lost completing this recruitment process, which you can dedicate to more important tasks within your business. Finally, you will not need to find the space within your office or provide IT equipment and software licenses for an outsourced professional, whereas these would need to be considered and invested in for an in-house employee.
Time savings
As mentioned above, you will save time with recruitment if you were to outsource your financial tasks, you also will not need to invest time in the training and maintaining of knowledge for your in-house team, but these are not the only time saving benefit.
When you outsource your financial functions, you do not need to spend your valuable time managing a financial department of your own, when experts are taking care of these tasks for you it allows you to focus on what you do best, and give your attention to other areas of your business. Increased efficiency
When you outsource your finance functions, the service provider completes these tasks all day, every day, making them efficient at these tasks and less likely to make errors. Whereas, if these tasks were handled in-house, your finance department may be distracted or overwhelmed with additional priorities such as creating revenue. Outsourcing firms will give these financial tasks the attention they deserve, ensuring they are treated as a priority.
Additionally, when you outsource your financial tasks, you are also passing the associated risks from your business to the outsourcing firm. This removes any anxieties you may have around an in-house team experiencing difficulties, such as broken software or staff sickness, which is especially beneficial during high-stress periods before deadlines.
Flexibility
The financial tasks associated with a business may fluctuate throughout the year, for example when the finance department are working to meet annual reporting deadlines or tax filings. This can mean there are periods of time that your business requires more or less financial support than usual, which doesn't align with recruiting an in-house team.
However, when you outsource your finance functions, you can pick and choose which services you need support with and how often you need the support, allowing you to tailor the support to match the shifting demand.
Things to consider when outsourcing your finance tasks
When outsourcing your finance tasks, it is important to consider the following factors:
The Person: Work with an individual or team who not only has the right experience and credentials, but who also fits into your culture well.
Communication: Establish clear communication channels to ensure that both parties are on the same page and tasks are completed accurately and on time.
Security: Ensure that the outsourced provider has robust security measures in place to protect your sensitive financial data.
Reputation: Choose a reputable outsourced provider with a proven track record of delivering quality services to clients.
Legal and regulatory compliance: Ensure that the outsourced provider is compliant with all relevant legal and regulatory requirements.
Considering these factors will help you make an informed decision when outsourcing your finance tasks.
Outsourcing your finance functions with The Finance People
If you are a SME without the resource to recruit an in-house finance department, or you are looking to save time and reduce costs through outsourcing, then look no further than The Finance People. Our goal is to ensure that outsourcing your financial tasks is simple and flexible.
How can outsourcing be flexible? We allow you to use our services however your business needs us, whether that be outsourcing one part of your finance function, or outsourcing the whole lot to us. We can also work with your in-house finance team if you need us to provide support in this way. No two businesses are the same, and neither are their outsourcing needs!
Our experienced and helpful experts are on-hand to help with your finance tasks, including bookkeeping, tax preparation, payroll services, financial analysis and more. Get in touch with us today for a no-obligation consultation to see how we can support your SME or startup with outsourcing your finance functions.