As smaller companies begin to grow, one of the areas they can struggle is with understanding their accounting data. They may not yet be at a size where they can afford somebody in-house and that is where the true value of outsourced management accounting is seen.
Why outsource your finance department?
All sizes of companies continue to look at ways of reducing costs – without affecting the quality of service they give – and one of the most cost-effective ways of managing your company’s finances is to outsource the task. Hiring individual professionals to deal with your bookkeeping, payroll, accounts payable/receivable, management accounting and compliance needs is a costly allocation of your business’s resources.
Setting up a full in-house finance department to meet all your needs is even more time consuming and costly.
What is Outsourced Management Accounting?
Outsourced management accounting is a process of measuring and recording the financial progress of your company by an outsourced third party.
To do this effectively, you need somebody who understands both the internal and external factors that affect the profitability in your company. Outsourced management accountants have the skills to interpret the information that is being collected and present it in an acceptable and understandable way.
Larger companies can afford to have an on-site management accountant but for many SMEs the cost is outside of their reach so the most cost-effective way to have a professional and accurate management accounting system for your business is to outsource it to a specialist company (like aperio) who are experts in the area.
aperio brings together the expertise of a bookkeeper, an accountant and a finance director offering your business the benefits of a complete finance department for a fraction of the cost. Outsourced management accounting is much more than just an outsourcing of bookkeeping services. It’s about financial analysis and financial reporting. And it has more benefits than disadvantages.
Some of the benefits of outsourcing for Irish SMEs
- Better control over the company’s finances.
- Better control over the company’s operations and budgets.
- It can free up time to concentrate on other parts of the business.
- It allows you to understand your profitability and margins to ensure your business is growing the way you want it.
- Probably the biggest advantage of all is the combined expertise you are availing of for a fraction of the cost.
- It removes the burden of lengthy admin and back-office work while gaining peace of mind that your financial information is up to date and accurate and compliant.
- Tailored monthly management reporting for your company’s specific KPIs.
- It shows you profitability margin comparatives based on product/service lines.
Is your in-house team qualified?
If a company has a bookkeeping department, this bookkeeping team is responsible for preparing the company’s financial statements and the company’s financial reports. However, in most Irish companies that task may fall to the bookkeeper.
The bookkeeper, who has a place of trust within the company, is responsible for preparing and analysing the company’s financial statements and managing its financial accounts – something they may not be fully qualified to do.
Mistakes in this fundamental step can lead to costly delays around tax deadlines and incorrect business decisions being made.
What tasks does an outsourced accounting partner do?
The functions will vary from company to company depending on size and level of outsourcing. A one-person business will have very different needs to a company with 20 staff. In either sized company, the first thing the outsourced accounting partner must do is get to know your business inside out and upside down.
Outsourced management accounting partners should also certainly be doing most of the following:
- Managing company cash flow
- Budgeting and forecasting cash flow
- Monitoring and controlling company operations (such as purchasing, selling, and promoting products) to meet financial objectives
- Complying with legal requirements regarding corporate governance, such as: Complying with laws governing the use of corporate assets or other business activities in which the company has a contractual relationship with another company (such as mergers and acquisitions) and complying with legal requirements related to these matters.
- Providing adequate disclosures to shareholders or other investors on material transactions involving the company.
- Managing communications between directors, officers, and shareholders.
Why should you consider outsourcing?
There are many reasons why companies choose outsourced management accounting services.
- They are smaller Irish businesses who don’t have the resources of a large company.
- They have a specific set of financial goals in mind like reducing overhead costs or improving profitability.
- The growth of their company means they now need accurate, timely data to drive their decisions.
- Their growth is such that they need immediate attention to their issue.
- They want their accounts done in a more efficient and effective way.
These are just some of the many reasons to outsourcing your management accounting – especially for companies in growth phase.
With aperio as your outsourced management accounting partners we can help you drive your business forward with data that is accurate and timely at the heart of your decision-making process. To learn more book a free consultation today.