Should You Outsource Finance & Accounting Functions?
With rapidly changing business models and dynamics, companies are keenly aware that expert financial management and skills must be represented on their team.
Fundamental Finance & Accounting Functions
Finance and accounting have to perform some fundamental functions to support a business. They include:
Finance & Accounting Warnings
The following are 10 warning signs indicating that finance and accounting functions are not performing optimally:
How to Configure a Finance Team
How you configure that team of experts can have a number of options.
A fully staffed Finance & Accounting team may have an executive tier of professionals including a CFO, VP of Finance, Treasurer and Controller. A team would also include a management tier with a Director of Treasury/Finance and Accounting Manager, and a staff tier with a senior accountant and an accountant. Also included might be Assistant Controllers, an Accounts Payable/Receivables professional.
Startup and Early-Stage Finance Teams
Startups and early-stage companies will do with fewer resources at first and build their team. That initial configuration may be a CFO and Controller, plus an accountant.
This would not include audit and tax services. According to industry associations, loaded salaries (base plus bonus, excluding benefits) for a CFO, Controller and Staff Accountant is approximately $510,000.
Conversely, outsourcing finance and accounting functions using a fractional CFO with project-based resources can be as little as 25-50% of a full-time resources.
Build or Rent a Finance Team?
The competition for accounting and finance talent is fierce. A Robert Half survey of 2,000 finance leaders in the U.S. found that 91% of them struggled to find the right talent, particularly staff and senior accountants.
Accessing the right talent is also more expensive today. Total compensation and pay raises for CFOs and finance staffs are increasing more rapidly than ever, according to CFO Magazine and a survey of 3,700 finance professionals conducted by the Association for Financial Professionals. Average CFO compensation now exceeds $300,000.
According to the Association of Financial Professionals, a VP of Finance’s base and bonus compensation is more than $240,000 on average, a Controller is more than $150,000 and Directors of Finance can be more than $175,000.
Learn More about Outsourced Financed and Accounting Options
Larger enterprises — generally $50M in annual revenue and more — typically need an in-house, fully staffed accounting and finance team. The “Build” model.
However, a new labor model in accounting and finance is emerging which can be constructed from a combination of full-time employees, fractional employees, interim leadership and managed services. This is a hybrid build/rent model.
Determining the right configuration for your organization is what TechCXO helps companies do.
Our seasoned finance executives, former CFOs, Chief Accounting / Administrative Officers (CAOs), Controllers and Treasurers, bring independent perspectives and practical solutions based on real industry experience. Whether clients need a sounding board for critical decisions, interim leadership to bridge a period of transition or crisis or they would like to outsource their finance and accounting functions, TechCXO helps identify and overcome roadblocks and achieve results faster.