Outsourcing corporate financial needs is getting increasingly common especially for small and mid-sized enterprises (SMEs). According to statistics, small businesses tend to outsource their accounting and IT needs because these tasks require expertise and proficiency that they might not possess internally. 37% of all accounting and IT tasks are typically outsourced, followed by digital marketing at 34% and human resources at 28%.
Financial management in business is critically important because it will determine the profit loss margin for a company. Financial management includes the planning, organising, controlling and directing the financial activities of a business. The accounting and bookkeeping functions form the financial foundation for a company. From their records, a picture of the company’s financial health is created and is then used to make informed decisions.
The financial activities should be directed towards achieving both the long and short term company goals. They include creating profits for the founders and employees, listing the company for IPO (initial public offering) or selling the company so there is no differentiation of outsourced and in-house financial management. So what are the benefits of outsourcing your corporate financial needs?
Here are 8 great benefits to outsourcing your corporate financial needs:
1. Access to professional expertise
You should outsource your corporate financial needs because it grants you access to professional expertise. Outsourcing firms employ highly trained accountants and finance professionals who are always kept abreast of the latest developments in the industry so they have the required knowledge and skills at their fingertips easily.
Most companies have a limited budget for manpower so outsourcing their corporate financial needs is the best option to receive various financial services as and when they need. This allows companies to maximise their resources, ensure that accounts are managed properly in accordance with regulatory compliance and deadlines are met.
2. Cost savings
When running a business, operating costs are incurred including labour costs such as employee salaries, benefits, taxes etc. In fact, labour costs are one of the highest expenses in business and business owners are looking for ways to reduce these costs.
Hence when you hire corporate service providers on demand, you not only gain access to professional expertise but also save huge on costs so the saved monies can be channelled for other purposes.
3. Avoid manpower issues
When you outsource your corporate financial needs, you can also avoid manpower issues such as turnover and employees’ time off. For startups or SMEs, every individual employee is vital to the success of the company.
When an employee falls sick, on vacation or resigns, it causes stress and anxiety for the remaining employees because they might need to take over part of the work which they are not familiar with at all. Therefore outsourcing is highly recommended.
If the person assigned as the point of contact is away or has left the company, the corporate service provider will assign another professional to help you instead. The cost of turnover can prove significant when an employee leaves your company. At times, you need to pay a recruiter fee and it might take longer than usual to find the best candidate.
You will then need to provide training to the candidate and if he/ she is not the right candidate, you will need to start all over again which can cause unnecessary frustrations. Time is wasted and deadlines are delayed or missed. Outsourcing will remove these issues so you can focus wholly on generating more revenue.
4. Saves time
Most business owners hold many hats at the same time when running a business and they lead hectic schedules. The corporate financial needs can be outsourced so that business owners can focus on creating sound business strategies for positive sales turnover and running the business.
The outsourced professionals are experts in their field and are capable of helping the company well, resulting in optimal and efficient use of resources overall. The outsourced professionals know what needs to be done and their goal should be to help you save time by giving you the necessary information to make informed business decisions.
5. More organisational flexibility
Outsourcing your corporate financial needs creates more organisational flexibility. If you have a small team of 2 to 3 employees, they can be overwhelmed when there is additional workload. Moreover, if accounting was not part of their expertise, it can lead to frustrations when they need to deal with accounting functions besides handling their daily work.
Eg. Company A had a need that increased their overall workload to higher levels and many had to seek external help to manage. Business owners who outsource their corporate financial needs have the room to flex, pivot and plan deftly.
The number of outsourced professionals can be increased according to your project needs as they are not bound by time or cost constraints, delivering the results within expected timelines so that is one huge advantage.
When you outsource your corporate financial needs, you can scale up or down quickly. Businesses that expand quickly often suffer from complications with the backend operations, causing the growth to slow down and incur losses. Unforeseen circumstances can also impact the economy such as COVID-19 and the Russo Ukraine war.
In such times, companies might lay people off especially those who are not performing well but want to retain the good employees. Outsourcing the corporate financial needs allows you to be more efficient with your money and gives you the ability to scale up when the business hits its peak. Should the business become more challenging to run, you can scale down without worrying about whether the manpower is sufficient.
7. Access to better tools and processes
Small business owners usually try to keep operating costs minimal and it can be achieved by outsourcing so you not only save money but also have access to more advanced tools to grow your business.
The outsourced professionals can also take a look at your financial processes and help to improve the flow so it is easier to manage during the day to day operations. This will greatly boost your team efficiency and productivity.
8. Business intelligence
There is stiff competition in the business world today and you need to be at the top of your game. This is where business intelligence comes into play and having professional expertise at your side helps because the right information is critically important to making wise business decisions.
Rather than manoeuvre through the dark on your own, you have professional advice on the business analysis and how to make adjustments to meet future business goals. This benefit is often overlooked when outsourcing is being considered.
In conclusion, there are numerous benefits to outsourcing your corporate financial needs. You not only save time and money but also on opportunity cost. Simultaneously, you gain access to professional expertise and are able to make better business decisions, resulting in business growth.