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How outsourcing your finance function can fuel company growth

November 2019
Read time: 4 Minutes

Of all the business processes to outsource, the finance and accounting function is often one of the last to be considered.

However, it’s worth considering if outsourcing to a professional firm represents an attractive option as you seek to scale your business, especially when you consider the resources, both in terms of recruitment costs and the time it can take to build a high performing finance function, not to mention the knowledge and skillsets required.

As more and more tech scale-ups are drawn to the potential benefits, BDO partner Ian McBane outlines how outsourcing can fuel company growth and free up founders’ valuable time.

The benefits of outsourcing your finance and accounting function

Many businesses are choosing to outsource a variety of business processes, including finance and accounting activities. In 2018, global businesses spent $23.6 billion on outsourced processes, including the finance function. 

For business owners of fast-growing organisations in particular, the key benefit of outsourcing is the ability to focus on core operations and revenue pursuit. “Rather than risk becoming distracted with running the back office or their finance and accounting function, founders can free up their time by outsourcing to experts,” says McBane. Outsourcing in this way can significantly reduce management pressures, as founders are able to rely on their key people to run other important functions and make key business decisions.

Another area where an outsourcing partner can really add value is by ensuring the quality and consistency of your financial reporting and management information. As you seek to scale up, you’ll need to have insight and analytics around the performance of the business and have a sounding board to discuss the financials that you plan to present to your investors and stakeholders.

Choosing an outsourcing partner for present and future needs

The outsourcing partner should have expertise in the business’ specific sector and understand the business as it stands and as you plan to evolve it in the future.

As a tech business founder, having a strategic plan for where the business is heading is vital. The requirements and complexities of financial reporting will increase over time, particularly for tech businesses moving through fundraising rounds. Having an optimised finance and accounting function will help future-proof companies’ need to meet requirements for strong management information and data for investors.

“I would always advocate an internationally based firm, as tech businesses can go global fairly quickly,” McBane recommends. “It’s a good idea to partner with an accounting firm that has the expertise, scale and experience of working with similar organisations.

“They should also have the ability to help you implement your growth plan, whether that's nationally or internationally. That means having the knowledge and the resource capability to assist your business on its journey,” McBane explains. “Not only that, it is important to make sure that the business has a strong partnership with whoever it’s working with.”

Breadth as standard

Having an outsourcing partner that can provide a significant range of relevant solutions is ideal, because it means there will be more integrated support and they may be able to open up more finance opportunities.

“For example, a specialist running the finance function for a business should be able to spot an opportunity such as an R&D tax claim,” says McBane. “The business could reach out to the same firm for help incentivising employees, or to identify and resolve a particular VAT issue.

“There are risks and opportunities we can identify through our core ongoing relationship team, and then we can bring in the wider firm and experts in those areas for a more comprehensive service.”

"Founders should be seeking that all-around solution to ensure that all risks and opportunities are identified and taken advantage of, where possible. "

Consider outsourcing from the outset

Elements such as finance, HR, back office systems and more are often overlooked by founders and leadership teams, because understandably they’re trying to grow and develop their product and so don’t see them as a priority.

However, it’s important for businesses with high growth potential to acknowledge that they will likely quickly outgrow their back office and reporting functions. Glassdoor reports that the average hiring process takes 27.5 days, making forward planning vital in high-growth environments. A core benefit of outsourcing these processes is the significant reduction in the hiring and training period, as outsourced experts are able to hit the ground running and scale up quickly.

“It's better to be ahead of the curve and have a streamlined finance process mapped out early on, using the latest technology, rather than trying to fix things retrospectively,” says McBane.

Combining outsourced resource and internal teams

Tailoring the solution to business type and complexity is paramount for success. If a business is fast growing and plans on going international, it needs to have the ability to scale out its finance resources appropriately.

If the processing aspects of the finance function are outsourced, a finance director has the ability to focus on the strategic areas that drive value to the business, such as shaping commercial, financing and investment plans. Knowing that the finance function is in safe hands and getting external assistance gives management the information, insight, and intelligence to be able to make those strategic decisions.

“We work with clients where there is no dedicated finance team at all, but for fast-growing international businesses or companies undergoing fundraising, we quite often work with the finance director,” McBane says. “We provide them with the information they need to make a strategic contribution to the organisation and its goals.”

BDO’s strategy

“We work with a range of clients in the technology sector. From early-stage businesses supported by our Tech Nation Rising Stars sponsorship, through to industry leaders we support through the Tech Track 100, we help clients of all sizes within the technology and media space,” says McBane.

“Additionally, our global reach is part of our appeal. Our international coverage across the 162 countries that we operate within means that our clients can have peace of mind if they would like to expand.”

Want to know more about the benefits of outsourcing? Get in touch and email [email protected].

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