Outsourced Controller Services: A Strategic Move for Growing Small Businesses
Managing accounting and finances efficiently and strategically is crucial for sustainable growth. One solution that has gained traction is outsourcing controller services. Most small business owners believe they need a bookkeeper, fractional CFO, or a combination of both when they actually need a controller. This blog walks through what a controller’s skill set brings to the table to help you make the right decision when building your scalable accounting team.
What Are Outsourced Controller Services?
Outsourced controller services involve hiring highly skilled external accounting professionals to manage and oversee the financial operations of a business. These services will include services like basic bookkeeping and payroll management but really come into their own with advanced accounting, reporting, cash management, and budgeting capabilities.
An outsourced controller acts as an extension of your team, providing expertise without the overhead costs associated with hiring a full-time, in-house controller. Businesses with revenue between $2 million and $20 million often need more advanced accounting but do not have 8 hours of work per day to keep an expensive, full-time controller busy. The outsourcing model is particularly appealing to small businesses that do not yet have the resources or workload to support a full-time financial department but still require high-level financial oversight.
What to Expect from Outsourced Controller Services
Comprehensive Financial Management: Outsourced controllers provide a broad spectrum of services including accounting, financial reporting, cash flow management, and budgeting. This comprehensive approach ensures all financial aspects of your business are professionally managed.
Strategic Financial Planning: Beyond the day-to-day financial operations, outsourced controllers play a critical role in strategic planning. They help set financial goals, create projections, and develop plans to achieve these objectives. Their expertise can guide decisions on investments, cost management, and growth opportunities.
Accurate and Timely Reporting: Accurate financial reporting is the backbone of any successful business. Outsourced controllers ensure that financial reports are prepared accurately and on time, providing valuable insights into the business's financial health. This timely information is essential for making informed business decisions.
Compliance and Risk Management: Keeping up with ever-changing tax and financial regulations can be daunting. Outsourced controllers stay abreast of these changes, ensuring your business remains compliant. They also help identify and mitigate financial risks, protecting your business from potential legal and financial pitfalls.
Cost-Effective Expertise: Hiring a full-time, in-house controller can be expensive, especially for small businesses. Outsourcing provides access to seasoned professionals at a fraction of the cost, making it a cost-effective solution without compromising on quality.
We mentioned in the beginning how many business owners default to the two common accounting titles, the bookkeeper or CFO. In order to better understand where the controller fits in, let’s dig into each role’s purpose and skillset.
The Role of a Bookkeeper
A bookkeeper is responsible for the day-to-day recording of financial transactions. In a corporation accounting department, the term bookkeeper is not commonly used. You’ll see titles like payables clerk or staff accountant. Primary tasks include:
Recording Transactions: Ensuring that all financial transactions are accurately recorded in the company's books.
Managing Accounts Receivable and Payable: Tracking money coming in and going out of the business.
Reconciling Bank Statements: Making sure that the company's financial records match bank statements.
Payroll Processing: Handling the processing of employee wages and salaries.
Basic Financial Reports: Preparing simple financial reports such as income statements and balance sheets.
Bookkeepers focus on maintaining accurate financial records through recording and reconciling. They ensure that the financial data is up-to-date and ready for analysis by higher-level financial professionals like accounting managers or controllers.
The Role of a Controller
A controller oversees the entire accounting process, ensuring that financial operations run smoothly and accurately. Their responsibilities include:
Budgeting and Forecasting: Creating budgets and financial forecasts to guide business strategy.
Financial Reporting: Preparing detailed and comprehensive financial reports for management.
Internal Controls: Implementing and monitoring internal controls to prevent fraud and ensure the accuracy of financial data.
Regulatory Compliance: Ensuring the business complies with financial regulations and standards.
Financial Analysis: Analyzing financial data to identify trends, opportunities, and areas for improvement.
Controllers bridge the gap between the bookkeeping functions and the strategic oversight provided by a CFO. They ensure that financial data is not only accurate but also used effectively to guide business decisions.
You may see a title like accounting manager in between the bookkeeper levels and the controller in an accounting department. The accounting manager would focus more on the financial reporting of the entity or perhaps a single entity of a multi-entity company. The controller would then focus on the consolidated financial statements and company-wide budgets and analysis.
The Role of a CFO
A CFO takes on the highest level of financial responsibility within a business. CFO’s typically have more of a finance background than accounting. CFO’s look to the accounting department to provide completed financial statements and analysis for use in strategic discussions with the executive team.
Their key roles include:
Strategic Planning: Developing long-term financial strategies aligned with the company’s goals.
Financial Leadership: Providing leadership and direction to the finance and accounting teams.
Capital Management: Managing the company’s capital structure, including debt and equity financing.
Investor Relations: Communicating with investors, shareholders, and financial analysts.
Risk Management: Identifying financial risks and developing strategies to mitigate them.
Mergers and Acquisitions: Overseeing and negotiating major financial transactions like mergers and acquisitions.
Although CFO’s are capable of building budgets and forecasts, you do not need a CFO for that skillset. A controller is fully capable of building and reporting on budgets and forecasts. Oftentimes, when a business owner is looking for a fractional CFO they are really looking for the skillset of a controller.
Why Outsourced Controller Services Are Important for Small Businesses Aiming to Grow
Improved Financial Health and Decision Making: With professional financial oversight, small businesses can improve their financial health. Better financial management leads to better decision-making, which is crucial for growth. Whether it's understanding cash flow or planning for expansion, outsourced controllers provide the expertise needed to navigate complex financial landscapes.
Focus on Core Business Activities: By outsourcing financial management, business owners and managers can focus on core activities that drive growth, such as product development, sales, and customer service. This allows for better allocation of time and resources.
Scalability: As your business grows, so do its financial needs. Outsourced controller services are scalable, meaning they can grow with your business at a fractional level. You can increase or decrease the level of service as needed, ensuring your financial management always aligns with your current business size and goals.
Access to Best Practices and Technology: Outsourced controllers bring industry best practices and the latest financial technologies to your business. This access can enhance efficiency, improve accuracy, and provide insights that might otherwise be unavailable to a small business.
Competitive Advantage: Small businesses with professional financial management have a competitive edge. They can react swiftly to market changes, seize opportunities more effectively, and navigate challenges with confidence. This agility is key to staying ahead in a competitive market.
Conclusion
Outsourcing controller services is a strategic move for small businesses aiming to grow. It provides access to high-level financial expertise, enhances decision-making, and allows businesses to focus on their core activities. By leveraging these services, small businesses can achieve sustainable growth and maintain a competitive edge in their industry.
Feel free to reach out for more insights on how outsourced controller services can specifically benefit your business.
