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Don’t Use 10 Year Old Math to Justify Your Outsourced Accounting Service

Back Office Accounting Supporting Todays Business Leader 5

It used to be about labor arbitrage.  This was a common refrain:  “Wait, you’re telling me that I can avoid having to hire a full time employee and outsource to you for a fraction of the cost?”  In the labor game, that makes sense.   Move fixed price labor to a variable cost outsourcing model.  Cue the pat on the back.  But the world is different today.  Solving the cost problem is only a part of the equation for back office accounting and finance.  Now the calculator is different. Let me explain.

What’s happening in the business environment?  Well, to put it bluntly, it’s more complicated.  Businesses today have elevated their sophistication.  Contracts are more varied and complicated.  Labor arrangements with employees are more customized.  Technology and cloud based tools unlock efficiency but create new process complexity.  And operating processes in an increasingly distributed world (both for employees and the clients they serve) requires more transparency and measurement to keep a pulse on the business performance.  So if you think that this about trading off fixed price labor for variable cost labor, you’re missing the point.

What are the required capabilities that I need to run my back office?  Here are the five core capabilities that are necessary to scale your back office with confidence.  


Bookkeeper/Accountant:  This is the low hanging fruit.  Yes, you need someone competent who can (i) manage accounts receivable including invoicing and collections; (ii) process accounts payable and expenses; (iii) manage payroll and its varied nuances; (iv) deal with regulatory and compliance issues; (v) reconcile all your statements and balance sheet items; and (vi) close your monthly books and provide you financial reporting.  Sure, there are a lot of bookkeepers and accountants out there who can catalog your historical information.  Find someone who understands how to serve your industry.

Technology Architecture:  There are so many cloud based tools that are helping to improve transaction management, reporting and measurability.  What to use?   And I’m not just talking bill.com, Gusto, Expensify, and QB Online, although these are awesome.  What I’m talking about is how these integrate to solve the business problem.  First start with the business objective you are trying to solve.  Then, determine how to best utilize the technology to achieve your goal.  Who is doing that for you?  It’s not your bookkeeper.

Process Optimization:  Specifically, we see the greatest amount of variability in revenue process breakdowns.  Today, especially in professional services firms, the inputs required to deliver an invoice are varied.  Data from time tracking, expenses, and contract design all converge for what needs to be an accurate and timely invoice to a client.  Who is helping map out that process so it can flow smoothly as you grow?  Who is piecing together the technology so that the process flow can be executed?  It’s not your bookkeeper.  

Data Analytics:  Great, so now you have your accounting in place, technology integrated and process designed.  Where is the reporting that gives the business owner the visibility into the exceptions necessary to manage the business without micromanaging it?  You are going to want a data person that can extract the necessary information into a data warehouse and output reporting based on the key metrics that you use to manage your business.  It’s not your bookkeeper.

CFO Advisory:  And now let’s say you get all of the above in place.  Who is helping you build your forecast for where you want to be this year, next year and next 3 years?  Who is analyzing your capacity utilization to determine when is the appropriate time to make investments?  Who is your thought partner on key considerations around capitalization, compensation, lifetime value and customer acquisitions costs?  Who is evaluating your future forecast, comparing it to actual performance and assessing variance and an action plan to address it?  It’s not your bookkeeper.  

The old math is not working any longer.  Credible business leaders that are running high velocity companies can’t simply look for an “inexpensive” alternative.  That’s not the math that is going to achieve your goals.  The math is a function of what it is you’re trying to achieve and the investment required to help you get there.   You’ll have a hard time justifying bringing that capability in-house and it is highly unlikely that you will be able to find this within a single individual (we call them, “unicorns”).  Your best solution is to outsource to a firm that understands the new generation calculation of how to serve back office finance in a way that matches to how business is built today.  Don’t do it for the labor arbitrage.  Do it because you want to scale your business and achieve your dreams.

Stride has invested in every one of these areas.  From data analytics to CFO Advisory to process, technology and scaleable accounting resources.  We get that no single individual can be exceptional at all the pieces.  So we have brought them under one roof to service our professional service clients.  If we can support you, please get in touch with us by sending a note to introduce yourself.

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