I get asked the question fairly often: “Should I hire an in-house accounting and finance team or should I outsource?”
I get the question a bit less today because there is such a wave of outsourcing and acknowledgment that outsourcing can be a really cost effective way to manage the back office of your business. But here are a couple things to think about
I want to make an argument for outsourcing in the following way. Today, when we talk about accounting and finance we’re not just talking about a single individual that’s just your books. We’re talking about a function that requires process knowledge, analytics knowledge, certainly bookkeeping knowledge, technology experience, and advisory or strategic capability.
It’s pretty hard to find that in a single individual, so at a minimum you’re probably hiring two to three individuals, a senior level finance professional (maybe a control or accounting level professional) and then maybe a lower level bookkeeper or accounts receivable or accounts payable professional. At that point you’re just in about the $400K+ plus range to support that.
Why have an individual or a house in team? Okay. Well, one reason might be because your business is less than a million dollars in revenue and you’re probably doing a lot of it yourself or you’re just doing the bookkeeping work but aren’t at a point where you feel the need to be particularly strategic about your financials. I get that. The second might be that your processes are so specific or bespoke to your business that you need or want somebody there all the time because of the nature in which you process information. Now, I’m going to challenge that and suggest that that really isn’t building a sustainable machine that will scale but you may not be in the place where you’re thinking about that or wanting to plan for it
When you outsource, that outsourced partner is going to be looking for more rigor and discipline in process. Again, I’m not saying one is better than the other, but just knowing what you’re signing up for is important.