From Startups to Enterprises: Scaling Finance Teams with Outsourcing

Deloitte’s 2024 Global Outsourcing Survey uncovered that 80% of executives are planning to maintain or increase investment in third-party outsourcing. Does this surprise you? Every organization, from startups to established enterprises, can leverage scalable finance outsourcing to control costs, expand efficiency, and reach new growth goals.

In fact, finance outsourcing is one of the top CFO growth strategies going into the next few years. Studies suggest that 57% of businesses outsource work to increase productivity, with another 59% outsourcing to reduce costs and focus on core tasks.

This guide will cover everything you need to know about scalable finance outsourcing, from the strategic advantages and key outsourcing areas to a five-step fool-proof process and how to unlock cost controls.

Why Outsource Your Finance Team?

There are dozens of advantages of outsourcing finance and accounting roles in your organization. Let’s cover a few of the top benefits and why outsourcing is a go-to CFO growth strategy.

Cost Efficiency

The first advantage of finance outsourcing is cost efficiency. In-house employees can be expensive, from required employer payroll taxes to offering competitive benefits, like retirement matches and paid time off. As your company begins to scale, keeping payroll costs low is non-negotiable. Outsourced finance professionals don’t come with these added costs. They are considered independent contractors, meaning your business only pays a set hourly rate or fixed fee, with no hidden costs.

Added Scalability and Flexibility

Did you know that it takes an average of 44 days to hire a finance professional? A lot can happen in your business in 44 days. Outsourcing your finance function allows you to grow your finance team without delays. Outsourced providers often have numerous team members ready to jump in at a moment’s notice, giving you access to unlimited scalability and ultimate flexibility.

Additionally, you don’t have to worry about business disruptions from turnover. There is a continuous line of backup finance professionals. If one outsourced professional leaves, another one seamlessly takes over, helping you focus on your growth goals without restrictions.

Three Key Outsourcing Areas for Growing Finance Teams

Although scalable finance outsourcing can focus on numerous areas of your finance function, there are three key sections that are fundamental to CFOs’ growth strategies.

Bookkeeping and Data Entry

One of the core functions of an effective finance system is accurate bookkeeping and data entry. Outsourced finance professionals can help you with a variety of fundamental services, including bank reconciliations, monthly journal entries, and financial report creation. Additionally, finance professionals can assist with cash flow management, ensuring you are receiving customer funds timely and paying vendors without overdrafting funds.

Financial Planning and Analysis

Financial planning and analysis are essential to reach your growth goals as a startup or established enterprise. Finance professionals have a wide range of skills, including backgrounds in financial analysis, projections, and planning. Your outsourced finance professional can manage everything, from determining where you are overspending to uncovering prevalent risks and their associated costs.

Investor Relations

Startups considering finance outsourcing need to pay close attention to investor relations, especially if they are relying on funding to keep the doors open. Part of investor relations is providing detailed information on current and future financial progress. If an investor requests a financial report, you don’t want to wait weeks to send it. With an outsourced finance professional, your investors can have reports in hand by the end of the day. Building trust and confidence in your operations is crucial to receiving future funding.

5 Steps to Scalable Finance Outsourcing

Successful and growing finance teams don’t happen by chance. Instead, it takes a dedicated effort from all involved parties. Here’s how you can achieve scalable finance outsourcing in just five steps.

1. Define Your Goals

   The first step is to define your goals. What does your CFO growth strategy involve? Are there tasks that can be outsourced to a finance professional? Defining your goals will help you implement a scalable finance outsourcing function and identify which professionals are best fit for the role. Here are some common goals to consider:

   • Control costs and eliminate overspending

   • Manage cash flow between capital infusions

   • Grow revenue by X amount

   • Stay within X% of budgeted amounts

   • Identify and eliminate financial risks

   • Improve stakeholder confidence in the financials

   • Develop a robust and accurate financial projection

   • Improve margins by X%

   • Optimize pricing according to market demand

   If any of these items are in your CFO growth strategy, write them down. In this step, it’s also important to generate short-term and long-term goals. What you want to accomplish in six months is just as important as your outlook for the next ten years.

2. Choose the Right Outsourced Partner

   Using your list of finance goals, start looking for the right outsourced partner. Here are some traits and characteristics to look for in an outsourced finance partner:

   • Availability – The outsourced professional must have availability that matches your needs. For example, working more hours at month-end.

   • Industry Experience – Experience working with other growing companies in your industry is beneficial.

   • Data Security – Most startups focus on providing a unique or innovative product or service. Your outsourced professional should have the infrastructure to protect this sensitive information.

   • Cost – The outsourced finance provider you work with should be cost-friendly. Remember, the cheapest option isn’t always the best. Your outsourced finance professional should optimize value in relation to cost.

   • Scalability – The finance professional you onboard should open the door to new scalability options. For example, taking a handful of tasks off your plate might give you the opportunity to raise more capital or secure additional customers.

   For startups considering finance outsourcing and looking to scale, they should consider working with an outsourcing agency instead of an independent freelancer. An agency often has numerous qualified employees, giving you the ability to scale without restrictions and eliminate business disruptions due to turnover.

3. Set Clear Expectations

   After you’ve found the perfect outsourced finance team, it’s time to set expectations. Although the outsourced partner you’re working with will have a strong understanding of their roles and responsibilities in your organization, it can be beneficial to set clear expectations. Outline what you require from your outsourcing team. For example, if you meet with investors on the fifth day of every month, your outsourced finance professional needs to have reports ready by the third day.

4. Define Workflows

   Another important component of building a scalable finance team is to define workflows. Who will your outsourced finance team be reporting to? What departments will they be communicating with? How will documents be transmitted? How will your finance team communicate with you and other team members? These are all important details to work out early on to eliminate operational silos and ensure fluid communication and collaboration.

5. Review and Adjust

   Finally, review and adjust your policies and processes. After you’ve completed the first four steps, your job isn’t done. Growing finance teams take continuous adjustments to ensure optimal efficiency. For example, if you notice communication lags, maybe you set aside one hour each Monday to check in with your team and define high-priority tasks. Take the time to review progress and alleviate any weaknesses.

To learn more about optimizing your team's size in the process, read: The Key to Right-Sizing Your Accounting Team.

Evaluating ROI and Minimizing Overhead

It can be difficult to measure the true impact of CFO growth strategies that include scalable finance outsourcing. However, quantifying your overhead minimization and growth can be invaluable metrics. There are two ways to evaluate the return on investment in finance outsourcing: qualitatively and quantitatively. Let’s look at each in more detail.

Qualitative Analysis

Qualitative analysis focuses on non-financial metrics, such as improvements in customer satisfaction or stronger vendor relationships. Other qualitative benchmarks that can help you understand the return on investment of outsourcing include your stress levels, stakeholder sentiment, communication efficiency, project turnaround times, and overall compliance with regulators.

Quantitative Analysis

Quantitative analysis focuses on financial numbers to identify the return on investment in outsourcing. Benchmarks, such as changes in overhead, margin increases, revenue growth, and asset growth, are great ways to evaluate the impact of finance outsourcing.

Learn more about the financial payoff of outsourcing: Maximizing ROI: The Financial Payoff of Outsourcing for CFOs.

Summary

Whether you're considering finance outsourcing for startups or established enterprises, are you ready to leverage the benefits of scalable finance outsourcing? It might be the secret ingredient you’ve been searching for. Reach out to one of our team members today to get started on your outsourcing journey.