Top Pain Points of Today’s CFOs (And Why Outsourcing Works)

December 1, 2017 Lydia Adams

As a CFO or finance executive, you likely know that outsourcing your Finance & Accounting processes can be an easy and effective way to drive significant savings. But done well, a Finance & Accounting Outsourcing (FAO) provider can do so much more for your business, freeing you from many of the headaches that plague today’s CFOs and enabling you to drive business results rather than simply report them. Below are the issues afflicting modern-day finance organizations and a description of how partnering with an FAO provider can help.

Limited resources 

In today’s tumultuous business environment, it’s more important than ever for a company to remain agile. Resources, both talent and capital, should be invested into areas that will help to differentiate the business. The Finance & Accounting function, no matter how well run, rarely plays a role in differentiating one business from the next. Why not give this function to someone who can run it more effectively for a fraction of the cost?

Disparate systems

Many companies, particularly those that have grown through multiple acquisitions, are running numerous ERPs and technology platforms. These disparate and disconnected systems, which often require manual rekeying of data, are one of the main reasons that many organizations are still struggling with a month-end close that resembles a fire drill. They create reports that are too late to make an impact, too difficult to understand and often done in Excel. Additionally, they have limited capacity or ability to track business metrics and perform root cause analysis.

“A service provider utilizing a cloud-based accounting platform can not only transform the way the F&A function operates with little to no upfront investment, making them more of a strategic partner to the business,” Megan Weis, VP & General Manager – FAO said. “But, they can run this function more effectively at a fraction of the cost. 

Scarce talent 

It’s more difficult than ever before to attract and retain accounting talent. As business continues to become more global and governments struggle with trying to find common ground on uniform accounting standards, the question becomes how do organizations seek and secure top accounting talent? Further compounding the problem is the fact that baby boomers are retiring and a new generation, with very different career goals and employment needs, is taking their place. And if you’re planning on upgrading technology from a legacy system to a more mainstream platform, be prepared for increased attrition once you train your employees to operate the upgraded system as they will now have improved and more relevant skills to market.

Service providers have access to large pools of very qualified, college-educated resources in offshore locations, many of whom have their CPA license and public accounting experience. Why use your limited recruiting resources to hire for a function that, although critical for running your business, is not differentiating you from your competition? A qualified service provider, particularly a niche provider who can provide personalized services, will work with you to hire talented resources to your exact specifications.

Inability to scale

As a CFO, a big part of your role is helping to guide the constant questions that arise when thinking about scale. It’s critical to have an overall and cohesive vision for all of the important staffing, systems and process decisions that you implement. The impact these decisions will have must be kept in mind for the implementation of your overall business strategy. Hiring a great team or selecting a great ERP won’t ensure success unless there is a crisp vision for how everything will be implemented and managed.

“Essentially you want to make sure you’re always seeing the forest and not just the trees, which isn’t always possible given an ever-changing landscape,” Weis said. “As a company grows from start-up to medium and then mid-market enterprise, the best-laid plans often go astray and the result is usually a combination of disparate systems and a general lack of talent that makes it difficult for many companies to scale.”

An outsourcing service provider can help by consolidating systems onto a single platform, standardizing processes, and providing the talent necessary to scale the business quickly and effectively. This allows you to concentrate on growing your core business, while you leave the F&A function to someone who delivers that exceptionally well as part of their core business.

No real-time reporting

With disparate systems comes a multitude of manual and inefficient processes that make it difficult enough to report numbers after the fact, let alone in real time. Reporting historical results in an environment like this is difficult enough and reporting in real-time is completely impossible.

The ability to produce real-time reports is the only characteristic of a well-run F&A function that can help a business to differentiate itself.

“As the world becomes increasingly complex, real-time data to aid in decision making is becoming critical for the survival of a business,” Weis said. “An FAO provider can partner with a cloud-based technology solution, such as NetSuite, to deliver F&A services on a platform that automates processes, more effectively manages workflow and allows the FAO provider to deliver real-time insights. This real-time reporting equips their clients with the data necessary to better handle uncertainty and make more informed decisions regarding their business.”

Little insight into customer behavior

In addition to no real-time reporting, disparate systems preclude the ability to delve into customer behavior. When data is housed in a single-platform with drill-down capabilities, it becomes possible to not only see the big picture but to drill down into specific groups of customers, a single customer, and even single transactions. This allows an enterprise to determine which are their most profitable accounts and identify the characteristics of those accounts that their sales department should be proactively seeking new clients. Additionally, credit terms can be customized based on customer behavior, allowing those who regularly pay in a timely fashion to enjoy more lenient credit terms and cracking down on those who don’t with tighter credit terms and by prescribing a set of actions that encourage on-time payment.

An FAO service provider delivering F&A services on a platform with drill-down capabilities and built-in analytics can help you achieve these types of meaningful insights into your business, making F&A a strategic partner to the business.

Rapid advancement of technology

Just like in all areas of business, technology within F&A is quickly evolving. Automation, analytics – both predictive and prescriptive – cognitive capabilities, both FAO and technology providers alike are investing heavily in these areas. It is not possible for an enterprise to keep up with this level of investment in a non-core function and many of your competitors have already made the decision to outsource and are taking advantage of the benefits these technologies can deliver.

“When you outsource FAO to a provider that is using a cloud-based platform to deliver services, ensuring the latest technology and maintaining that technology becomes your provider’s concern, freeing up both FAO and IT resources within your organization in the process,” Weis said.

 

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