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Do I need an in house Finance Team?

There comes a point in the stage and growth of a business where you think you might need to recruit additional finance staff. Or does there?

Technology has massively changed the way financials and accounting are now maintained. Dedicated roles of accounts payable, credit control, sales ledger clerk etc now face extinction due to software being able to largely do the same thing. However, the plethora of skill sets required to navigate and properly handle a growing business' financials has grown substantially.

Ideally SME's could do with 1) an in house bookkeeper/finance assistant (who understands cloud technology), 2) a financial controller for management reporting and cash flow forecasting and 3) a finance director for overall financial strategy and helping the business grow.

In reality a small business is unlikely to have the budget to bring on board such a team as part of a full internal finance function. A finance assistant cost is around £20k-£25k, a financial controller around £45k-£50k+ and a finance director can be anywhere from £70k upwards.

Given that the above full internal finance function is largely affordable for most small businesses, they tend to get by with the people they have trying to deliver whatever service is in their capacity. By and large however, there will always be gaps in what an ambitious business owner needs from a finance function and what they actually get from an in house team they can afford.

This means that the business owner can be left frustrated in getting their business where they want it to be and achieving their ultimate goals. Not to mention having to get involved personally in the nitty gritty of the finances over and above the million and one tasks required to run a business.

Life should not be so hard for business owners. As an entrepreneur you set up your business to give you the life that you want whilst doing something that you really enjoy and are passionate about. The dream certainly didn't include wading through receipts and trying to make sense of a cash flow forecast!

So what's the alternative?

The rise of cloud accounting software such as Xero and QBO has facilitated the ability of dynamic finance professionals (such as accountants) to work much closer together with business owners to help them manage their full finance function.

How is this happening?

  1. Collaboration - Cloud accounting software means much more collaboration than ever before. The accounts can be seen in real time by the accountant and business owner. No need to save backups, send the data, stop working whilst the accountant is working on it, restore data etc etc (yawn!).
  2. Automation - a lot of the data entry can be mitigated through the use of OCR apps. That means that invoices and receipts can be scanned and sent for review and posting to the accountant. No need even to hold onto to the paper anymore as copies can be maintained within your accounting software.
  3. Open banking - the new open banking rules means that the banks have allowed third parties (highly secure of course) to access account data on a read only basis. This means your transactions can flow directly from your bank to the software without having to manually input bank statements.
  4. Real time intervention - your trusted adviser can get in touch with you if someone isn't quite going right. Alerts can be set up to monitor cash flow, debtor balances, ratios to judge whether your going to have a problem with settling your liabilities in the future etc so that you can take action in real time. No point in your accountant telling you what's gone wrong months after your year end when discussing year end accounts!
  5. Access to high level finance services - most growing businesses could really do with finance director (even on a part time basis) but the reality is they can't afford them. Now, your accountant has the ability to step into that role and tailor a service that fits your business and budget. Services such as cash flow forecasting, management reporting, KPi tracking, business planning can be provided from the same place as where the numbers are managed.
  6. Procuring finance - technology has also revolutionised the small business finance sector. Disruptors in the sector have given the banking giants a run for their money by coming up with products and services that are flexible, accessible and work for the small business looking to grow. Your trusted advisor should be at the centre of your growth plans and advising you on all the relevant options out there from invoice finance, secured finance, debt factoring, bridging etc. Having real time numbers and the ability to forecast and build 'what if scenarios' based on certain eventualities is essential in the decision making process.

Many dynamic and forward thinking accountants are now offering full finance function services to business owners facilitated by all of the above. We are one of those. :-)

So if you're an ambitious business owner with exciting growth plans then ensure you have the right professionals alongside you to help you get to where you want to be.

All the best,

Reza



 

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