While it may not be typical, the concept of outsourcing the organisation’s lead finance role is gaining in popularity. The reasons for doing so are varied however organisations that venture down this path seek to obtain benefits that they would otherwise forego. Some of these benefits are detailed below.
1. Short, medium or long-term engagement
The needs of the organisation determine the duration of the engagement. The organisations that have outsourced this role have done so for differing reasons, whether it be for cost savings (which this concept can bring), providing support to the incumbent finance team or to step into the role on short notice due to an employee termination event.
Whatever the reason might be, the duration to which an outsourced finance lead is involved is based on the organisation’s objectives and scope of the engagement. Therefore, the arrangement is flexible (organisations are not locked in) and the scope of the engagement can be broadened or narrowed depending on what is required.
2. Increased productivity, responsibility and accountability
When an outsourced finance lead is appointed, they are done so on the understanding that they will not be overseeing the finance team on a day-to-day basis. Therefore, this provides an opportunity for the incumbent team to take on more responsibility, increasing productivity and provides greater level of accountability when reporting up to the outsourced finance lead and the executive team/business owner.
Furthermore, the responsibility and accountability also rest with the outsourced finance lead to manage the finance team to ensure timing and quality of deliverables and to report up to the executive team/business owner and/or Board.
3. Independent improvement
There can be, stereotypically, two common responses to the question “why do we do it this way?”. One response being, “we always do it this way” or the second, “I don’t know”.
When an organisation engages an experienced outsourced finance lead, the organisation is aware that the lead brings with them the ‘know-how’ from different industries. So, whilst the context from industry to industry differ, the principal behind improving any part of a finance function is leveraged through the best practice/know-how applied within other industries. This approach independently challenges inefficient or bottleneck processes with the overall aim of improving the efficiency and effectiveness of the finance division.
4. Cost saving
It has been proven where the scope of the engagement is clear and understood by all relevant parties, organisations have stood to save up to 50% on their payroll cost by outsourcing the finance lead. Ancillary payroll costs such as recruitment and termination pay outs are also saved such is the flexible nature of the engagement.
The world in which organisations and businesses now operate in has forever changed. Therefore, business owners, executives and boards are viewing their operations through a different lens. In that context, outsourcing the finance lead provides a different approach with the potential to provide lasting financial and non-financial benefits.
If you wish to discuss the ideas raised in this article, please contact your Bentleys Advisor, or contact us via the General Enquiry form.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.