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  • Pam Prior

When Is the Right Time to Outsource Your Accounting?

The First Step Changes Everything

My new job: It was great on paper! I loved the people I met in the interview process; the compensation was right; and the challenge was exactly what I love and at which I excel. But, like so many of you who are entrepreneurs, after a while, despite the fact that I saw the change that needed to be effected, and the path to success; despite falling in love with the team and driving the A-Players into the spotlight and decision making positions; and despite the security of it all – I had to leave.

I knew it in my heart, but I dreaded having the conversation with the people who had come to rely on what I was doing there. I knew I wasn’t indispensable – no one ever is – but I knew there would be some folks who were disappointed and even angry with me should I choose to leave. I let that dread build up. I found excuses to dismiss it and then lived with the aftermath of that dismissal. I dreaded getting up in the morning. I was disappointed in myself. All of those things came only because I deferred TAKING ACTION.

Then one day something happened that made me bite the bullet (what it was isn’t critical here) and do the right thing – FINALLY. So I called the person I needed to call, and I said, “This isn’t a good fit for either of us anymore. I’m giving my notice.

THERE! It was DONE. The minute that sentence came out of my mouth, it was like someone lifted a 10 ton boulder off of my back. The relief was palpable, and all of a sudden my line of vision into the future had so much more clarity. I had been spending time in “what if’s”, and making up scenarios, all of which exponentially worried me, and NONE of which reflected what actually happened.

Entrepreneur – Is it Time for Your First Step?

A decision for a business owner to outsource finance and accounting can feel equally daunting. Do you ever feel like you’re flying a plane at night with no visibility when it comes to your company’s financial situation? If so, you may be ready to outsource your accounting.

Let’s say you’re getting financial reports every month. Someone manages QuickBooks for the business, even if it’s just you or a friend.

There’s a number on the bottom of the report that says you’re profitable, so you shove it in a drawer and try not to worry about it until next month. But your cash balance is shrinking, and you don’t understand how those two things reconcile. You are losing sleep whether you keep the report in a drawer or not.

The next month you experience the same thing. It’s like a cut on your arm that keeps getting aggravated, because the minute it scabs over you scratch it again, month after month. It’s worrisome because you know these financial reports are important, but you also aren’t getting what you need in order to interpret them.

How Do You Fix The Problem?

If the situation above sounds familiar, one of two solutions could help:

1) Your business model could be such that with a little understanding about your business structure, your current bookkeeper could adjust thing just a little to fit your needs.

This is where you could look to an outsourced CFO to learn your business model from YOUR perspective; work with your existing team; change a few things; and boom; you’d be ready to go. Based on your growth plan, you’ve got everything you need for the next three years.


2) The other scenario is that the outsourced CFO learns about your business model and discovers that you are severely under-served with your current accounting and finance process, and stand only a limited getting reliable, timely and consistent answers about the profitability of your individual business lines, prospects for growth, or cash flow forecasting. Worse, you may have cash tied up in ways that you are not clearly seeing, and therefore cannot control. Your transactions are getting more complicated; your volume is increasing, and revenue recognition in your industry is tricky.

In this case if we were your outsourced CFO, we would recommend that it’s time to elevate the service level you are receiving, and we would help you get it set up properly – in a way that serves your needs – in your language and a cost that makes sense relative to the value it is bringing.

What Are The Fears That Hold People Back From Outsourcing?

Understandably, people have fears when it comes to outsourcing: confidentiality, control, and being unsure of what questions to ask potential providers. The good news is that these fears, though justified, are surmountable.

There are excellent bookkeeping services, many of them. There are outstanding, experienced, part-time CFOs who can help you set up the right outside bookkeeping service for you – or recommend that an internal solution is best. They will hold your hand and ensure the bookkeeping meets a certain set of standards. Afterwards, they get out of your way so you don’t have to keep paying for the CFO service.

The relief this brings is knowing that your finances are in good hands, and that your financial reports will be timely, reliable, and consistent. If you ever want to grow again, you know there’s someone who can help you determine if and when you may need a bigger solution.

Like that sore on your arm I mentioned earlier, when you don’t take care of these things in your business, the next month it will hurt even more. Pay attention to how much the monthly reporting bothers you each time you get your reports or have a question. Is it cluttering your mind? As a CEO, you need to be clear-headed to make the decisions you need to be making. You need to be as uncluttered as possible – and an unresolved financial reporting process is clutter.

You will know it’s time to outsource when the pain becomes so annoying you can’t take it anymore. That’s when you will decide, that for the sake of the business and your sanity, the dissonance has to stop.

If you’re comfortable, you’re getting what you need, and you rely on it, then this message isn’t for you. Keep doing what you’re doing!

However, if any of this story resonates with you, if you have the common “accounting headache” each month, you may be ready to outsource some of this and get some outstanding advice on the best way to upgrade instead of just throwing something at the wall and hoping you end up with the right solution.

I can promise that this is like anything else; the anticipation of dealing with the problem is 200% worse than taking the first step towards rectifying it.

Author, Virtual CFO, and Finance Coach

"Your First CFO: The Accounting Cure for Small Business Owners" on AMAZON.

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