Why you need to outsource your finance function and how to go about it…Part 3
Using your finance function as a tool to manage your business.
Welcome to the third and final part of my series detailing everything you need to know about outsourcing your finance function. Read part one, or part two here. In this part, we’re going to look at how an outsourced finance function can become one of your best and most effective tools to manage your business. Here are some key benefits:
Work with people who think like you do
What difference would it make to your business to have a finance function that will stand or fall by the level of wealth they create for you?
As dedicated accounts specialists, it’s our job to save you money, make you money, and set you up for a secure and happy future. If we don’t deliver on this, we’ll have no clients. End of story. So it’s in our best interest to generate wealth for you. We think like a business owner and this opens up new possibilities and better ways of doing things.
Ditch the management accounts if they are not serving you
True management accounts include many ratios. Paul always recommends choosing two or three that make sense to you, for your business, and monitor them closely. These are your guides to know if you are on track. Ratios you will see in management accounts include:
- Debtor days
- Creditor days
- Gross margin
- Net profit percentage
- Percentage of turnover spent on team
- Current ratio
- Quick ratio
- Return on capital employed
- Return on investment
If your current management accounts are simply your profit and loss and balance sheet, then it’s time to have a rethink. It pays to work with Xero specialists; if your bookkeeping is up to standard then reporting in Xero is all most business owners need. This will save you time, money and will give you all the information and insight to know what’s going on now with your business accounts, and what’s likely to happen in the future. Are you confident enough in your bookkeeping to forgo your management accounts? Are you monitoring the KPIs that demonstrate that your business is on course? How will you know when something goes wrong? What signposts do you have to highlight issues before they become real problems, lose you money or get too out of hand to correct?
Not having to wait for year-end to see the state of play
It’s unlikely that your bookkeeper will be posting your depreciation, accruals, prepayments, amending your stock, amending your WIP, etc. on a monthly basis. To do all this you need a level of expertise and qualification that you simply can’t find with a basic bookkeeping service.
For years accountants have covered up the lack of knowledge of bookkeepers. It gets to year-end and the accountant unravels the records, puts them right, and produces the draft year-end accounts.
An outsourced finance function (a good one like Meades) will do this, which means your reports in Xero ARE your draft year-end accounts. You don’t need to pay a qualified accountant to produce a report every quarter to show you what’s happening – it’s all in real-time.
Still not sure if outsourcing your finance function is the right move?
Having worked with hundreds of clients over the years, I understand that any change in system, any new way of working is unsettling and comes with a certain amount of trepidation – especially when finance or accounting is not your skill set.
BUT for any of you who are serious about growing your business and increasing your profits and personal wealth, outsourcing your finance function has to be a priority.
Dedicating time, skills and resources to your finances is like pouring rocket fuel on your potential. You’ll have greater knowledge, better insight, and the ability to plan for your immediate and long-term goals. I’m passionate about this, as is the whole Meades team, and we’d be delighted to help you make the move.
Want more insight to get you in the best financial shape?
There’s a wealth of information in my business planning series. Click on the following link to download your free workbook.
Or speak to me directly to discuss if an outsourced finance function is right for your business >> Book your free discovery call.