Advantages of Outsourced Accounting You Can’t Ignore

Outsourcing certain business functions to third-party service providers is not a new concept. Businesses have been outsourcing functions like payroll, IT and human resources for years.  

However, many companies haven’t given much thought to outsourcing their accounting and finance functions. Doing so can result in a host of benefits — including freeing up your team to spend more time on tasks that add strategic value to the organization. 

Who Typically Outsources Their Accounting Function & Why? 

Often the best candidates are companies whose growth trajectory requires that they begin to think bigger, better define their place in the market and how they’re going to move forward. They need better financial clarity but might not be able to afford full-time financial and accounting professionals. These organizations need expertise related to their industry and would benefit from knowledgeable consultants who can offer comprehensive solutions to complex hurdles facing the business. 

Outsourced accounting also works well for leaders who find themselves spending too much time in the business processes and not enough time working on long-term strategic planning. This can lead to a number of problems, including misaligned directives, unchecked risk exposure, a lack of focus and direction, and a limited ability to pursue business growth opportunities. 

More Advantages of Outsourced Accounting 

In addition to freeing up executives to spend more time on high-level strategic planning activities, your company could realize a number of other advantages of outsourced accounting to a third-party service provider that specializes in this. These include the following: 

  • Saving time and money — Compared to hiring, training and maintaining an internal department, outsourcing your accounting and financial work is not only more cost effective, but also solves business capacity issues. Outsourcing can lower your total costs by eliminated expenses related to employee benefits, training and technology/software costs while redirecting valuable time back to growing your business.  
  • Anytime, anywhere access to financial data — Use of the leading-edge cloud accounting technology will allow you to close your books quicker and give you real-time reporting. You’ll gain visibility into your financial health with access to financial data and records anytime, anywhere. 
  • Improved operational efficiency and processes — Outsourcing your day-to-day activities such as billing, payroll and month-end close will free up valuable time to focus on business goals and growth. Rather than chasing after unpaid invoices or manually cutting checks, you can automate these processes and streamline operations.  
  • Access to expert financial resources — It’s challenging to find and retain staff that have the knowledge and expertise in all areas of your accounting and finance function. Additionally, it’s hard enough trying to juggle the responsibilities of running a business and managing the staff. Outsourcing to a team of virtual accountants ensures your financial records are accurate and up to date, giving you the confidence to make decisions about the future without a lot of oversight on your part.    
  • Reduced risk of fraud — Maintaining proper internal controls to protect against fraud, theft and human error is required for any accounting and finance function. If you are leaning on just a few people to fill multiple roles, this puts your business at higher risk. By outsourcing, you can have a clear separation of duties and greater oversight to mitigate these risks.  
  • Greater peace of mind — If your accounting and finance operations are in order, risks of potential threats are low and visibility into the financial health is readily available, this can put your mind at ease and help you focus more on your overall business strategy.  

Additional advantages of outsourced accounting and finance function are stronger planning and execution. This will result in better decision making, improved direction and tactical outcomes, and higher profitability. 

Fit is Crucial 

When searching for a provider, look for a partner — a firm capable of establishing a relationship with the right levels of communication and trust. 

Also, business owners should look for industry experience and a firm that has a suite of advisory offerings that can complement the accounting and finance functions. A company’s services can be enhanced by the firm’s expertise in these areas, putting more eyes on the business, which leads to more proactive advice. 

Fit is crucial because business owners need to have a strong relationship with their service provider. Trust between the provider and owner is critical in order to eliminate the need for an owner’s day-to-day oversight. But that shouldn’t eliminate the need for the owner’s participation, as their input is key to making financially sound business decisions. 

Three Ways to Improve Supply Chain Management

Businesses can reap big rewards by making a commitment to improve supply chain management. Unfortunately, many businesses fail to devote adequate resources to this endeavor, thus missing out on potential benefits.

Improving supply chain management starts with developing a supply chain management strategy. While this effort may be time-consuming, not creating a supply chain strategy could be even more costly.

Many different factors can affect the success of your supply chain. But there are a few critical action items you should focus on to help ensure success and profitability, including the following:

Create and Share a Written Supply Chain Strategy Document

Most manufacturers rely on gut, history and trust in their suppliers to develop their goods on time. With a written strategy, you can see and predict the future and determine your own success based on your suppliers’ success.

A supply chain strategy document is a written plan to help your supply chain managers determine how to distribute or allocate resources over a period of time. We suggest you include a S.W.O.T. analysis in this document so you can proactively address opportunities or issues.

Strengths

Who are your go-to suppliers that are always looking out for your best interests? Which supplier understands your business best? What supplier has the quickest turnaround? Do they have more parts they could supply to you, even if they are a little more expensive? It may be worth paying a little more for predictability.

Weaknesses

What are your fears about your suppliers? Is there a supplier that is continuously pushing the envelope to deliver on time? Do you have a supplier that often ships incomplete orders or parts that don’t meet your quality reviews? Be sure to track this information. You may be missing signals that a supplier is unreliable.

Opportunities

Where along your supply chain and your production line is there an opportunity to improve? Are there parts you could start producing in-house to increase efficiency and lead time? Are there parts you should be outsourcing to free up your front line to work on more productive initiatives?

Threats

Threats can be obvious or hidden. An obvious threat could be that one of your suppliers is not producing up to par, or they always ship late, causing you to slow down production. A hidden threat may be that your competition is working with its suppliers to develop a newer and faster way to produce the same product you are offering.

Align Your Supply Chain with Your Business Goals

You need to have clear metrics based on your business goals — from projected sales volumes, production times and lead times down to every part required to produce your products and the predictability of your supply chain).

If you want to hit $20 million in sales, for example, how does this break down by product and month? What parts do you produce in-house and what parts are provided by your suppliers? When do you need supplier parts in-house to create the number of parts to reach your monthly sales and delivery goals? How much lead time do your suppliers require?

The viability of your suppliers is key to your flexibility. If you are working with a small supplier, they may need more lead time to produce your parts. If you are working with a larger supplier, they may have the parts on hand, but they may also charge you more for this convenience.

Do you have a system in place to measure your supply chain? It may be as simple as a spreadsheet, or you may need to invest in a supply chain management tool. Do you have a warehouse management system (WMS), an enterprise resource planning system (ERP) or a business intelligence tool (BI) in place? These systems can help you automate orders, manage your supply chain, see numbers in real time and increase your overall efficiency.

These tools will also help you prepare monthly reports to share with your partners, keeping everyone up to date on delivery times, schedules and future projections. Keeping supply chain partners aware of their monthly performance and upcoming needs will provide immeasurable results.

Focusing on your end game (your projected and actual sales) along with your supply chain will allow you to keep a high-level view of your needs and give you the opportunity to accurately and predictably align your supply chain with your business.

Focus on Facts and Metrics, Not Assumptions

Assumptions are all you have when you are first starting up. But once you have an established business, basing decisions on facts and actual metrics needs to be the norm.

Surprisingly, most businesses don’t use daily measures to track success. If you aren’t tracking daily progress and if your teams don’t know what their KPIs for success look like on a daily, weekly and monthly basis, how can you improve and optimize your production, let alone your supply chain?

A fact-based culture is inherent in a long-term, successful business. We suggest having each team sit down and come up with all the metrics they can measure on a given day. Then work together to narrow them down to the critical influencing metrics — the ones that genuinely affect your business results. Having full alignment from the front line to the executive team is crucial to optimizing your lines.

You will also be amazed at the change in attitudes when you start to look at the numbers. Facts take away ambiguity. They allow your teams to remove the emotionally charged attitudes and stop finger-pointing. Once that occurs, they can work together to come up with solutions on how to improve supply chain management.

Keys to Successful Supplier Management

Focusing on managing your suppliers by developing and sharing a solid supply chain strategy document is the biggest key to successful supplier management. So is building strong relationships by keeping lines of communication open. This includes being transparent in communicating numbers, goals and issues with your partners on a consistent basis.

Make a commitment now to creating a strategy document to improve supply chain management and start reaping in the rewards.

5 Questions All Leaders Should Ask To Assess Cybersecurity Risk

The Cost of a Data Breach

A study conducted by IBM last year, The 2020 Cost of a Data Breach Report, put a price tag on data breaches. According to the study, the average cost of a data breach is $3.86 million. Also, 80 percent of data breaches resulted in the exposure of customers’ personally identifiable information, which is the most expensive type of breach to remedy.

Stolen or compromised employee credentials and cloud misconfigurations are the most common causes of data breaches, with 40 percent of breaches caused by these incidences. Misconfigured cloud networks increased data breach costs by half-a-million dollars, according to the study.

Cybersecurity Starts at the Top

Statistics like these make it clear that cybersecurity should be an important part of every organization’s operating plan. Ensuring a well-protected network starts at the top.

Here are five key questions leadership should ask to assess cybersecurity risk:

Question #1: Is your executive leadership informed about cyber risks that threaten the company?

Cybersecurity is about managing risk. A breach can have dire consequences. This makes managing cybersecurity risk a critical part of an organization’s governance, risk management and business continuity framework. Early response actions can limit or even prevent possible damage. Accordingly, timely reporting to leadership should be built into the strategic framework for managing the enterprise. The CEO, CIO, business leaders, continuity planners, system operators, general counsel and public affairs should be part of the chain of communications.

Question #2: What is our exposure to cyber risk, the potential impact of a breach and our plan for addressing both?

Identifying critical assets and associated impacts from cyber threats is critical to understanding your specific risk exposure. These will most likely be a combination of financial, competitive, reputational ando/or regulatory risks. Risk assessment results are key to identifying and prioritizing specific protective measures, allocating resources, informing long-term investments and developing policies and strategies to manage cyber risks at an acceptable level.

Question #3: How does our cybersecurity program apply industry standards and best practices?

A comprehensive cybersecurity program leverages industry standards and best practices to protect systems, detect potential problems and enable timely response and recovery. Compliance requirements help to establish a good cybersecurity baseline to address known vulnerabilities. However, they do not adequately address new and dynamic threats or sophisticated adversaries. Using a risk-based approach to apply cybersecurity standards and practices allows for more comprehensive and cost-effective management of cyber risks than compliance activities alone.

Question #4: How many cyber incidents is normal for us? At what point should executive leadership be informed?

Executive engagement in defining the risk strategy and levels of acceptable cyber risk enables close alignment with the business needs of the organization. Regular communication between leaders and those held accountable for managing cyber risks provides awareness of current threats, security gaps and associated business impact. Analyzing, aggregating and integrating risk data from various sources and participating in threat information sharing with partners helps organizations identify and respond to incidents quickly. Ensuring that protective efforts are commensurate with risk.

A good way to establish updated security protocols is to have an assessment of your network. This can show you where you stand and provide insights to a solid plan of action.

Question #5: How comprehensive is our cyber incident response plan? How often is it tested?

Even a well-defended organization will experience a cyber incident at some point. When network defenses are penetrated, the leadership group should be prepared with a Plan B. Documented cyber incident response plans that are exercised regularly help enable timely response and minimize impacts.

Devise a Cybersecurity Plan Now

When it comes to cybercrime and data breaches, it’s not a question of if, but when. Now is the time to devise a plan for how your organization will deal with a data breach when one occurs.

Meet with your key leaders use the questions to assess cybersecurity risk. If you don’t have adequate answers, commit to doing whatever it takes to get answers before your organization is the victim of a data breach.

How to Foster Company Culture in “the New Normal” We Live in Now

Over the past year, the COVID-19 pandemic has redefined “normal” in almost every aspect of our lives, including our work lives.

Many employees have been forced out of the traditional office environment they’ve worked in their entire lives and had to adapt to a new work-from-home model. This brings new challenges in terms of keeping work lives separate and distinct from personal lives, even though there’s a natural overlap between work and personal.

A big part of the workplace experience is the daily interaction with our “work family.” Not surprisingly, this personal and social aspect of work has suffered a major blow during the pandemic. This raises the question: How do we maintain our company culture in this new type of work environment? And what are the keys to staying socially connected even when we’re physically distant?

Use Technology to Stay Connected

We hear a lot about how technology has interfered with personal relationships. This, however, might just be one time where tech brings us even closer together. There are several ways that technology tools can better connect us with our coworkers.

Being apart means we can’t just poke our head into our neighbor’s cubicle for a quick chat about a work problem, upcoming meeting or what we watched on TV last night. Granted, watercooler talk can be a productivity killer if it’s excessive, but when it has been reduced to almost nothing, we lose a bit of our humanity.

Works teams, regardless of how social they might be, still need to maintain human interaction and a collaborative atmosphere. Using apps to chat, video call or talk, allows team members to jump in when they want to talk and be social. It also provided the option to disconnect when they need time to focus.

There are a variety of technology solutions that offer this capability. Most likely your firm already has one available. Many of the web conferencing applications like Skype or WebEx will do just fine. If your company is using a collaboration platform such as Slack or Teams, you probably have voice capability already. So, throw on a headset and invite your coworkers to join in! You don’t need a scheduled meeting to just chat.

Maintain Normal Routines as Much as Possible

The suggestions above are close to what you might normally do at work on a regular basis, just translated to a virtual world. This principle applies to most every aspect of work life. We need to continue doing the things that we would normally do if we’re to maintain our company culture.

Hopefully you have some standing traditions such as celebrating your coworkers’ birthdays or handing out praise to teammates for a job well done. Keep doing this! If you have regular staff meetings, leave them on the calendar and find a way to conduct them remotely. Work must go on whenever possible, so it’s important to find ways to connect your team to the resources that they have when they’re in the office. Consider securely connecting employees to your internal systems via Virtual Private Network (VPN) technologies or other remote sharing applications.

Embracing change can help too. If you normally work independently or don’t have a regular communication cadence, now might be a great time to experiment with creating one. Setting up regular meetings to review progress and set up work for the next week is important to staying productive while apart.

Even if you’re sure your team knows what they are supposed to be doing, consider a weekly or bi-weekly meeting to discuss the work. If nothing else, this keeps you talking and leads to a collaborative effort in reaching your goals.

Keep the Human Touch

You probably feel like it’s more important than ever to maintain focus on your business priorities. This is critical, especially if you’re in a leadership position, but also make sure your team knows that you care about them personally as well. Check in with your teammates individually to ask how they’re doing and make sure they have what they need to stay productive at work and happy at home.

Perhaps most importantly, we need to give one another some grace in this period where we are all adjusting to our new work lives. Nothing is running perfectly for any of us right now, and an extra dose of patience and understanding will go a long way toward reducing some of the stress.

Ask your colleagues how you can help share their load and make life easier. This might not be a common thing in your workplace, and it might feel uncomfortable at first, but it’s a key component of letting others know you care.

With a little luck, these tips will have a positive impact on your company culture that lasts even after we all come back to the office.