The business world has seen an upward trajectory when it comes to outsourcing finance; following in the camber of the greater global trends around outsourcing. The past decade has seen a growing number of businesses embrace the outsourcing model as a way of attending to non-core functions.
This year has been a tough one for South African businesses. While at the beginning of 2014, economic growth was projected to be about 2.7% of the gross domestic product (GDP), the national treasury has now revised that significantly downward to 1.4%. The interest rate, while remaining accommodative, has been adjusted upward. Banks have become more wary of handing out unsecured loans. Inflation has exceeded the 3%-6% target band, and consumers have, out of necessity, tightened their belts. These factors have combined to require a certain scrupulousness from decision makers in South African companies. With these and other constraints, more and more business owners are considering outsourcing finance in their organisations.
Outsourcing finance requires the realization that while healthy finances are integral to the success of your business, they constitute a support function rather than a core one. Because of that, someone else could probably do the job more effectively – and leave you more time to excel at yours. Here are four reasons why you should consider outsourcing finance:
- Save on costs: The biggest reason why companies consider outsourcing finance is because of the potential cost-saving involved. Instead of paying the (often sizeable) fulltime salaries of qualified financial experts and running a department in-house, you’re paying only for the services you need, as and when you need them.
- Ensure finance-related deadlines are met timeously: In small to medium-sized companies, responsibility lines become blurred. Most people juggle several roles, often having to respond to company needs on an ad hoc basis. If your business falls into this category, you will appreciate how easy it is for an employee who wears several hats to let financial reporting requirements fall through the cracks. For example, SARS deadlines could be missed without realising it, or you could go months without revising your cashflow projection. Outsourcing finance ensures that the various financial requirements that will ensure your company’s health, are met every month. Focus on your core operations secure in the knowledge that your tax returns are being filed timeously and your financial control mechanisms are being attended to.
- Attract high quality expertise with no risk: We all know how difficult it is to find and attract the right financial talent. The risk of hiring the wrong financial person (or people) is high: not only do they command large salaries, but they are making decisions that will affect the future of the business. Moreover, once you have taken such a person on-board it can be rather difficult to get rid of them if there is a bad fit.
Outsourcing finance allows you access to high levels of financial advice without the risk of taking on an employee fulltime in order to do so. If the “fit” isn’t right, you can arrange for another executive to take their place without battling through HR requirements to do so.
- Allows the space to focus on core activities: The classic reasoning behind outsourcing finance also provides a compelling case. It gives you the freedom to do what you do best, which is run your business and sell your product. Finances are required for a framework in which to operate, but shouldn’t be consuming the time and effort it takes to grow and operate your company. Outsourcing finance understands and respects the need for division of time and labour where appropriate.
The notion of outsourcing finance may seem almost counterintuitive to some, because of the great importance of the financial function. It’s hard to let go of the reins in an area where much stands to be lost in the event of mismanagement or incompetence.
If you are wondering where to find a trustworthy source of financial expertise to fill your needs as part of an outsource solution, The Finance Team could be your answer. Our qualified associates are handpicked for their skills, trustworthiness and competence. They can help to form an outsource solution that fits your company’s needs as well as your budget.