By Dave Hickey
As a leader of a growing or mature business your focus needs to be on developing new products or markets, improving efficiency or service and encouraging the team around you to use their expertise to meet today’s, as well as tomorrow’s, challenges.
You know you can’t do everything, but it’s difficult to stand back and let others, more expert in their individual fields, lead.
This is a real challenge as organisations emerge from the start-up phase and begin to scale. Founders can’t be an expert in everything and recognise that they need support from specialists in areas outside their comfort zones.
Outsourcing non-core activities such as accounting can allow leaders spend more time working on the business and less time in the business.
Business Beginnings
Let’s face it; accounting gets a bad rep as not being the most exciting topic in the business world! As a small business owner, you’d probably rather talk about your products and services, than your accounting debits and credits (unless accounting happens to be what you do for a living.)
You’ve kept a close eye on expenses, knowing it’s your job to keep costs as low as possible. You may even have done the bookkeeping yourself or looked over the shoulder of your bookkeeper to keep an eye on the finances.
Why? Because smart business owners realise that accurate and timely accounting is not just a necessary evil, but vital to keeping their businesses afloat.
Outgrowing Bookkeeping
However, as the business grows, most owners find that their time becomes more valuable doing other things. The finite hours in the day are better served by focusing on building the core business, not overseeing day-to-day bookkeeping.
When a business owner is no longer able to be involved in every aspect of a business is when the business begins to need more than bookkeeping.
Many bookkeepers are most comfortable when handling billing, collections, payroll, deposits, sales taxes, bank account reconciliation, and basic financial statements. They cannot supply what a business owner really needs in the growth stage of the business: management accounting.
Businesses need both financial and management reports. Your business needs basic financial reporting for compliance and making sure your books are up-to-date. Management reporting is used to make business decisions backed by real-time data and key performance indicators.
When you reach a point when a bookkeeper is no longer sufficient and you need management accounting, you have reached the point in the lifecycle of a small business or non-profit organisation, where accounting suddenly becomes a more interesting topic of discussion.
Extracting useful information from financial data and turning it into financial intelligence on which business decisions and plans can be based is a significant challenge for all growing organisations.
We find business owners with a “getting better” agenda, who are not happy with the status quo, often value outsourcing accounting as a way to quickly move up to management accounting. They see outsourcing as a competitive advantage that allows them to be the best in class without any upfront investment of time or money.
Focus on Core Business
For most businesses and non-profits accounting is not a core competency. Core competencies are those unique selling points, competitive advantages, and senior management skills that are responsible for a business’s growth.
Any function not related to your business’s core competency, which distracts employees and resources from making money, can be outsourced. Therefore, outsourcing accounting frees up management’s time to focus on the aspects of the business that drive sales and service and, ultimately, profitability.
Outsourcing and the related automation speeds up processes, meaning less time working in your business and more time working on it.
In addition, the automation of the billing and collection process saves time and expenses invoicing and improves cash flow by faster collection.
If you’d like to find out more about how DHKN’s outsourced, cloud-based accounting solutions can help you and your business, contact Brian Savage at +353 (0)91 782019 or bsavage@dhkn.ie
