CFOs are faced with a challenging responsibility of being accountable for finance teams’ execution of deliverables. These deliverables include financial accounting and reporting, completing debt and equity transactions, or M&A and are often driven by external individuals who do not understand financial details.
In many cases, CFOs are in a precarious position. If things go well for the company, they often encounter business growth which outstrips their capabilities or experience, yet when the businesses do not perform well, they find themselves on the chopping block.
Accounting options to consider
As an operational risk mitigant, CFOs should consider hiring a team of individuals who are available on a fractional basis to flex up and down as demands on the finance department change, but do not cost a fortune or bill you when they are not working. CFOs should find a fractional accounting firm who can learn your business over time and has capabilities in cash flow forecasting, budgeting, financial reporting and analysis, and other variable activities.
Finding one individual that checks all these boxes and can complete the tasks efficiently is slim to none. Hiring more inhouse resources for the accounting team is also an option but can quickly become very expensive and time consuming with the interview process, training, and upkeep that an inhouse team requires. Additionally, carrying high fixed costs raises the risk that the finance team will have to layoff team members when demands, and budget, shrink.
If your company’s financial situation is constantly evolving and in need of a well-rounded, highly experienced team that can keep up the pace of your business, fractional accounting is the solution for you.
Capacity
Fractional accounting offers flexibility for variable needs to staff as much and as little as you need, at any given time, to get the job done. It is hard to staff a finance department with full-time employees and be able to promptly respond to natural ups and downs in demand for staff.
The business evolves, acquisitions happen, difficult audits arise, ERP and other systems change, all creating a variable demand on fixed staff. The CFOs default position is often a campaign to recruit and staff more in a traditional in-house model, as a reaction to being behind or needing more capacity, at which point, teams are either stretched too thin, or become overly bloated and inefficient. This can ultimately lead to increases in turnover that further exacerbate the issue.
With outsourcing your finance department, you negate this issue entirely. You hire more than just a team of individuals but a specialized company that is there to closely track your finances. With this business model, turnover is no longer a stress factor for CFOs.
Competency and capability
With fractional accounting, there is an opportunity to have a team of highly qualified people who can problem-solve, architect, and optimize solutions as the work demands. With a select few individuals, it is hard, especially in the middle market, to staff for all the potential needs that your finance team is going to have to serve.
Spanning a broad gap with few people often also makes them more expensive. There are always gaps in talent, experience, etc. and often things the business will demand that no one on the team is prepared or experienced enough to address. Often the CFO must cover for this gap, but pulled in many different directions, this can be a challenge.
Fractional accounting and finance services can be a great way to mitigate these risks. You can sleep at night knowing that highly-qualified accountants are ready to execute quickly when the need arises, no matter what presents itself, and in the interim are able to guide you in the right direction for future planning.
An additional element of efficiency in fractional accounting
Traditional staffing puts a single body in the role for a fixed cost. Often, this person must be the highest skill set and cost for the menu of tasks they need to perform. Fractional accounting and finance allows for the right person with the right skill set and experience to perform, and the cost is only what is needed. Lower cost resources can be engaged seamlessly for parts where higher-cost team members are not needed, which optimizes productivity and cost.
Variable demands are easily met with fractional teams in the most cost-efficient way, as the team will naturally delegate a task down to the lowest cost resource possible while still maintaining high quality and timely delivery. This optimization happens at the task level, automatically, so you don’t have to manage tasks or make those decisions; but ultimately are able to defend the team’s cost as brutally efficient and effective.
The Bright Balance business model
Here at Bright Balance, we serve businesses from startups to large corporations, giving you the resources that fit your financial needs and increase profitability. We offer several different services including transaction processing, various types of accounting support, CFO and FP&A augmentation, etc.
Our team is equipped with highly trained individuals that deal with varying sectors of finance so that we can offer our clients exactly what they need. Due to our cost efficiency, CFOs do not need to worry about justifying the cost of a “consulting firm”, but instead can look forward to a team of experienced practitioners as a labor optimization model that saves you time and directly reduces overhead cost.
To learn more about partnering with Bright Balance, reach out to us here. We look forward to helping your company grow!
