The mid-market is tough: five ways outsourcing finance can unlock growth in 2023
Article by Sanjay Swarup, CEO SKS Business Services
While it is good business sense to keep costs in check when times are good, it is imperative when times are tricky. If you are struggling to grow in the current climate, here are five ways that outsourcing your finance operations will help.
Are you the squeezed middle?
Inflation continues to hit medium-sized companies from all angles. Brexit has increased input costs and squeezed export margins, the Ukraine war has pushed up energy prices, and record employment is driving wages.
While larger companies can absorb inflationary pressures, things are more challenging for a middle market recovering from the Covid pandemic.
How Outsourcing Can Help You Grow
Cost base is the obvious first stop for business leaders battling economic turbulence. Here’s how outsourcing your finance operations can save money and help your business grow:
1. Outsmart the talent crisis
Like other sectors, UK accountancy is suffering a skills shortage. This has led to 89% of employers increasing their accounting and finance salaries in 2022, and 86% planning a further raise in 2023, according to data from recruitment firm Hays.
Outsourcing protects your business from wage inflation and enables you to scale without hefty recruitment costs. It also futureproofs your operations from employee turnover as staff use a candidate-friendly job market to find opportunities elsewhere.
2. Invest cost-savings in growth
Outsourcing a four or five-person finance team can save a business up to 40%. For example, a company with a £5 million turnover could save up to £100K in costs relating to recruitment, payroll, national insurance and office space.
This extra capital can be spent on growth via investment in areas such as sales, marketing, and product development. Good outsourcing partners will invest in the latest accountancy and IT software systems. This means you can access the benefits without having to pick up the installation and maintenance bills. Again, you can allocate the savings to driving growth.
3. Work on the business, not in it
To grow during challenging macroeconomics, your C-suite needs to be focusing on big picture strategy. Do you need to overhaul your supply chain? Should you open in a new market?
Outsourcing repetitive back-office tasks, such as payroll, bookkeeping and statutory accounts, frees your senior team from everyday tasks. They no longer have to deal with people management, recruitment, and holiday requests. Instead, they can focus on driving operational efficiencies, client relationships and growth strategy.
For those worried about team relationships, the global move to remote working during the pandemic has removed one of the biggest stigmas attached to outsourcing: working with people you have not met in person. The adoption of cloud technology has also reduced the need for in-person meetings.
4. Get expert advice for changing times
While many SMEs have fantastic in-house accountancy and finance teams, it is difficult to attract top talent. This is because there is little opportunity for career progression compared to a large outsourcing company or a ‘big four’ firm. This risks leaving medium-sized businesses unprepared for unexpected economic shocks or specific situations.
Imagine you suddenly need debt: would you opt for an amortising loan, a plain overdraft, or invoice discounting? And once you’ve made your decision, which provider is best? The answer, of course, depends on your current situation.
A skilled local accountancy firm can step in to help but will charge by the hour and may not be familiar with your day-to-day financial operations and long-term goals. On the other hand, a financial outsourcing company is a cost-effective way for leadership to ‘import’ expert knowledge from a team already familiar with the business.
5. Secure external investment
If you are planning to attract external investment, such as growth capital or even an outright sale, you will need advice from specialist accountants to ensure your finances are prepared. For example, a potential investor or buyer will likely require detailed accounts from the last three years as part of their due diligence.
An outsourcing firm will have the breadth of expertise and experience to help you produce the required financial records and information to help you secure external investment.
Equipping You For Growth
Growing a company is tough at any time. However, when things are particularly unstable you must equip yourself with every competitive advantage possible. Click here to grow your business with our finance function outsourcing services.
About The Author
While working at BP, Sanjay Swarup saw first-hand how large corporations benefit from financial function outsourcing. He founded SKS Business Services in 2007 to bring the same services to medium-sized companies.
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