Call us biased, but we want our client relationships to work well. We hope that this will help you consider whether it is the right thing to do to outsource some or all of your finance function, with tips on how to do it.
1. COULD IT WORK FOR US?
Outsourcing can work well if your organisation:
- is small or it does not have a complex business model.
- does not have the financial resources to commit to a skilled staff member, whether permanent or contracted.
- has tried but cannot locate the required skills in the market (this is quite common in the non-profit sector)
- is in a state of change, and it needs a short-term solution, for example, someone is going on maternity leave, or the organisation is changing strategic focus.
- needs occasional highly skilled support but has in-house staff to do the rest. An accounting firm keeps up to date with ongoing compliance changes.
Outsourcing is probably not a good fit for your organisation if:
- there are regular cash flow or other challenges that require day-to-day decisions from a skilled finance person.
- there is a complicated and unique financial system important for your business model.
- you want your finance staff to be part of your management team.
- you require instant response times from one or more people only focussed on your organisation.
💡Importantly, financial management risks cannot be transferred outside the organisation, nor can decision-making.
So even in an organisation without a single finance-dedicated person, an operations manager or executive director needs to be in relationship with the service provider and needs to perform certain oversight and decision-making roles.
2. PINPOINTING THE SERVICES REQUIRED
You can select one of more roles for a regular service provider, including one of the following, each of which requires a different skill set:
- Transactional – bookkeeping (note that this works best if the organisation administers orders and payments)
- Accounting – review of the bookkeeping and preparing various reports for donors or annual financial statements.
- Compliance – submitting statutory returns, such as annual income tax returns.
- Financial management support – advice on accounting, operational (such as budgeting) or compliance matters or strategic input (sometimes known as a fractional CFO)
3. PICKING A PERFECT PARTNER
You can look out for the following:
- Non-profit expertise – in addition to accounting expertise, look for a firm that understands the unique compliance and accounting needs of non-profit organisations.
- Tech-savvy approach – ensure that they use modern accounting applications that integrate smoothly with your other systems.
- Scalability – your provider should be able to adapt as your funding sources and programs grow or scale down. This could include sharing skills to enable your organisation to part ways in the future.
- Proven track record – check references to ensure you are making a wise choice.
- Values – establish whether the provider’s values are in line with your organisation’s.
- Back-up – selecting a single individual to function as your outsourced function is risky so look for a provider who has a team to provide a back-up system and to share knowledge with each other.
- Code of conduct – ensure that they subscribe to a professional code of conduct to ensure high standards of integrity in your relationship and in the organisation’s accounting and compliance work.
- Price – compare the service to the full cost of hiring internal resources.
4. MAKING IT WORK
Once you have selected your service provider, aim to build a partnership with them based on agreed mutual expectations. Building a good relationship will strengthen your organisation. How can you do this?
- Be clear about deadlines, deliverables, and channels and timing of communication.
- Ensure that you have a clear organisational contact.
- Regular check-ins will help keep the relationship on track.
- Remember that someone close to the operations needs to check the accounting information.
Please get in touch with us if you need any assistance at ziyo@ziyo.co.za.