Financial management outsourcing: bridging the gap between accountant and business owner

By Kylie McQuie

People start a business so they can do what they love every day. At first, the business card might bear the title “Cathy – Cupcake and Coffee Extraordinaire”, but eventually they are Cathy the customer service specialist, marketing manager, technology director and bookkeeper. It is enough to turn even the most capable entrepreneur into an overwhelmed, serial multi-tasker wearing too many hats.

A lot of entrepreneurs and small-medium sized business owners get caught up in the daily grind and lose focus of the long-term goals of their business. The days churn by and the strategic, long-term planning of the business falls by the wayside. Furthermore, many business owners struggle to relinquish control of the day-to-day operations of their business. They pride themselves on keeping the details of the entire organisation buried in their head.

Although entrepreneurs generally have many talents, no one can do it all. As they say, attempting to be the jack of all trades will leave you the master of none, ultimately resulting in the inefficient utilisation of talents and resources. It is this inefficiency that will stall growth and negatively influence your business’s bottom line. If you look at the long term financial and growth goals of business, it is clear that outsourcing particular functions firmly has its place.

While small-medium businesses have long seen outsourcing as a strategy reserved for big business, it has become a more accessible tool for small businesses. Outsourcing has a powerful impact on growth, productivity and bottom lines. Business owners are coming to realise that removing themselves from low-level operations is the smartest investment that they can make in the long-term success of their business.

A fundamental aspect of business success is without a doubt how an organisation manages its finances. This is highly evident if you speak with any business owner, entrepreneur or CEO who will all sing the praises of having someone in their corner looking after the financial management of the business. Financial management outsourcing leaves them with more time and energy to focus on what they do best – running their own business.

This is where a boutique financial management services company can be of enormous help, to give business owners the peace of mind that the financial affairs of the business are under control.

The benefits of outsourcing and using a niche company like boutique financial management companies include having access to experience, knowledge and expertise you may not be able to afford by recruiting in-house personnel.

Put simply, these companies bridge the gap between business owners and their accountant / tax agent. They don’t replace the role of the tax agent (who prepares your tax returns and provides you with tax and other advice), rather they partner with business owners and their tax agent to help keep the financial affairs running smoothly throughout the year. They become the “eyes and ears” of the clients’ business throughout the year, keeping both the client and tax agent informed of pertinent issues, so that they can be dealt with on a timely basis.

Tax agents can prepare the annual Income Tax returns of clients of these companies knowing that all the issues that have arisen during the year will have already been brought to their attention and resolved at the time. This is contrary to how it usually goes, having to deal with it when the tax returns are completed, which is often many, many months after the end of financial year when a proper resolution of the issue might not then be possible.

All too often, costly errors and time delays can result in tax agents giving the client a significant bill as they had to spend additional time fixing the problems and/or picking up and putting down the job while they wait for further information from the client.

In many cases, this causes unnecessary fee disputes and conflict between the client and the tax agent, when in reality it isn’t the tax agent’s fault. These companies work collaboratively with tax agents and communicating with them throughout the financial year ensures there are no surprises at year-end and everything the tax agent could possibly want to know is provided in one end of year folder, thus enhancing the relationship between the client and the tax agent.

The benefits for your clients outsourcing their Financial Management include:

1. Seeing and dealing with issues as they arise: By providing quality and accurate reporting on the operational aspects of the business because the financial management services company see the issues as they arise. Furthermore, if something comes up, the company goes straight to the tax agent and asks them to provide advice.

2. End of Year: When it comes to end of year, the company you outsource your financial management to will know exactly how, when and what information the tax agent wants, to get the job done quickly and profitably. We know 99% of tax agents didn’t become an accountant to spend 99% of their time on compliance.

3. Improve Recovery Fee: Those who outsource their financial management save costs on their tax agent’s fees because they provide their tax agent with timely and accurate data, all correct from both an Income Tax and GST perspective. And whilst the tax agent might be earning less fees for compliance in a numbers sense, they are spending much less time, with many less queries so the fee recovery (profit) for the work they do increases as a result. So everybody wins!

This pivotal partnering relationship provides accounting firms / tax agents with the opportunity to outsource their client’s financial management needs to boutique financial management services companies. Tax agents are confident in the knowledge that they will get their work done efficiently and profitably.

Kylie McQuie brings over 10 years of experience in accounting firms, establishing her own Management Accounting business in 2008.

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