I always appreciate the opportunity to talk to a prospective client who has not selected us for their services.  Hey, it happens to all of us!  A few days ago, I had a great chat with one such prospective client from whom I had not heard in several months.  The great part about that conversation is that it was no longer weighed down by his attempts to interview me for the “job.”  It was a very casual but insightful conversation in which he shared his two-month experience with having replaced his accounting staff with a full-service accounting firm (our competitors).

During our conversation, this executive director of a not-for-profit organization stated that the term “outsourcing” carries a negative connotation and doesn’t properly describe the relationship that he has developed with the team and the services he is receiving.  As he considered his alternatives a few months ago, he was afraid that any outsourcing would take the finance function completely off his plate to the point that he would lose touch.  He felt there might be a disconnect when the information was brought to the decision table – namely with his treasurer and board.

So I asked him, what would be a better term?  “Oh! Let me put on my marketing hat and think about this for a minute … ‘Finance Department.’”  “That’s it?!?” I asked.  “Yes, because I have an entire finance department, at precisely the levels that I need, and available to expand or shrink as needed. Because firms like yours work with a diverse set of clients and have to keep up with the best tools and technology of the industry, we’ve improved the efficiency of our finance department many-fold!  In the end, we need less hours to run the department than when we had our full time staff.”  Interesting.

We continue to use the term “outsourcing of accounting services” because it is easily recognizable, but it falls short of describing the true nature of these servicesAccounting for financial transactions that flow through your organization (money earned/received and money committed/paid out) is a very systematic process.  Technology has evolved to the point of taking many of those systems off people’s hands and it is expected to take a larger share each year.  By implementing robust and efficient systems, you quickly reduce the amount of time a bookkeeper or accountant needs to touch a transaction.  Preparation of financial statements, their interpretation, and analysis of your current situation requires more expertise but can also be streamlined into a process that may only require a few hours per month, depending on the size and complexity of your organization.  The real value obtained from strategizing, budgeting, forecasting and being at the table to help you use the financial data to make informed decisions requires much more expertise and can be very expensive.  But you may only need a few hours a month, so the Finance Department I just described could be summarized in one full-time person who can be the bookkeeper, controller and CFO – all in one.  Good luck finding that person!

I would like to call these services “Finance Department, on steroids” because for small to mid-size companies, it is the best of both worlds.  It is a complete and knowledgeable Finance Department at a fraction of the cost for full time in-house staff members.

Maribel Ponist, CPA is CEO and Director of Client Accounting Services at Lumix CPAs and Advisors. She is a member of the Advisory Board for CPA.com and the AICPA Digital CPA Conference.  She also serves as a peer reviewer for the Maryland Association of Nonprofits Standards for Excellence Institute®. Follow Lumix on TwitterFacebook, and LinkedIn for the latest insights, news, and updates in accounting and advisory services.

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