Does your construction firm need an outsourced controller?
Construction companies often still rely on a small internal team to handle financials. But firms following a legacy approach struggle to make the more agile decisions needed to thrive in today’s highly competitive market.
That’s why more construction firms are turning to an outsourced controller to strengthen their reporting, analysis and financial management capabilities. An outsourced controller can help your leadership team take smarter, more strategic action at a fraction of the cost of hiring a full-time controller for your team.
Keep reading to learn more about how an outsourced controller can help your business succeed.
What does an outsourced financial controller do in construction?
A financial controller is a senior member of your finance team who keeps your financial reporting accurate and, within the construction industry, reviews your work in progress (WIP) schedule to identify potential overruns with estimated costs. Typical outsourced controller responsibilities include:
- Ensuring accurate financial reporting: Overseeing income and cash flow statements, as well as your balance sheet and WIP and contract schedules.
- Managing your accounting team: Bridging the gap between your accounting team and your CFO by overseeing daily accounting work while delivering essential information to your leadership.
- Developing and managing budgets: Ensuring appropriate budgets for both external client jobs and internal operations, as well as communicating with your project managers to maintain accurate details around current job costs.
- Risk management and compliance: Avoiding cost overruns and implementing internal controls to help you mitigate financial risks.
- Maintaining cash flow: Keeping accounts receivable and accounts payable running smoothly to give your business a healthy level of cash flow.
- Analyzing financial data: Delivering key insights on trends, opportunities and problem areas to help your C-suite make more informed, strategic choices.
Outsourcing allows you to fill this role with an experienced professional in a fractional or part-time capacity.
Pros: How an outsourced controller helps construction firms
Hiring an outsourced controller allows you to add clearer financial insights and management without onboarding a full-time senior employee. For mid-market businesses that want the ability to make more data-driven decisions, this can often be a great fit.
1. Smarter financial decisions
An effective controller delivers clearer, more accurate financials to your C-suite. This gives your leadership more data for informed decision-making, which can help make your whole business more agile or scale up to meet your growth goals.
2. Pay for what you need
Outsourcing means that you only pay for the services you actually need. It’s not uncommon for controllers at smaller companies to spend part of their days doing office manager work because there aren’t enough duties to fill a 40-hour workweek.
If your business isn’t at a point where you need a full-time controller, outsourcing allows you to hire one fractionally — for 10 or 20 hours a week rather than 40 — while still attracting high-caliber talent and experience.
3. Deep industry experience
Bringing in a fractional team member who has significant experience working with other businesses in your industry gives you a fresh perspective on how you can do things better and keep up with your peers.
You’ll also be gaining a team member who understands financial excellence specifically from a construction industry perspective and is prepared to do things like hold your project managers accountable for accurate cost updates.
4. High qualifications and minimal training
You won’t have to spend time training an outsourced controller to do the job. Instead, you’ll get a highly qualified, capable employee ready to hit the ground running and deliver (with the caveat that they will still need time to learn how your particular business works).
5. More efficient, effective business performance
You’ll be adding someone who understands modern accounting processes and systems and will work to implement those within your business. This can play a huge role in improving your business’s overall performance by giving you a better grip on how money is moving through your organization and allowing you to plug holes, mitigate risks and find efficiencies.
Cons: What are the downsides of an outsourced controller?
An outsourced controller is not a one-size-fits-all solution. Some potential downsides you may face include:
1. Fractional capacity
This pro can also be a con. An outsourced controller will typically work with more than one client at a time. If you want someone who is focused entirely on your business in a full-time capacity, hiring internally makes more sense.
2. Systems or infrastructure challenges
Outsourced controllers often work remotely, and many will proactively look for ways to bring your processes and workflows up to date. If your company doesn’t have the infrastructure to support remote work or updated systems, it will be harder for your new controller to make a real impact.
3. Could lack construction experience
If you choose an outsourcing partner that lacks construction-specific knowledge and experience, your new controller may need significantly more time to learn how everything works. You’ll be better served by deliberately selecting for construction experience during your outsourcing search.
Should you hire an outsourced controller or go in-house?
If your existing financial capabilities need an upgrade, should you outsource a controller role or hire in-house? That typically depends on your specific business needs, including size, financial resources and strategic goals.
1. Business size and market position
Business size is a critical factor. If your business is large enough to need full-time controller services, you may be better off hiring a full-time employee. But if you’re a smaller or medium-sized business, an outsourced controller gives you a resource to compete with larger firms in your market without taking on more headcount.
2. Financial resources
Both outsourcing and internal hiring require a significant financial commitment. But one will typically make more financial sense than the other. Assess how much controller support your business needs (you may want to consult with an advisor on this) and do a cost-benefit analysis of hiring versus outsourcing for the role.
3. Goals and strategy
How much time does your current senior team spend on financial management? Depending on your current goals and strategic focus, an outsourced controller can free up your CFO to focus on higher-level strategy and problem-solving to help you take your business to the next level.
How Wipfli can help
We help construction companies get stronger financially, upgrade systems and grow. Let’s talk about your goals and how we can provide solutions like an outsourced controller to help you reach them. Start a conversation.
Let’s make your business stronger
