Pros and cons of outsourced controllers: How to make the right choice for your business
In today's fast-paced business environment, effective financial management is crucial for the success and growth of any company.
To help ensure accurate and timely financial reporting, as well as strategic decision-making, many businesses turn to controller services. But with multiple options available, such as hiring an in-house controller or outsourcing a fractional controller, it can be challenging to determine the best fit for your organization.
Making an informed decision that aligns with your business needs requires you to understand the potential pros and cons of engaging outsourced control services.
Understanding controller services
Before delving into the pros and cons of outsourced controller services, you need to understand what controller services entail.
Controller services involve comprehensive financial management tasks performed by a financial controller. The financial controller holds a senior-level position and is responsible for overseeing all economic business activities, helping to ensure accuracy and compliance and providing valuable insights to drive financial stability and growth.
Some key responsibilities of a controller include:
- Financial reporting: Compiling income statements, balance sheets and cash flow statements.
- Oversight of accounting team: Providing guidance to team members, setting efficient workflows and overseeing day-to-day operations.
- Budgeting and forecasting: Developing and managing budgets aligned with company goals.
- Compliance and risk management: Overseeing internal controls and mitigating financial risks.
- Cash flow management: Managing accounts receivable and accounts payable to optimize cash utilization.
- Financial analysis: Analyzing financial data to identify trends, opportunities and areas for improvement.
Pros of outsourced controller services
Outsourced controller services offer several advantages for businesses of all sizes. Here are some key benefits to consider:
1. Scalability and flexibility
Outsourcing controller services provide businesses with scalability and flexibility. As your business grows, you can easily adjust the level of controller services needed without the constraints of hiring and training new staff. Whether you require full-time support or a fractional share of a controller, outsourcing allows you to tailor the services to your specific needs.
2. Access to expertise
Outsourced controllers bring a wealth of experience and expertise to the table. They are highly skilled professionals with in-depth knowledge of accounting principles, compliance regulations and financial best practices. They stay up to date with industry trends and can provide valuable insights to optimize financial performance and mitigate risks.
In addition, controller services are all outsourced controllers do, so their expertise is highly focused and advanced. And they have access to a back bench of knowledge from other CPAs at their firm.
3. Advanced technology and tools
Outsourced controller services often come with knowledge about advanced financial software and technology. They can help you leverage the latest tools or optimize your existing solutions so that you can streamline financial processes, identify areas where automation and innovation can create efficiencies and help ensure accurate and timely reporting.
5. Focus on core competencies
Outsourcing controller services allows business owners and managers to focus on core competencies and strategic decision-making. By delegating financial management responsibilities to experts, senior-level staff can dedicate their time and energy to driving the business forward, rather than getting bogged down in day-to-day financial tasks.
6. Cost savings
When a controller resigns, it’s not just a matter of filling a vacant position — it’s about mitigating the substantial costs and productivity losses associated with their departure.
The most significant financial impact of controller turnover is often the loss of productivity experienced by the finance team and the broader organization. As the position remains vacant or is filled by a less experienced team member, critical financial tasks may be delayed or overlooked, leading to inefficiencies and missed opportunities.
By outsourcing, businesses can access stable, top-tier financial expertise without the overhead costs associated with hiring a full-time employee.
Cons of outsourced controller services
While there are many benefits to outsourcing controller services, it's essential to consider the potential drawbacks as well. You want to ensure that you’re selecting an outsourcing partner that understands these perceived cons and takes steps to eliminate them.
1. Lack of on-site presence
One of the primary perceived drawbacks of outsourcing controller services is the lack of on-site presence. Unlike an in-house controller who can be physically present within the organization, an outsourced controller typically works remotely. This can create challenges when immediate decisions need to be made or when there is a need for face-to-face communication.
Remote work platforms have evolved, with a variety of platforms controllers can use to connect via video on multiple devices. However, if an in-person meeting remains a priority, consider working with a firm that is willing to be on-site when necessary.
2. Limited knowledge of the business
Outsourced controllers may not have the same level of familiarity with your business as an in-house controller.
They may not fully understand the unique intricacies of your company culture or specific operational challenges. This can sometimes lead to a lack of context in financial reporting and recommendations.
You can help speed up the transition by being in-depth and transparent about your business during initial consultations.
You can also leverage the potential benefits that come with having an outside party review your financial operations. With their experience in working with a variety of organizations, an outsourced controller may be able to help you find innovative ways to improve operations or identify issues that your financial team wasn’t able to see.
3. Communication and response time
Effective communication is vital for successful controller services. However, with outsourced controllers, there may be delays in response time due to factors such as time zone differences or competing priorities with other clients.
It's crucial to establish clear communication channels and expectations to minimize any potential issues. Work with your service provider to understand their communication practices and the options they have, such as video calls or instant messaging, for immediate communication.
Making the right choice for you
Choosing among outsourced controller services or an in-house controller depends on various factors unique to your business. Here are some considerations to help guide your decision-making process:
1. Business size and complexity
Consider the size and complexity of your business when determining the level of controller services required. Smaller businesses with fewer transactions and simpler financial reporting needs may find outsourcing to be a cost-effective solution. Larger organizations with more complex financial operations may benefit from having an in-house controller who can provide dedicated support.
2. Financial resources
Evaluate your financial resources to determine what is feasible for your business. Hiring an in-house controller may require a significant investment in salaries, benefits and infrastructure — not to mention the cost of recruiting and onboarding controllers. On the other hand, outsourcing allows businesses to access high-quality controller services and provides a stable and consistent resource.
3. Strategic focus
Consider the strategic focus of your business. If your senior-level staff needs to dedicate their time and energy to core operations and strategic decision-making, outsourcing controller services can free up valuable resources.
How Wipfli can help
Wipfli’s outsourced controller services offer your organization a flexible way to access expertise, scalability and advanced technology. As a skilled, experienced partner, Wipfli knows how to deliver value to your organization’s financial operations. See how we can help you.
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