Pros and cons of outsourced controllers: How to make the right choice for your business

Without effective financial management, your business will struggle to grow or maintain profitability. But does a strong financial team have to be entirely in-house?

The answer is increasingly no, as many businesses now turn to outsourced controller services to provide financial leadership. Keep reading to learn more about the pros and cons of hiring an outsourced controller, as well as how to decide whether outsourcing or going in-house makes more sense.

What does an outsourced controller actually do?

An outsourced controller holds a key leadership role on your finance team in a flexible, fractional capacity. In addition to overseeing your accounting team, an outsourced controller helps to ensure accurate financial reporting, provides valuable insights to drive growth and takes on compliance or risk management duties.

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 give your business high-level financial leadership in a flexible, cost-effective package. Key benefits include:

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 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.

4. 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.

5. 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

Outsourced controller services do have some drawbacks, especially for businesses that want an on-site controller presence or have other requirements that may make hiring in-house the better option. Here are key cons to be aware of:

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 your 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.

Outsourced controller vs. in-house controller: What’s right for your business?

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:

	Outsourced controller	In-house controller
Business size	Small or medium organization	Large, complex organization
Time requirements	Part-time or flexible controller support	Full-time controller support
Financial resources	Cost-effective	Full-time salary
Finance capabilities	Small or limited in-house finance team	Established in-house finance team
Technology	Accounting system in need of upgrade	Modern accounting system
Recruiting market	Limited talent pool	Access to experienced talent

Give special attention to factors like:

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.

Read more

• The evolving role of financial controller
• Unlock the power of fractional CFO outsourcing
• Internal audit plan: Don’t overlook these items