Good financial management is one of the most critical aspects of business operations, which is why the job market for professionals in the finance industry is skyrocketing. For example, according to the Bureau of Labor Statistics, the job outlook for financial managers is projected to grow by 17% between 2021 and 2031 (which beats the 5% average for all occupations).
Competent finance professionals are unquestionably indispensable in any organization. But maintaining an in-house team can get costly, which is why many companies outsource their finance departments. Not only does this allow access to expertise it helps businesses reduce costs.
For businesses considering outsourcing their financial function, this article will give you a comprehensive guide to finance outsourcing. We will discuss the pros and cons of having an outsourced finance function and give a few examples of the types of finance roles you can outsource.
What Is Finance Outsourcing?
Finance outsourcing refers to engaging financial services or talent from outside your organization. Compared to having a finance department in-house, choosing to have an outsourced finance department means hiring a third party to take on finance functions, including:
- Financial analysis
- Financial planning
- Investing
- Risk management
Keep in mind that financial services are not necessarily accounting services. The former focuses on planning and directing financial transactions, whereas the latter records and reports those transactions. Finance professionals do not usually take on accounting functions, which is a critical distinction to keep in mind when outsourcing a finance department.
Source: Advisori Finance
Companies outsource financial functions for several reasons, which we will discuss in the next section.
What Are the Benefits of Outsourcing a Finance Function?
Businesses have turned to finance outsourcing to benefit from cost-efficiency, better talent, and access to new technologies and systems. This may mean they use an outsourcing company or a freelancer. At Hire CFO, our outsourced financial services bring a range of benefits:
Costs
A key benefit of having an outsourcing finance function is the savings it will bring. For one, you won’t need to incur training costs because the freelancer or outsourcing company you hire will already have the necessary expertise and experience required to get started immediately. All you need to do is onboard them and familiarize them with your daily operations.
In addition, your finance outsourcing costs will be lower than the salaries you would have to pay by hiring from your local area. This is especially true if you hire talent from regions with lower wages and living costs, such as Latin America. You can engage the remote services of senior finance talent based outside the US for a lower monthly cost than their US-based peers.
See how much outsourcing your fiance function can save you with our Cost Savings Calculator.
Exposure to New Technologies and Systems
Hiring a finance team in-house requires you to invest in technologies, software, and systems for them to use. Outsourced finance functions do not come with these costs. Your hired talent will likely already have access to the tools they need to take on the role. They will also regularly update both the software they use and their knowledge of new systems to stay competitive.
This key benefit of outsourced finance functions allows businesses to take advantage of new technologies and systems without needing to find investment or having to purchase them outright.
Access to Global Financial Specialists
There are many limitations involved in hiring talent in-house. The talent pool you can access may be limited by where they live (for example, commuting distance) and the salary you can offer. This limits the number and quality of candidates that might apply for your finance positions.
Many businesses are realising that an outsourced finance function breaks down those barriers, allowing them to access talent from anywhere. This provides access to a broader pool of candidates with the necessary skills and qualifications (from top global universities worldwide) to take on the role. It also might mean that, although they might not have the resources to pay top talent locally, there still will be high quality talent within a companies’ budget.
What Are the Risks of Having an Outsourced Finance Department?
Though outsourcing the financial function is overflowing with a number of benefits, it’s important to be aware of the potential risks. Before outsourcing business should consider the following:
Autonomy
Outsourced finance professionals will usually work autonomously (unless you are working with an outsourcing company). They likely have their own process and ways of going about finance tasks—and sometimes, this may not align with your company’s or in-house department’s processes or preferences. At Hire CFO, we work closely with companies when providing an outsourced finance function to ensure they will fit in with the culture of the organisation.
Some companies lose some control with an outsourced team compared to having a fully in-house finance department who they can mold according to the standards of their organisation. Therefore, outsourcing a finance department could be a risk if the company in question wants to maintain full scope and control over how their finance department functions.
Response time
Working with talent from different parts of the world can become complicated when time zones are considered. You and your outsourced team may have different working times, which can lead to delays in response times and challenges in communication. This can become an issue when dealing with critical matters or projects that need immediate attention.
If fast responses and work overlap matter to you, then it would be in your best interest to outsource finance talent from nearby countries in LatAm, where workers will be in the same time zones as the US. Hire CFO will find an outsourced finance function which meets your needs.
Final Thoughts
Outsourcing finance functions provide a great way for businesses to get top talent and save money. At Hire CFO, we offer flexible, expert-led financial solutions tailored to the exact needs of your business. Whether you are looking for a Fractional CFO, Fractional Finance Manager, Fractional Finance Director or wider Fractional Accounting Services, our team can help drive strategic growth, improve financial control, and support long-term decision making.
Ready to take your finance function to the next level? Get in touch with our dedicated team to find the right financial leadership for your business. Book a call or request a free quote today.
