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PODCAST: Outside the box of a finance department

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PODCAST: Outside the box of a finance department

By: Dean Dorton | June 25, 2020

These days our lives are filled with services—GrubHub®, Netflix®, the landscaping company, and more. We live in a time in which paying for services is normal and we don’t think twice about a subscription delivery model. What if running your accounting and finance functions could be just as easy?

Unhinged Podcast

Episode 2

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Transcription

Alright, alright, alright. Hello again. I’m Justin Hubbard. Welcome to the second edition of Unhinged, brought to you by Dean Dorton. Here at Unhinged, we are trying to knock the doors off the status quo with the accounting and finance landscape. So we’re doing a podcast, a little bit unique for an accounting firm such as Dean Dorton. Last time I gave a quick intro into why we’re doing this, but in short, we’re trying to shine a light on best practices and things that work and don’t work within the accounting environment. And we’re also just trying to help companies pave a way to improve themselves, to improve their organizations, be more valuable, and be more successful.

Okay, today I’m going to talk about delivery methods. Now I’m not talking about DoorDash versus Grubhub. I’m not talking about Jimmy John’s freaky fast delivery. I’m talking about how your organization goes about getting its accounting and finance needs met.

We live in this time in which we’re pretty accustomed to paying for services. Maybe our parents and grandparents took pride in doing things themselves, but I’ll tell you folks, I’ll outsource anything. If Amazon wants to send me Tide detergent once a month so I don’t have to think about it, I’ll pay them a premium, doesn’t bother me at all. We don’t go to grocery stores anymore. We don’t go into Walmart anymore. We buy our stuff online. We pay shoppers to shop for us. We pay clothiers to buy clothes for us. They’ve never met us, but yet we trust their judgment. We subscribe to lawn services, insect services, lighting services, plant watering services. We even rely on Netflix recommendations to tell us what to watch next. And, by the way, I strongly encourage everyone to check out Waco.

As a society, we’ve handed over a lot of our services, the process of getting things done, to third parties. So why don’t we do the same within our organizations, within our businesses? Specifically, why don’t we do that within the accounting and finance department?

Technology has evolved to an interesting point in which now you can have real-time access to data. You can use automation to capture things automatically. Everything is not keystroke driven as it once was. And it’s reached the point where you can get modern elaborate tools to add value to your organization at a very economic and scalable rate. Historically, accounting has been done internally within organizations—business owners start their business, they rent out shop, they rent out office space, whatever to run their operations. They made it the accounting in a back office or in a corner, or even the kitchen table at home. Maybe a family member was doing the billing and the invoices and cutting the checks. There’s a period after a few months, that gets old really quick and business owners start to think, “I didn’t sign up for this so that I could be an accountant. I don’t like dealing with payroll. I don’t like dealing with vendors. I don’t like having to write invoices to get paid.”

And all of a sudden, they go from having this lofty goal of getting rich, really, they just want to grow their business to a point where they can justify paying someone else to do the accounting. And so they hire a bookkeeper. And the bookkeeper comes in and does the bank recons and cuts the checks, prepares the invoices, and may or may not prepare a financial statement here or there. But the business owner may not be paying a lot of attention to the day-to-day operations. And maybe they’re okay with that. But I think slowly, businesses have learned, because the world has gotten so competitive, that you can no longer be negligent about your financial statements. You can’t just assume if there’s money in the bank to make it through today, that your business is doing well.

So, I just want to challenge businesses to think bigger about their accounting and finance department. Now with the advent of cloud-based technology, you can have multiple users operating within an accounting system from multiple locations. You can have automation-driven applications, which perform scripts to accomplish tasks that someone would have to do manually. They were keystroke driven. You have the ability to take an internal function, outsource it, and then redeploy the people who are fulfilling that function into areas that are much more valuable and have a higher return on investment for your company. It’s all done through outsourcing.

Before you say, “I’m out. Outsourcing is not for me. It’s not for my group. I’m not that guy. I don’t outsource,” I just want to ask you a handful of questions for you to consider. Have you ever thought about what turnover in your accounting department will do to you? What kind of delays that will cause? Have you considered, or do you know, if your accounting system is prone to crashing? Is it out of date? Is it no longer being serviced? Have you outgrown your accounting system, but you don’t think you can afford a more robust system, a grownup system, if you will? Do you have good people in your accounting team, but they could be adding so much value if you could just get them out of the accounting role? Maybe they’re doing a great job within the accounting department meeting a need, putting out fires, but you know they could really help your business if you could just move them elsewhere? Is your month-end closing process causing unnecessary stress and pain? Are you worried about fraud or theft? Are you able to track non-financial data within your system? Do you simply just hate hiring accountants? Lastly, do you struggle to understand your financial statements? Can you tell your own story based upon your financial statements?

If you answered yes to any of those, I would challenge you to strongly consider outsourcing your accounting or finance operations. Maybe some of you are uneasy with the whole notion of outsourcing. That’s too big of a jump, right? Can we take a baby step? Absolutely. Now, we call that co-sourcing; it’s a hybrid.

Maybe you have some key staff who are doing a great job and you just want to blend in a supervisor or a controller. That’s possible. You can outsource that supervisor or controller role. Maybe you have a great controller or someone with experience who is getting bogged down in data entry and you need to outsource the data entry component. Not a problem. Maybe you have a great team of accountants, but need someone at an executive level to lean into your business, to partner with you, to be on your team, on a outsourced basis, to feel a CFO type need. That resource is available.

And the beauty of an outsourced model is that it can be customized to what you need. And you may not even know what you need. That’s why it’s such a healthy discussion to have.

I’ve been working with the outsourced accounting group of Dean Dorton for two years now. I have gone from thinking that that was a peripheral service that we as a firm provided, now being its biggest cheerleader and thinking it is going to be one of the leading revenue strains within our firm. But in working with clients in our space, I’ve noticed a few characteristics that make for a smooth transition into an outsourcing model.

Characteristic number one: the organization knows the top of data and reports that it needs; it just doesn’t know how to get them.

Number two: the organization is already outsourcing other services, whether it be payroll, HR, IT, landscaping. If you’re accustomed to working with people who aren’t within your organization, then you’ve already probably jumped the biggest hurdle of outsourcing the accounting function. Organizations that are open-minded to change, willing to try new stuff, willing to adapt, evolve, to have some difficult conversations as to improve a process.

Number four: organizations that embrace change. It doesn’t mean you like change, that just means you have to understand it, embrace it, appreciate it and not give up.

And lastly, organizations that know the difference between an outsourced staffing arrangement and an outsourced service. There’s a bit of a difference there in terms of just control that you may have.

I’m a big believer in pros and cons in making decisions and I’m a big believer in transparency. There are definitely some pros and some cons to an outsourced model. Here are the ones that come to my mind.

As I said, there’s some loss of control if you outsource anything. I outsource my lawn care and it’s not been mowed in three weeks. So I’m feeling a lot of pain over that right now, as my children stumble through the weeds of our backyard. In the accounting environment, you lose the ability to come up with spontaneous deadlines because within the outsourced accounting world, you have to build timelines and workflows in order for the mechanism to work efficiently.

To be honest with you, implementations are tough. You’re getting a new system, new tools, new people, probably new processes. That’s tough for a while. And there’s definitely some short-term pain there.

Organizations have to get used to a team member who’s not physically present. If your accounting clerk is your Jimmy John’s runner, you’re going to have to find somebody else or pay that three bucks for delivery or bring a lunch, or walk. #healthyhabits.

You may not save any money outsourcing. A lot of people outsource to save money, but frankly, if you’re overworking your staff or you have your staff spread across too many functions, you may actually see an increase in expense as you redeploy your existing staff to more valuable services or duties and then you bring on the outsourced function.

Some pros, lot of pros. Remember, I’m a cheerleader for these services.

Pro number one, first and foremost: you will have a professional group of accountants performing your accounting. You have access to a lot of institutional knowledge. You will likely have access to a firm. The ability to lean in, to dip into that pool is certainly valuable. You’ll have access to more sophisticated tools and the outsourced model is likely to come with that cloud-based technology, automated tools, things of that nature. Along those same lines, you’re going to have access to dashboards and customized reports that give you the data that you need to run your business.

Someone else will carry their staff retention risk. If you struggle to hire accountants or retain accountants, that will no longer be your problem—that’s your service provider’s problem. Similarly, you don’t have to worry about updating the technology. The technology maintenance burden will shift to the service provider.

If you’re a fan of accounting rules and love it, when your auditors come to you with the new revenue 606 requirements and the new lease standard requirements, and if that just doesn’t tickle you pink, then outsourcing is definitely for you because that will become the outsourced accounting group’s problems.

Seven, perhaps most important, if not second most important: you can redeploy your team members to more valuable positions within your organization.

And then lastly, certainly not least: you as a business owner can return to focusing on your business and growing your business and not on the accounting.

As I was preparing for this, we’re at some point of the COVID-19 situation. Hopefully we’re at the end, but who knows? And working within an outsourced accounting group, it’s been interesting because as our clients have reacted to the social distancing and the economic shutdown, we have had to react with them. We’ve had to pull in beside them, coach them through the stimulus packages, the federal programs, the reporting requirements, revisit workflows. I’m proud to say our clients haven’t missed a beat. Transactions have continued to get processed. Business has gone on as usual—as usual as it can be. And that’s something to be proud of, but it’s also a great advertisement for the value of the services. And especially as we consider what the future may hold, what the societal changes may be as a result of the past 10 weeks.

Now, while an outsourced or co-sourced model may not be perfect for you, I definitely think that it’s worth a conversation. I just want to leave you with the challenge of looking deeply at your organization, understanding your pain points, thinking over the past few months, as we’ve all had to deal with the COVID-19 situation—what are the weaknesses within your company? Where do you need professional help? Where could you just redeploy resources to strengthen your organization? Maybe it is not outsourced accounting, maybe it’s something else, or maybe it’s worth a conversation with somebody who does whatever that is for a living. And I strongly encourage you to use this time to do a deep dive within your organization, rethink your business processes, and build a plan to make your business stronger, whether it’s outsourced accounting, whether it’s hiring better talent, new initiatives, whatever the case may be.

With that, I want to thank you for joining me. Stay tuned for next time. I’m out.

Your Host

Justin Hubbard
Justin HubbardDirector of Accounting & Financial Outsourcing
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