During early stages and growth stages of business, resources, like time and money, mean everything to the success or failure of small and medium-sized businesses. Companies of this size typically cannot afford to maintain full-service bookkeeping and accounting departments in-house. These businesses, however, desperately need the services and expertise provided by a complete bookkeeping and accounting staff in order to drive growth and achieve success.
Roles and Responsibilities of a Full-Service Accounting Department
With their bookkeeping staff primarily satisfying the handling of daily processes, compliance with taxes, regulation and payroll requirements, many small business owners do not realize the actual scope of a full-service accounting department's function. In order to fully comprehend what a full-service accounting department does for a business, one must understand the difference between the roles and responsibilities of various bookkeeping and accounting positions.
A bookkeeper's responsibilities include mostly transactional functions, such as paying bills, invoicing, data entry and keeping track of payroll, income and expenses. Bookkeepers are the source of a company's entire record of financial data. To ensure accurate and timely financial reporting, it is essential that bookkeepers work with accuracy and efficiency. They also must have a solid understanding of the company's system of record and understand how to code transactions.
Accountants sometimes handle some of the same duties as bookkeepers, but they have a four-year college degree and generally have more experience and expertise than a bookkeeper. Accountants oversee bookkeeping functions, reconcile payroll, review accounts payable activity and balance accounts to ensure accurate balance sheets and income statements. Accountants occupy mid-level positions in the bookkeeping and accounting department and are responsible for implementing the company's accounting policies and procedures.
Responsible for overseeing financial processes, timeliness and reporting, a controller manages a company's accounting function. The controller creates the month-end closing schedule and is responsible for making sure the financial reports generated by the bookkeeping and accounting department are accurate and delivered to the correct individuals on time. Controllers are also responsible for ensuring the department's policies and procedures operate within the Generally Accepted Accounting Principles (GAAP) as set forth by The Financial Accounting Standards Board (FASB).
Chief Financial Officer (CFO)
The responsibilities of the CFO mainly focus on the future of the company and the decisions it makes in the present to achieve future goals. If absolutely necessary, a CFO might sometimes also handle the duties of a controller, but the primary role of a CFO is strategic. At the head of the accounting department, the CFO analyzes all the reports and data created by the bookkeeping and accounting department to foresee and prevent future financial challenges and create a viable financial strategy to help the business achieve growth, reduce expenses and increase profits.
Six Benefits of a Full-Service Accounting Department
- Make Smarter Decisions - Transparent, accurate information delivered in real-time allows business owners to improve strategic planning and make better decisions on behalf of the company.
- Optimized System - A full-service accounting department optimizes a company's technology throughout all departments to eliminate redundancies, tedious data entry and streamline reporting and job costing to generate actionable data.
- Improved Cash Flow - A full-service accounting department improves cash flow forecasting so business owners can better anticipate and prepare for cash flow shortages.
- Reduced Risk - With complete separation of duties and a department of fully qualified experts, businesses mitigate the risks associated with both internal fraud and compliance with regulations and taxes.
- Increased Profits - With meaningful, actionable data at their fingertips, business owners can learn to pull the levers of their businesses to reduce expenses, optimize pricing and enjoy increased profits.
- Strategic Growth - By tracking and measuring the right key performance indicators, provided by a full-service accounting department, business owners can set tangible goals and measure their company's progress toward meeting them.
The Disconnect between the Small Business and Its Back Office
In order for a small business to fully realize the complete potential of its back office, it needs a full-service accounting department, staffed with one or two bookkeepers and accountants, a controller and a CFO. The small business's back office also needs an optimized and integrated technology stack to streamline processes of accounting and strategic finance.
Most small businesses can't afford the number of employees with the type of experience and qualifications required to operate a fully functional, smart back office. Due to the high cost of employees, training, office space and management, most businesses can't afford to hire the highly qualified staff required to fulfill the duties of an in-house bookkeeping and accounting department.
They also should not take the risk of building a full-service department and its systems from scratch. In addition, these small companies' bookkeeping and accounting functions don't necessarily require full-time accounting departments. As a result, small and even medium-sized businesses usually will not see a return on investment by hiring a complete full-service accounting department to work in-house.
When paying for a complete bookkeeping and accounting department, in-house, the cost of salaries alone can often top three to four hundred thousand dollars. Although a full-service accounting department will undoubtedly generate income, in a small business, the department would struggle to generate enough revenue for the business to benefit from the return on investment.
Purchase a Competitive Edge: Invest in a Fractional Share of a Full-Service Accounting Department
Outsourced bookkeeping and accounting provides small and medium-sized businesses with affordable access to a complete, full-service bookkeeping and accounting department. Owning a fraction of an outsourced bookkeeping and accounting department is similar to owning a portion of a time-share property. You have as much access and benefit from the department as you need and can use, without taking on the total cost and risk of fully investing.
With the right outsourced accounting partner, you will have access to a complete team, dedicated to optimizing your company's systems and processes to improve operations, reduce expenses and increase profits. You can make better use of your existing employees, while also having access to financial experts to assist you with management accounting and using your financial reports as tools for strategic planning to drive growth.
A small or medium-sized business with access to a full-service accounting department sets itself apart from theircompetition. Small businesses with access to full-service accounting gain an advantage over competitors in their industry with better pricing, improved product and service development, decisive sales and marketing strategies and optimized hiring processes.