Establishing strong financial infrastructure is critical when starting a new business, yet it’s often an afterthought for early-stage founders. In fact, accounting is one of the most vital aspects of the survival of your business and appropriate accounting leadership from the start can help your small business significantly. Many small business owners turn to an outsourced financial controller for their startup.
What is an Outsourced Financial Controller?
An outsourced financial controller provides numerous services that you can’t get from non-accountant employees. Accounting is important beyond just record-keeping, and outsourced financial controllers can help business owners track cost per project, which products are most profitable when it is time to change something, or help know what is going to happen next. Financial Controller Duties include but are not limited to:
- Monitoring and tracking inventory assets
- Establishing and implementing formal financial procedures
- Overseeing the financial team to ensure timely reporting
- Providing valuable insights on the company’s financial position
- Recognizing financial risks and provide solutions to avoid them
In short, an outsourced financial controller is a company leader who works to execute proper accounting techniques to establish accurate books, enhance the effectiveness of a company’s accounting team, and provide financial analysis and recommendations to executives.
One of the biggest challenges for many business owners is finding the right level of finance and accounting support. It is important for small business owners to understand that all types of finance professionals are not the same. They may hire a bookkeeper and expect them to carry out complex accounting policies or create forecasting models, for example, or hire someone overqualified, such as a chief financial officer (CFO), to perform data entry and compliance responsibilities. To properly execute a financial strategy and drive the success of a company, what business owners need is a financial controller.
Five Reasons Your Startup Should Hire a Financial Controller
Here are five reasons your Startup or Small Business needs an Outsourced Financial Controller
1. Your Business Is Growing
If your small business or startup is growing exponentially, then basic accounting practices won’t cut it anymore. If you feel that your expansion is actually negative because you don’t know how to manage income and expenses and other accounts, you should definitely look into hiring an outsourced financial controller. A financial controller can provide a steady hand that you need to organize your growth going forward. They could provide plenty of expertise in the field of accounting, ensuring that you can focus on other aspects of your company. A controller can also provide you with detailed reports on financial management that can be utilized by the CEO in making crucial decisions.
2. Financial Controllers Know When It’s Time to Change
The finance team at your small business knows when it is time to change its operations. While this does include job costing, your financial controller can also tell you when it is a good time for a new initiative. “CFOs can stimulate and drive the timely execution of change in the finance function or the enterprise,” explains Deloitte. “Using the power of their purse strings, they can selectively drive business improvement initiatives such as improved enterprise cost reduction, procurement, pricing execution, and other process improvements and innovations that add value to the company.”
Accurate financial statements are important to assess the financial health of your small business.
3. Financial Controllers Know Which Efforts Are Most Profitable
Which products generate the greatest profitability for your company? Which generates the least? Are you losing money on some of your products? If your company produces, distributes, and/or sells multiple product lines or variations of a product, it is vitally important to understand your profitability for each product line. Without this knowledge, you run the risk of making faulty sales decisions.
Misunderstanding your costs and not optimizing your product mix can result in competitive disadvantages. Your controller will know which of your efforts are most profitable and which are not performing as well. In the same way that he or she looks at actual expenses compared to estimates, the financial controller can look at actual versus estimated expenses on a per-project basis. This is called job costing and you can use it to see which projects earn your company the most money.
4. CFOs and Financial Controllers Know What Needs to Happen Next
Outsourced financial controllers are more than just accountants. They have the knowledge and expertise to make sure your small business stays in compliance with government regulations, adheres to tax statutes, and has the ability to explain company finances to investors. The business you hire to handle your controller services knows exactly what steps you need to take to protect the company and to help it grow. Also, financial controllers know your depreciation schedules and can advise when it is time for you to reinvest so that you can take advantage of tax breaks and depreciation.
5. A financial controller reduces your risk of fraud
Small businesses can be just as much at risk for fraud as big businesses. So, as a small-business owner, it’s important to conduct fraud risk assessments on a regular basis. While business owners are ultimately responsible for due diligence and management, a financial controller mitigates risk through the segregation of duties. Reporting and auditing functions are managed by the controller, not by the same individuals who have authorization or spending powers.
When Should I Hire an Outsourced Financial Controller?
Often, small business owners choose to handle their business’s finances initially in hopes to save money. Although this may work initially, as your business begins to grow, it may become more difficult to keep up with compliance regulations. If your business is experiencing any of the following situations, it may be time to hire a financial controller:
- The current accounting team is having difficulty identifying errors in financial reports.
- Business growth is exponential, and company leaders are unsure of how to manage the financial changes that come with a larger business entity.
- The company’s accounting team requires quality management.
- Company leaders want a financial guarantee in meeting state, federal, and local tax regulations.
- The business is struggling to meet important financial deadlines.
- Company leaders are focusing their time on basic accounting tasks rather than the growth of their business.
Limitless Investment and Capital Financial Controller for Startup Services in Arizona
As your business grows, it will benefit from having an experienced CPA provide accounting and financial advice beyond what a bookkeeper can offer. Limitless Investment and Capital provides part-time outsourced financial controller services for Startups in Arizona on as-needed hourly, weekly, or project basis. Our CPA firm can provide comprehensive financial oversight that will contribute to the long-term growth and success of your business. Get in touch and learn more about our outsourced financial controller services today!