Escalon Services

In the dynamic landscape of modern business, companies face ever-evolving challenges that demand strategic financial management and a keen focus on growth. Amidst these challenges, the role of Chief Financial Officers (CFOs) has become increasingly vital. Many businesses, recognizing the need for expert financial guidance without the burden of a full-time, in-house CFO, are turning to outsourced CFO services. In this comprehensive exploration, we delve into the transformative impact of outsourced CFO services, emphasizing their role in unlocking growth and optimizing financial strategies.

I. Understanding the Dynamics of CFO Services:

A. The Traditional CFO Model: Traditionally, organizations hired in-house CFOs to oversee financial matters, implement strategies, and ensure compliance. While this model offers dedicated expertise, it can be financially burdensome, particularly for small to mid-sized enterprises (SMEs) with limited resources.

B. Rise of Outsourced CFO Services: Outsourced CFO services have emerged as a strategic solution for businesses seeking financial expertise without the overhead costs of a full-time CFO. Outsourcing provides access to seasoned professionals who bring a wealth of experience and insights to the table, tailored to the unique needs of each client.

II. Key Advantages of Outsourced CFO Services:

A. Cost Efficiency: One of the primary benefits of outsourcing CFO services is cost efficiency. Businesses can access top-tier financial expertise without the expense of a full-time executive. This allows organizations to allocate resources more effectively, directing funds towards essential operations and growth initiatives.

B. Expertise On-Demand: Outsourced CFOs bring a diverse skill set to the table, honed through experience with various industries and challenges. This expertise can be invaluable for businesses navigating complex financial landscapes, providing on-demand solutions and strategic guidance.

C. Flexibility and Scalability: Unlike in-house CFOs, outsourced services offer flexibility and scalability. Businesses can tailor the level of financial support based on their current needs, scaling up or down as circumstances change. This adaptability ensures that companies receive precisely the support required at any given time.

III. The Strategic Role of Outsourced CFO Services in Finance:

A. Outsource Accounting: Outsourced CFO services often encompass comprehensive accounting solutions. From bookkeeping to financial reporting, outsource accounting services streamline financial processes, ensuring accuracy, compliance, and transparency. This allows businesses to focus on core operations while maintaining a solid financial foundation.

B. Outsource Finance: Beyond accounting, outsourced CFO services extend to broader financial functions. These may include financial planning, budgeting, forecasting, and risk management. Outsourced finance professionals work collaboratively with internal teams, providing strategic insights to optimize financial performance and mitigate potential risks.

IV. Tailoring Solutions for Small and Mid-Sized Enterprises (SMEs):

A. Customized Financial Strategies: SMEs face unique financial challenges that require tailored solutions. Outsourced CFO services specialize in creating customized financial strategies aligned with the specific goals and constraints of smaller businesses. This personalized approach enhances the effectiveness of financial planning and decision-making.

B. Growth-oriented Financial Management: For SMEs aspiring to grow, outsourced CFO services play a pivotal role in guiding expansion strategies. These services contribute to the development of sustainable growth plans, helping businesses navigate financial hurdles and capitalize on opportunities.

V. Navigating Regulatory Compliance:

A. Ensuring Compliance: Staying abreast of ever-changing financial regulations is a daunting task for businesses. Outsourced CFO services are well-versed in regulatory compliance, ensuring that clients adhere to industry-specific financial standards. This expertise minimizes the risk of legal complications and fosters a secure financial environment.

B. Risk Management and Contingency Planning: Outsourced CFOs are adept at identifying potential risks and developing contingency plans to mitigate them. Whether it’s market volatility, economic downturns, or unforeseen challenges, these professionals provide strategic insights to safeguard businesses and ensure financial resilience.

VI. Building Strategic Partnerships:

A. Collaborative Approach: Outsourced CFO services operate as strategic partners rather than external entities. Through a collaborative approach, these professionals integrate seamlessly with internal teams, fostering open communication and knowledge transfer. This collaboration enhances the overall financial acumen within the organization.

B. Long-term Relationship Building: The relationship between a business and its outsourced CFO service is often long-term. This continuity allows the outsourced CFO to gain a deep understanding of the client’s business, enabling them to provide increasingly valuable insights over time. The result is a symbiotic partnership focused on sustained growth.

VII. Case Studies: Realizing Growth Through Outsourced CFO Services:

A. Case Study 1: Streamlining Finances for Increased Profitability

Company X, a mid-sized manufacturing firm, engaged outsourced CFO services to streamline its financial processes. By implementing efficient accounting practices, optimizing inventory management, and providing strategic financial insights, the outsourced CFO contributed to a 20% increase in profitability within the first year.

B. Case Study 2: Navigating Market Challenges with Financial Expertise

In the face of market volatility, Company Y, a technology startup, partnered with an outsourced CFO to navigate financial uncertainties. The CFO’s expertise in risk management and strategic planning helped Company Y not only weather the storm but also identify new market opportunities, resulting in a successful pivot and sustained growth.

VIII. Future Trends and Innovations in Outsourced CFO Services:

A. Technological Integration: The future of outsourced CFO services is intertwined with technological advancements. The integration of artificial intelligence (AI) and automation is streamlining financial processes, enhancing accuracy, and allowing CFOs to focus on high-level strategic decision-making.

B. Data Analytics and Predictive Modelling: Data-driven insights are becoming increasingly crucial in financial decision-making. Outsourced CFOs are leveraging advanced data analytics and predictive modeling to provide clients with actionable intelligence, enabling proactive strategies for growth and risk mitigation.

Conclusion:

A brilliant content marketing strategy has the potential to raise brand awareness, boost traffic and generate high-quality leads, thus boosting the sales and revenue of your business. In fact, the 12th Annual B2B Content Marketing reveals that a staggering number of marketers have been successful in achieving their business goals of creating brand awareness (80%), building credibility (75%) and educating audiences (70%). Besides, content marketing budgets have catapulted with 69% of businesses planning to increase their content marketing budgets in 2023.

But, devising a content marketing strategy and its tactical execution can be challenging at times, particularly for small businesses. They often tend to make mistakes that could have a huge impact on their brand visibility, and ability to draw in and convert customers.

Listed below are five content marketing mistakes that small businesses should avoid.

Content marketing mistake #1: Not having a master plan

Small businesses tend to dive headfirst into content marketing without a master plan. As a small business owner, if you don’t have one, your efforts will be inconsistent and futile, which could cause your audience to lose interest in the brand.

The master plan needs to be clear with an effective strategy and excellent tactical execution. For instance, you may use community forums or discussion boards to know the pulse of your target audience, gain valuable insight, and figure out how to modify your messaging to suit your audience’s needs.

Devise a plan that specifies objectives, takes the target audience into account, and matches the appropriate formats to those objectives in order to take off. This will assist in producing more targeted and compelling content that appeals to the “ideal” client.

Content marketing mistake #2: Not understanding the target audience

“Understanding what your audience needs and values will be your key to content marketing success in 2023,” states Director of Organic Search Kyle Byers. According to their recent survey, this is one of the key factors determining the success of a content marketing strategy. The survey revealed that 47% of respondents conduct audience research and 44% said improving the quality as well as the value of their content has resulted in success.

Failing to understand your target audience and producing content without considering what is important to your customers or the manner in which it will help them is the second most common mistake you can make with content marketing.

Any content you generate, no matter how good you believe it is, will be of no use if it does not resonate with your target audience. Besides, you will fail to attract and engage new clients if you cannot generate meaningful content for which you must first understand your clients’ challenges and end goals.

Remember, your business success and content efficiency are dependent on your ability to identify and engage with your target audience.

Content marketing mistake #3: Not focusing on SEO

Investing in search engine optimization (SEO) should be a priority for your business as it is a crucial part of content marketing. SEO is how your content will be discovered online principally in search engine result pages (SERPs). According to 2023 HubSpot research , “nearly one-third of marketers use a website to attract and convert leads, while a majority of site traffic comes from search engines.”

Without SEO your content cannot be discovered online which can ultimately result in no traffic. A good SEO strategy will make sure that you are developing content that people are actually searching for.

Content marketing mistake #4: Not limiting sales-focused content

Most businesses end up making extremely promotional or sales-orientated content in order to drive sales, but that’s not how it should be. Sales might be the end objective of your content marketing strategy, but pushing it too hard is likely to drive your audience away resulting in a low success rate.

Instead, you should aim for establishing brand trust and adding value to the lives of your audience through content that is useful, solution-focused, educational, engaging as well as entertaining. This will ignite their interest, create credibility, and increase the likelihood of content shareability.

Content marketing mistake #5: Not reviewing performance

Investing time in reviewing and analyzing your content marketing statistics can provide you with great insights and a database that can be used to drive your future content strategy.

If a content piece does exceptionally well, marketers can remodel it or leverage the strategy which worked with the audience. To know what works for you and what does not, you must evaluate content marketing performance by analyzing the data.

Consider metrics like click-through rates, social media shares, page views, traffic sources, and the amount of time visitors spend looking at a content piece online to gauge whether your campaign performed well or not.

If you choose not to monitor and conduct reviews on a regular basis, your efforts go to waste.

Want more? Escalon has helped thousands of small businesses maximize their potential with our back-office solutions for accounting, HR, benefits, payroll and recruiting, insurance and taxes — and we can help yours too. Talk to an expert today.

This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here

As a startup founder, you may be trying to single-handedly take care of every aspect of your business, including managing your accounting and finance functions. However, research from the American Psychological Association shows that multitasking could take a toll on productivity — in fact, even brief mental blocks created by shifting between tasks can cost as much as 40 percent of someone’s productive timeSchedule a call today

But with accounting being crucial for every business, you may be on the fence about choosing between outsourced accounting and an in-house accountant. While both options have their advantages and considerations, understanding and assessing them based on your specific circumstances and needs can help you make an informed decision.  

Let us compare the pros and cons of outsourcing accounting services to hiring an in-house accountant, empowering you to determine which option best suits your small business.  

Cost considerations.

Outsourcing accounting services allows small businesses to access experienced professionals without the need for a full-time worker. This helps you save money by eliminating expenses such as salary and benefits like retirement, vacation time and health insurance — outsourced workers usually cost less than regular full-time workers. In addition, there is no need to spend money on software and the equipment essential for handling the accounting and finance processes.  

Employing an in-house accountant, on the other hand, gives you the benefit of having someone dedicated to your business’s specific financial operations. However, it calls for several fixed costs associated with salaries and wages, benefits and office space. 

Additionally, finding and hiring a qualified accountant can be a time-consuming and competitive process. Retaining this employee may also be a challenge, as they may seek career advancement opportunities elsewhere.

Experience and expertise.

Outsourced accounting gives small businesses access to a team of highly qualified and trained accounting professionals, who specialize in various areas such as tax preparation, bookkeeping or financial analysis.  

These experts bring a wealth of experience and knowledge, ensuring accuracy and compliance with regulations. Additionally, they use the latest technology and processes to ensure that your data is accurate and secure. 

Small businesses in every industry are increasingly relying on cloud computing to drive innovation, optimize efficiency and scale seamlessly. And the cloud services these businesses rely on do offer numerous benefits. Cloud solutions are incredibly flexible, easily accessible, cost effective and innovative. And, when leveraged intelligently, cloud computing can be the difference between short-lived success and a lasting competitive advantage.

Unfortunately, many small businesses aren’t prepared to handle the sky-high costs of uncontrolled cloud spending. Because without proper cost optimization strategies in place, cloud spending can quickly spiral out of control, hurting the bottom line of the businesses it aims to support. 

That’s where Cloud FinOps comes into play. 

FinOps, meaning the combined practice of “finance” and “DevOps,” is a management practice that focuses on optimizing the financial performance of a cloud computing infrastructure so the company as a whole can use cloud computing efficiently. It drives greater business value by helping every department, from IT to finance, recognize how their cloud usage can be contributing to the company’s overall costs — so decision-makers can minimize waste at every level. 

When it comes to developing your financial strategy and safeguarding your small business’s financial future, you may find yourself facing this common dilemma: You need expert financial guidance and support, but you don’t yet have the budget or resources to hire a full-time, in-house, fully qualified financial team. 

If that problem sounds familiar, you’re not alone. As many as 80% of early-stage small businesses operate without a Chief Financial Officer (CFO) or controller in place. And unfortunately, what they don’t have can seriously cost them. That’s why an outsourced CFO or financial controller can be one of the most valuable — and cost-effective — financial strategy investments you can make in your small business.

Cloud-based technology is more than a passing trend. It’s the new normal for small businesses in every industry. 

With the ever-increasing need for efficiency, flexibility and on-demand access, cloud-based solutions are revolutionizing everything from file storage and communication, to project management and customer relationship management. Today, it seems cloud-based technology is permeating every area of business. And business finance is no different. 

Cloud-based financial tools now give small businesses a new way to manage their finances, balance their books, conduct everyday accounting tasks and plan for their financial future. Schedule a call today

Curious how the cloud can streamline your business’ finances and help you reach your goals? Read on to learn what cloud-based accounting is (and isn’t!), its advantages over traditional accounting solutions, and how you can start leveraging it today. 

People operations in recent times have come to be a catchphrase that seems to be bent on removing Human Resources from the lexicon of corporates and HR practitioners themselves. People operations or PeopleOps is seen as a more holistic and cohesive term that encompasses every aspect of an employee’s work life — from when they join a company, till the time they bid farewell to it.

A growing number of small businesses are bringing in outside help to manage their financial needs. In fact, statistics suggest that accounting is one of the most popular outsourced processes for small businesses.

Partnering with an outsourced finance department presents an opportunity to take advantage of the most effective team of accountants and finance professionals, and larger-scale technology. At the same time, it helps small businesses reap the benefits of higher efficiency, expanded capacity and significant cost savings.

Clearly, outsourcing can have endless benefits!

But, should your small business invest in outsourced financial services? Let’s get a deeper understanding of financial services outsourcing and its downsides to see if it’s the best option to grow your small business.Schedule a call today

What is financial services outsourcing?

Outsourcing refers to the strategic use of external resources to perform tasks traditionally handled by internal staff and resources. Correspondingly, outsourcing financial services implies using a third-party service provider essentially acting as your own financial team. They handle all or some of the financial processes of your business depending on your needs — from bookkeeping, account reconciliation, financial data analytics and taxes to CFO services.

Advantages of outsourcing financial services

Outsourcing your financial services to an external provider can help your small business streamline its financial and accounting operations while benefiting from significant cost savings. Here’s a comprehensive look at the primary benefits of outsourcing financial services:

Reduced cost. When you outsource your finance and accounting tasks, you don’t have to pay the same salary or benefits as you would if you had hired an in-house employee to handle the finance functions. This can significantly reduce your overhead costs and increase profit margins.

Plus, since you are only paying for the work that’s done, you don’t have to worry about extra costs associated with having an in-house employee, such as PTO, taxes, insurance, and other related expenses. In short, outsourcing your financial services is much cheaper and more cost effective than creating a dedicated in-house finance department.

Access to experts and new technologies. Partnering with a dedicated financial services provider generally provides you with a higher level of experience and expertise than in-house employees can provide. This can be especially beneficial if you need specialized financial and accounting skills, or expertise that isn’t readily available in your area or country.

Additionally, an outsourced solution gives you access to cutting-edge technology and systems which your growing business couldn’t otherwise afford.

Improved efficiency and decision-making. By outsourcing, you can free up your finance team to look beyond transactional activities and focus on resolving risks and pursuing opportunities as well as value-added activities. Thereby supporting dynamic decision-making and sustainability in the long run.

Scalability. Opting for an outsourced solution offers your small businesses a high degree of flexibility in the fulfillment of current needs. Giving you access to a larger pool of finance talent and resources, outsourcing can help your business to scale up quickly — with just a minimal incremental increase in costs — without having to worry about retaining year-round staff members or hiring additional employees, or taking on additional overhead expenses like office space and equipment rental fees.

Drawbacks of outsourcing financial services

Despite the many benefits of outsourcing financial services, you don’t want to go down this path until you compare these to the potential drawbacks:

Lack of control. Although you can provide direction to the external agency about what you need to accomplish, you give up some control when you outsource. And there are many reasons for this. Firstly, you’re hiring a contractor instead of an employee. Secondly, since the person is not working on-site, it can be difficult to maintain precise control.

Communication issues. Third-party financial providers may have a different schedule  — operating in a different time zone or have a different preferred method of communication — that can interfere with instant communication resulting in work delays. 

Erodes company culture. While outsourcing financial services may seem like a cost-effective solution, doing so may harm employee morale and company culture. The in-house financial team may feel like they are being replaced — leaving them frustrated and upset.

Plus, outsourcing can lead to confusion over which tasks remain in-house and which are the responsibility of external service providers — adding challenges to the daily workflow of your organization. 

That said, outsourcing doesn’t always have a negative impact on company culture. However, you need to safeguard against this before you decide to outsource your financial services. This typically means holding open discussions about organizational changes with your finance team.

Hidden cost. If an outsourcing contract is not well crafted and managed, there can be hidden costs or scope creep that can lead to you paying more than you expected.

Elevated risk. While inherent risk is a part of any partnership, this risk increases with an outsourced financial services provider. Sharing your business assets with an outside partner —  financial data, intellectual property, etc. increases the risks of security breaches and data loss.

Want more? In addition to taxes, accounting, bookkeeping and CFO services through its FinOps, Escalon’s Essential Business Services include PeopleOps (HR, benefits, recruiting and payroll) and Risk (business insurance). 

Over the past few years, businesses have begun to realize how powerful community really is. The sense of belonging, loyalty and camaraderie that a dedicated community creates unites their customers, strengthens brand awareness, and gives businesses true staying power — three benefits that can prove invaluable in times of market turbulence. 

In this article, we’ll look at how customer communities benefit the businesses they’re built around, and how your small business can harness the power of this growing trend. Schedule a call today

What is a customer community?

A customer community is a group of loyal buyers who are united in a unique way — by the niche interests, goals and needs they have in common. That loyalty and buy-in among members is why businesses that leverage community are reporting significant growth and customer retention. 

In a report on startups, nearly 80% of B2B entrepreneurs agreed that building a customer community was important to the success of their business — and 28% believed community is essential to their competitive advantage. Businesses built on a thriving customer community also report increased brand loyalty, lower customer support costs, stronger awareness and better brand recognition. Those are valuable benefits for growing small businesses!

Is community becoming essential for business growth? One study suggests so. 

In a 2020 report by Harvard Business Review, community was revealed to be one of the biggest predictors of business growth. The study cited businesses like Salesforce, Harley-Davidson, and Codecademy as examples of companies that have successfully created a community-style following of customers. 

In these communities, customers help each other troubleshoot issues, compare use cases, talk about their favorite features and benefits, and even upsell one another on new products and services. For the companies that lead these communities, the benefits are undeniable. Millions of customers have developed connections to these brands — and their businesses have the retention and loyalty to prove it. 

How can your business create a sense of community for your customers? Start with these three steps.

Any business with a clear and valuable product or service can develop a loyal community with the right tools, a little intentional effort, and a few brand advocates. Here’s how:

1. Choose your platform. Some businesses build their community using a communication tool like Slack. Salesforce, for example, is a giant Slack community with tens of thousands of members. You can also leverage a membership platform like Kajabi, or social media platforms, like LinkedIn or Facebook. As a rule of thumb, the more tailored and accessible your community platform is, the more valuable it will be to your customers! Talk to us about how Escalon’s essential business services can help you have more time to focus on building a community of loyal customers.

2. Get early buy-in. To begin building your community, invite a few loyal brand advocates to start attracting customers to your group. A brand advocate or affiliate can be up to 3x as effective at encouraging engagement and buy-in than a regular happy customer, so this is a valuable strategy to leverage early on. 

3. Listen for feedback. As the leader of your community, you’ll have full access to see the conversations, reviews, feedback and engagement of your members in real time. As you listen to your members, adapt your community to fit their preferences and motivations. If they want more educational resources, provide them! If your community is asking for events or opportunities to engage with other members, create interactive spaces. The more you can shape your group to meet your customers’ needs, the more effective it will become. With this community-building strategy in place, your small business can build the kind of engagement and brand interaction with your customers that pays for itself for years to come.  

What are the best benefits of creating a community around your business?

Businesses that successfully build a community for their customers have a true advantage over their competitors for three big reasons:

1. Access to free marketing. Potential customers are 84% more likely to trust the referral of a friend, family member, coworker or network connection. And customers who enjoy engaging in your community are more likely to refer that community (and your brand) to those around them. As your community grows, you gain increased access to automatic marketing and invaluable word-of-mouth referrals, which reduces your marketing costs and increases your customer acquisitions. 

2. Reduced cancellation and refund rates. In engaged communities, customers tend to support other customers. This can help reduce your requests for refunds or exchanges, as customers work together to troubleshoot challenges and offer helpful guidance. Not only does this boost your revenue — it can minimize your customer support costs. 

3. Access to high-quality unique data. The conversations your customers have within your community are an invaluable source of data on customer preferences, behaviors, purchasing patterns and more. Plus, your dedicated community can work like a focus group, giving your team the opportunity to beta test new products and soft-launch services with a small group of loyal customers. 

With these strategies in mind, community can be your biggest competitive advantage

Today, small businesses can no longer rely on traditional marketing and advertising strategies alone. It takes a personalized, hands-on approach to capture the attention of customers — and build the loyalty you need to outlast your competition. 

Want more? Since 2006, Escalon has helped thousands of small businesses scale faster with our back-office solutions for accounting, taxes, HR, payroll, insurance, and recruiting — and we can help yours too. Talk to an expert today.Schedule a call todayThis material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.

Despite fast-rising salaries for both accountants and auditors, increased benefits, and greater incentives to complete an accounting-based degree, the number of new accountants entering the workforce is declining by the year.

According to a report by the American Institute of CPAs, the number of accounting majors at the bachelor’s and master’s levels has dropped by 4% since the pandemic. In 2010, there were nearly 50,000 CPA candidates sitting to take the required exam. But in 2021, that number dropped to just over 32,000. While not all accountants are CPAs, a drop in the number of CPAs — the licensed professionals required to perform many high-level accounting tasks — is a key symptom of the declining industry as a whole. Schedule a call todayAdding to this shortage is the number of CPAs at, or past, retirement age. A staggering 75% of the CPA workforce met or exceeded retirement age in 2020. And as these seasoned CPAs leave the workforce, they’ll leave behind a dearth of senior-level positions younger CPAs aren’t yet experienced enough to fill. 

This upcoming shortage of accounting professionals is likely to impact small businesses and the economy in three major ways:

1. Expect less financial guidance for small businesses and big companies

The talent exodus is creating a widespread shortage of CFOs, CPAs, finance managers, FP&A professionals and other financial experts. That lack of talent is likely to lead to less financial oversight and guidance for companies of all sizes. And as more companies struggle to find qualified, affordable, experienced financial expertise and support, they may be exposed to greater risk.

Early-stage startups are already less-than-likely to have a CFO or senior accounting professional in place as they grow. And small businesses often rely on the expertise of their CEO to guide major financial decisions — whether that person has an accounting background or not. But as the cost of hiring an increasingly rare experienced accountant rises, these businesses will be forced to pay more to attract and retain the limited talent that is available — stretching their resources even further. 

2. Anticipate fewer, longer financial audits for public companies

Comprehensive accounting audits that look into the integrity and compliance of large companies have never been more important than they are now — especially in the wake of banking collapses and market uncertainty. But with fewer qualified auditors staffing the Big Four firms (Deloitte, PwC, Ernst & Young and KPMG), expect the audits these firms do to be slower, less detailed, and potentially less accurate than in the past.

The Securities and Exchange Commission recently fined Earnst & Young $100 million when it was discovered that some of the firm’s accountants cheated on their licensing exams. This finding calls into question the accuracy and reliability of the work the firm has conducted, and suggests some auditors and accountants have been tempted to cut corners, faced with a growing workload and a shrinking workforce. 

The increasing shortage of auditors and accountants is likely to lead to longer audit and due diligence periods for public companies and those in the merger or acquisition process. And those delays can make stakeholders (and stockholders) uneasy, creating further volatility across the market. 

One of the quickest ways to increase your small business’ productivity and maximize your budget is to outsource a handful of essential business tasks.

Not only does outsourcing save your internal team considerable time, especially when it comes to tedious and repetitive tasks, but having a dedicated external team handle your tasks also gives you access to a higher quality of administrative support at a more affordable rate than employing full-time professionals.

What kind of companies should consider payroll outsourcing services?

Payroll outsourcing services are particularly beneficial for small businesses that have a limited internal team or who are looking for increased transparency and efficiency. In fact, an estimated 45% of small businesses already outsource this essential service!

If you’re a business owner or startup founder who handles your own payroll, outsourcing this service can free your time and headspace. If you have an accounting team already, releasing them from payroll duties gives those team members the opportunity to focus on more valuable tasks, like financial reporting, forecasting, budgeting, bookkeeping and planning.

As a small business owner or CEO, you’ve got a lot on your plate. And handling the financial side of your company is just one more task on your never-ending to-do list. 

If you’re feeling overwhelmed by your bookkeeping and accounting activities, or realize these critical tasks have been largely ignored in your company, it’s time to consider bringing in a finance professional to streamline your operations and get your finances back on track.

The day a business owner sets up a company, they expose themselves to a number of risks. It could take only one lawsuit to knock a small business out of business — for instance, in the event of a lawsuit, a general liability claim can average more than $75,000 per case to defend and settle, according to data from the Hartford. It is essential for entrepreneurs to ensure they have the right insurance for all types of business risks, so as to not leave themselves exposed and vulnerable.

Thankfully, a wide range of insurance coverages is available to cover all the possible risks a business may encounter. Check out this breakdown of some insurance policies that an organization should have in place, even if they may not need them all right up front. Note: the amount of coverage and cost of policies vary among different insurers.

General liability insurance

This is typically the first insurance policy any new company should get because it covers your assets in case of a claim against you. For example, you will be covered by general liability insurance if someone slips and falls at your business.

This type of insurance can be tailored based on your business's specific needs. And even though you probably will not find an out-of-the-box solution that covers everything, you will want to get this policy shortly after setting up your company so the policy will pay for potential damages.

Workers’ compensation insurance

In order to make sure that you and your staff members are just as well protected as your customers and clients are, a workers’ compensation policy is required. This insurance policy covers injuries incurred by you or your team members while on the job.

In most U.S. states, a workers’ compensation insurance policy is compulsory if you employ a minimum number of people as W-2 staff members (therefore, it may not be optional if you fall under this category). For instance, in California, you must have a workers’ compensation policy, even if you only have one employee. Therefore, check out your state’s requirements and obtain coverage accordingly.

Unemployment insurance

Just like the workers’ compensation policy, unemployment insurance is generally required by your state if you have staff members. This type of insurance ensures that those staff members can continue to earn money even if they lose their jobs. It is best to set up this coverage when you first enroll employees in your payroll process.

Property insurance

Property insurance allows you to be reimbursed if your place of business experiences damages or losses. For example, if a fire broke out in your office, this insurance policy would likely cover both the building itself and the items in it, including furniture, computers and inventory.

Business owner’s policy

An insurance company may offer you business owner’s packages in which you can purchase a number of business insurance policies at once, and this policy is known as a business owner’s policy (BOP). These packages can be customized, and usually cover general liability insurance, commercial property insurance and business income insurance at the same time. According to the Insurance Information Institute, typically, businesses with 100 employees or fewer and revenues of up to about $5 million or less are ideal candidates for a BOP.

Cyber liability insurance

Most businesses keep private customer information on file, ranging from credit card data and Social Security details to perhaps even health records, depending on the type of business. In order to ensure that you are protected against network breaches, you must consider a cyber liability policy. This policy will allow you to defend yourself in case of a breach of privacy, and help you pay for your defense and/or any damages incurred if you are found guilty.

Business interruption insurance

In case of damages due to instances such as a fire in your building, your property insurance may cover you for stuff like your computers and inventory. However, it is likely you will need business interruption insurance to reimburse you for the losses you face from not being able to conduct business while you are awaiting a new batch of inventory. A business interruption insurance policy will essentially help you replace the income you lose during times of interruption.

Commercial auto insurance

Not every firm has a company car, but if yours does, then a commercial auto insurance policy can come in handy. This insurance policy will reimburse you if your work vehicle is damaged or if someone is hurt in the vehicle during the course of business.

Product liability insurance

In some cases, a general liability policy may not cover you if a product you sell malfunctions or breaks down and causes harm to a customer. If you create, distribute and/or sell such products, you should consider adding product liability insurance to protect yourself.

Home-based business insurance

If you are running a business out of your home, you need to consider getting a rider on your homeowner’s insurance policy to protect yourself. A home-based business insurance policy can take care of instances of injuries that someone might face after visiting your place of work (home) to do business, or in some cases, it may even help you recover the cost of losing business equipment.

Conclusion

If you’re considering these types of business insurance policies, it is a good idea to speak with a professional who can assess your liability risk and help you choose the best coverage for your company. Accountants, insurance agents, attorneys, and professional organizations can all be good resources as you navigate the insurance process.

Technology is changing the way accountants do their jobs, and cloud accounting is a primary factor behind this shift. Through cloud accounting, businesses access programs from a remote provider over the internet rather than by handling documents on-site.

Cloud accounting offers the same functionality as traditional accounting. The only difference is that it runs on remote servers online, meaning you do not have to download large software applications. Tasks such as price quotes, invoicing, payment processing and cash flow monitoring can be accomplished easily with cloud accounting.

How the cloud has transformed accounting

In the past, accountants used software installed on their work computers to perform their job. Cloud accounting refers to the practice of performing accounting via software hosted on remote servers. Data is processed in the cloud and returned to the user.

Cloud accounting was introduced in 2006 but has become increasingly prevalent in recent years due to the pandemic and the widespread adaptation of remote work. According to an April 2022 report, the global market for cloud accounting software was valued at $2.63 billion in 2018 and is expected to reach $4.3 billion by the end of 2024. This represents a compound annual growth rate of 8.6%.

Typically provided in a software as a service format, cloud accounting is used by accounting professionals to manage accounts payable, receivable and the general ledger, among other things. Like other cloud-based systems, cloud accounting software operates on the cloud provider’s platform. That means employees or outsourced accountants do not have to be physically present at a business location to use the tools needed to carry out accounting tasks.

Recap: Traditional versus cloud accounting

Traditional accounting software — The norm before the advent of cloud accounting, applications were installed on the hard drive of a workplace computer and used from that location. This had several constraints, including limited access to data, the need for continual software upgrades and the cost of storing financial information.

Cloud accounting software — Shifts the entire accounting process to the cloud. Data is securely kept on a cloud server, where it can be accessed from any device connected to the internet. Most cloud systems also feature an open application programming interface, which implies that third-party software may connect to your system to confer additional value.

Five key areas where traditional and cloud accounting differ

Among the chief pros of cloud accounting is that it is accessible from anywhere with virtually any device. It is also preferential to traditional accounting in terms of:

1. Price : Traditional accounting entails purchasing software, installing it on all devices that will use it, and buying hard drives to store the software and your financial data. Cloud-based accounting requires only a device, internet access and frequently, a monthly subscription fee to the SaaS provider to make use of its cloud-based accounting software.

Most cloud accounting software is subscription-based where you select a tier and pay a monthly fee. Costs may vary from $5 to $75 per month, depending on the number of users and features. Some software even provides one-time or lifetime subscriptions from $150 to $500 based on the level of service chosen.

2. Speed: Since it is installed on workstations directly linked to servers, traditional accounting software tends to be faster than cloud-based accounting. This allows for more efficient data transmission versus with cloud-based accounting, where you must transfer the data online. However, a faster internet connection boosts the performance of the cloud-based system to the point where the difference is negligible.

3. Access to real-time data: Real-time access to data, which is impossible with traditional software, is one of the top benefits of cloud-based accounting systems.

4. Scalability: As a business grows, so too does its volume of transactional and financial data. Traditional accounting software requires larger and faster servers to incorporate all the data, resulting in additional costs. Cloud-based software often incorporates extra data for free.

5. Safety: With traditional accounting software, there is an ongoing threat of data loss due to power fluctuations, hardware faults and even natural disasters. Cloud-based accounting, since data is stored remotely and routinely backed up, is less susceptible to physical harm.

Is cloud-based accounting secure?

Data saved on a computer is vulnerable to compromise through malware, viruses and ransomware. Cloud-based software reduces these risks with a range of security measures to protect your data, including backups and encryption.

While no system can be guaranteed to be absolutely secure, reputable cloud accounting providers adhere to industry best practices when securing data. Further, cloud accounting software is frequently developed by major corporations, for whom data security is a top priority.

Security advantages of cloud accounting:

1. Data is automatically backed up 24/7: Cloud accounting saves all your financial data automatically.

2. Backlog history: Cloud accounting delivers a digital backlog of everyone who has signed into your program, including when and what modifications they made.

3. Data security: Shifting your data to the cloud is more secure than protecting your data with a physical barrier, which can be stolen or tampered with.

4. Advanced encryption: Most cloud accounting providers encrypt user data with the same sophistication as the world’s most prestigious banks and financial organizations, ensuring better security.

When is cloud accounting a good choice?

If your business requires quick access to accurate financial data and KPIs, cloud accounting is an appropriate solution because of its superior real-time capabilities. Most platforms have an open API, so many options exist for building an app stack.

Among the spheres where businesses often rely on cloud accounting are:

• To reduce manual labor through automated processes. • To perform data analysis on the fly. • To access financial data on the cloud from anywhere. • To simplify tax preparation.

How cloud accounting works in a business setting

Accountants, controllers, CFOs and company employees can collaborate through cloud accounting by accessing it using a web browser on any device. Service providers also offer mobile apps to enhance the user experience on phones and tablets.

Generally, the software connects with the firm’s bank accounts, allowing for all transactions to be automatically posted to the appropriate digital ledger. Users have a home dashboard that displays essential financial information, including cash, invoices due in the next five days and past-due client payments. As soon as the software gets the latest information, numbers are updated immediately.

Most cloud accounting software lets you integrate third-party apps and software. For example, if a business owner uses a point-of-sale system to track sales, the POS system can be linked with the accounting system to track specific transactions, sales tax liabilities, sales by subcategory and more. The time tracking program might be integrated with the accounting software to include manual labor in customer invoices for a company that provides services.

Benefits of cloud accounting

Cloud accounting software’s advantages explain why it has quickly become the instrument of choice for many finance professionals. Below are the top eight benefits:

1. Automation: Transactions process automatically when bank accounts are linked to the accounting system, avoiding the need for time-consuming data input or manual processing. Accounting software may also pay vendors and automatically generate client bills on dates the user specifies.

2. Ease of access: Any user with an internet connection, web browser and login credentials can use a cloud accounting solution.

3. Reduced operating costs: Cloud-based companies often spend less capital than those that maintain their own technology packs in-house. With cloud accounting, you don’t have to buy expensive gear or employ a huge IT team to run the system.

4. Data protection: It is significantly more difficult for most firms to secure their on-premises systems than for leading cloud software providers. Reputable cloud accounting providers follow industry best practices to secure data using Security Sockets Layer protection on in-transit data and public/private key combinations to decode data. Further, cloud software vendors continually and automatically back up data, while standalone accounting software requires manual backups.

5. Scalability: Cloud software gives businesses access to almost any computing resources they may require. As the company and its requirements expand, it may always add more server space.

6. Enhanced collaboration: Collaboration is made more accessible with cloud accounting software, since data is available to all authorized users.

7. Enhanced efficiency: Companies can ramp up very quickly with a cloud accounting system sooner, as they don’t have to buy and set up servers or train an IT team to handle the procedure.

8. Connected online transaction: Payment applications can be linked to cloud accounting system’s invoicing, simplifying the payment process.

In a June survey conducted by The Conference Board, 60% of CEOs said they expect the U.S. to hit a recession by 2023’s end and 55% expect inflation to persist into 2023, as reported in.

While that is not great news for any business, research has found that businesses that succeed through a recession and afterward are those prepared. For example, a Bain & Company analysis found that the top 10% of companies that flourished through the Great Recession had created solid contingency plans before the slowdown hit.

On the other hand, the worst-performing companies tended to be those that reacted to the downturn defensively, causing them to lose steam and struggle even once the recovery came.

Amid the current economic uncertainty, an outsourced CFO can play an important role in advising startups on decision-making and strategies. In recent years, the role of CFO has shifted far beyond that of creating financial reports and ensuring regulatory compliance.

A CFO’s acumen at assessing and integrating financial data plays an increasingly high-profile role at many modern companies. Fortunately, the availability of outsourced CFOs means these skills are now available to new businesses who might not otherwise be able to justify the salary of an in-house CFO.

The right outsourced CFO can quickly help you get on the right footing by analyzing your cash burn rate and runway for different scenarios. They can also assist your startup with updating your forecast and business plan on an ongoing basis.

Indicators of an economic downturn

Although it may seem like it’s all bad news, some economists maintain that a recession is not inevitable. The New York Times recently surveyed a group of economic experts on the chance of recession and their forecasts were far from unanimous. Meanwhile, venture capitalist Chris DeVore told GeekWire that while the days of “easy money” may be over, there is still a lot of VC money floating around, particularly in the smaller check category.

Despite this swirl of opinions, the shared reality of most of us today is that the economy is in a scary place. So, what can you do to proactively help your business? In addition to considering the services of an outsourced CFO, keep an eye on the indicators that forecasters are watching now:

Six strategies to prepare your business for a downturn1. Set aside money for emergencies.

Aim to have at least three to six months’ worth of operational expenditures stashed in an emergency fund. This will give you a buffer if revenues take a hit. An outsourced CFO can also help you develop a plan so you don’t resort to making hasty decisions concerning business finances.

2. Play offense and diversify your lineup.

If your business has strong cash reserves, with the guidance of an outsourced CFO, you may be able to tap into areas you hadn’t considered, such as buying vulnerable firms. Also, consider that many businesses are still struggling with a lack of qualified employees. If you want your organization to be recession-proof, boost retention with measures such as professional development opportunities.

3. Assess spending.

An outsourced CFO can help create a budget that triggers expense modifications for different scenarios. For instance, you could set up a trigger that tells you how much you need to reduce payments if revenue falls by 10% to preserve your operating margins.

4. Be thoughtful in your spending cuts.

Outsource to a third-party CFO for professional insights on downturn-preparation measures such as switching from fixed to variable costs, automating repetitive processes to free up employees’ time for business development and analyzing the monthly cost of recurring charges.

5. Make inventory management more efficient.

There are times when it’s necessary to acquire inventory to keep up with demand for the next month. Consider a scenario where you typically have $2 million in goods. In the event of an economic downturn, you’ve overspent and had $1 million in goods that you can’t use. In a recession, cash is what you need, and an outsourced CFO can help ensure your business is positioned accordingly.

6. Check the interest rates that apply to your debts.

Stagflation is a term economists use to describe a situation where sales and demand decline as interest rates rise. Businesses with a tremendous amount of debt are the most prone to this situation. Varying interest rates on your loan can hit hard during a recession, especially if your sales are down. Set up your business for an economic downturn by preparing for this situation.

Set up an effective finance system

For most businesses, safeguarding cash flow and profit margin is the primary goal during a recession. When a significant shift in cash flow occurs, an outsourced CFO will work to ensure you stay on top of it. The CFO can run various scenarios and identify which should trigger your recession strategy to be implemented.

Conclusion

Businesses need to get ready now if they want to withstand a recession and come out ahead of their competitors. Every business is different, so the holistic perspective of an outsourced CFO can be a decided advantage. Businesses that outsource CFO services gain access to a pool of financial experts with a range of experience and a commitment to staying up to date and following the best practices in multiple sectors.

The goal of a private equity firm is to purchase a company, invest in its growth and garner a profit for investors by selling it to a larger interest, typically within three to five years. But they must also focus on adding value to assets and investor relations in this short time period.

PE firms have conventionally charged investors a fixed management fee of the total assets under management. However, with the traditional AUM model undergoing increasing strain, firms are looking for alternatives that can bring down costs without sacrificing efficiency.

More PE firms today are recognizing that they can reduce costs by outsourcing the administrative operations of their portfolio companies. This means a bigger percentage of management fees can be booked as the fund profits or more returns to limited partners.

Outsourcing is also appealing to private equity-owned companies because it allows things to be done more quickly, in keeping with their short turnaround time. Functions that PE is outsourcing include IT, HR, customer service and finance.

According to EY podcast What PE is outsourcing to create value , “typical savings that we see,[are] anywhere from 5%-10% on the low end and all the way up to 30%+,” said EY-Parthenon US Value Creation Leader Gregory Schooley, in reference to PE firms that outsource.

Benefits of outsourcing for PE firms

Outsourcing routine business functions also help PE firms reduce the cost of operations of their funded companies but without hiring more people. In a sense, the outsourced staff can be considered an extended team working on a plug-and-play basis.

An outsourcing partner can help PE portfolio companies by:

1. Providing cost savings versus hiring internal resources. 2. Increasing returns through sustainable investment strategies. 3. Reducing cybersecurity risks. 4. Providing information about the latest trends and changes to the regulatory landscape. 5. Delivering timely and accurate financial reporting, data-driven insights and portfolio value. 6. Implementing operational best practices. 7. Deploying tools and tech to oversee larger volumes of data, and training staff how to use it. 8. Providing easy access to experienced professionals. 9. Freeing up internal resources to focus on strategic tasks that grow revenue. 10. Making it easier for you to expand or scale.

Types of outsourcing services for PE

With ever-changing regulatory and investor requirements, a portfolio company requires accurate, timely financial information to gain a competitive advantage and deliver value to investors. An outsourcing partner can provide PE firms with an end-to-end operating model that best serves the future business needs of their portfolio companies.

Following are the seven types of services that a PE firm can outsource:

Professional outsourcing

– Encompasses specialized services like accounting, bookkeeping, digital marketing, and other complexes, repetitive business activities.

IT outsourcing

– Provides a variety of IT operations and infrastructure management. With IT outsourcing, you gain IT support for maintaining data security, keeping licenses up to date and developing apps or websites.

Process-specific outsourcing

– There are three types of process-specific outsourcing.

• Knowledge process outsourcing for improving products and services through research and data analysis.

• Recruitment process outsourcing to hire, train and retain top talent. You can get support for job postings, shortlisting applications, background checks and creating an employee handbook.

• Legal process outsourcing to manage regulatory compliance, litigation and other legal needs. With LPO, firms can keep their legal spending to a reasonable amount and get the insights they need for investors and regulators.

Business process outsourcing

– Manages repetitive daily business operations, such as administration, customer service and lead generation.

Manufacturing outsourcing

– Helps meet increased demand for products with limited in-house resources. It also helps businesses save funds to regularly update equipment.

Project outsourcing

– Businesses can also outsource a particular project when they lack the time, skills or funds to otherwise complete it. This may comprise projects such as website redesign, content creation, tech-related functions and running marketing campaigns.

Financial outsourcing

– Professionals specializing in financial reporting, accounting, regulatory and compliance services provide their services. Outsourced finance service providers can also implement technology and tools to help your portfolio companies improve outdated systems and increase productivity.

What should a PE firm look for in an outsourcing partner?

According to capital marketing company Ocorian, a general partner’s decision whether to outsource boils down to three factors. These include “evaluating the real cost of running their business; anticipating the impacts of changing regulatory and investor requirements; and choosing an effective end to end operating model that best serves their future business needs.”

Before finding an outsourcing partner for your portfolio companies, carefully investigate their reputation. The right outsourcing partner should drive value across all aspects of the business.

Here are the four key factors PE firms should assess in an outsourcing partner:

Level of expertise, and experience. • Record of investment in innovative tech, and systems. • Robustness of their operating platform. • Testimonials