Why outsourced financial controllers benefit startups

Starting a business is an exciting experience, but running it efficiently like a well-oiled machine is another ball game altogether. Did you know that a staggering 38% of startups fail due to improper financial management?

But what if we told you that you don't have to be a part of that scary statistic?

The truth is that every business that succeeds in the long haul has one thing in common: their financial operations are in order. These businesses have a healthy balance sheet. They pay their employees and suppliers on time, optimize cash flow cycles, and generate profits for their stakeholders. Investors love to fund companies that have positive financial reports and a clear vision for future growth.

However, optimizing your company's financial systems and accounting policies isn't easy, especially when you're in the initial growth stages, scaling up fast, and funds are tight. Just like every company needs a business leader, your startup needs a financial leader to steer it toward long-term growth and profitability.  

This is where financial controllers come into the picture. Unfortunately, many startup founders and entrepreneurs aren't aware of the role of a controller, whether they need one, and, most importantly, if they can afford a full-time controller. Fret not. We're here to help.

In this guide, we'll answer all those burning questions and more. We discuss the crucial role controllers play in keeping your accounting systems running smoothly and why you might consider hiring an outsourced financial controller instead of a full-time team member. So, if you're ready to take your business to the next level and ensure its long-term financial sustainability, read on.

What is the role of a controller?

A financial controller is responsible for the day-to-day financial operations of your business. They ensure your company's books, records, and ledgers are in order. In simple terms, the financial controller is a senior manager who oversees an organization's accounting processes and finance activities.

The role varies depending on the organization's size, nature, and type. For example, accounting controllers in small businesses are more hands-on and are involved in day-to-day bookkeeping tasks. On the other hand, controllers in large corporations primarily perform managerial tasks such as preparing operating budgets, financial reports, etc. They collaborate with Chief Accounting Officers (CAOs), Chief Financial Officers (CFOs), treasurers, and other financial experts to improve the overall accounting standards.

Whether you hire an in-house or an external contractor, most controllers are involved in forecasting, budgeting, and financial decision-making. You can think of the business controller as your go-to finance expert, offering tailored advice to achieve your financial goals.

The strategic benefits of outsourcing a controller

Let's face it: Running a business is no easy feat. It's an incredibly complicated juggling act that requires you to balance multiple tasks at any time. While hiring a full-time, in-house CFO might seem like the best solution, it's often expensive and impractical.

Outsourced controller services are a good alternative for young startups and small businesses. Let's delve into how outsourced financial controllers empower your business.

Enhance cost savings compared to in-house hiring

As a young startup, you're likely to have limited resources and a tight leash over your budget. Hiring a full-time controller might not be possible for you, as you have to pay a hefty salary and benefits, not to mention budgeting for additional job costing expenses like office space and equipment. Outsourcing allows you to pay only for the services you require. You can even hire independent contractors on hourly wages and pay them a fixed fee, significantly reducing upfront costs.

Tip: Understand the differences between controlling vs. accounting. This helps you define your specific financial needs and identify the required accounting services. Look for an outsourced controller who offers a customized package that aligns perfectly with your budget and requirements.

Get access to expertise and specialized skills

Another huge benefit of hiring an outsourced controller is that it allows you to find the right person experienced in your specific industry. This is a must, especially if you operate in a niche industry with unique accounting and tax regulations. Finding an in-house controller with specific expertise is time-consuming and expensive. Outsourcing companies have a wider pool of talent, making it easy to find the right person with the specialized skills tailored to your needs.

Tip: When sourcing candidates, look for individuals or firms with a proven track record in your industry. Professionals with relevant certifications demonstrate a deeper understanding of your industry's unique challenges.

Improve financial reporting and analysis

In-house account controllers often juggle multiple responsibilities and are pulled in all directions, potentially limiting the time and resources dedicated to in-depth analysis. Outsourced controllers, on the other hand, specialize solely in financial management. They can provide comprehensive and insightful reports, translating data into actionable intelligence that empowers you to make strategic decisions.

Tip: Look for outsourced controllers who utilize financial reporting tools and are proactive in their communication so that you receive timely updates and clear interpretations of your financial situation.

Adapt to changing business needs

As your business landscape evolves, your financial needs will change. An in-house controller might not readily adapt to these constant changes. Outsourcing offers greater flexibility, as you can scale your financial management services up or down as needed, ensuring you have the right resources at the right time without unnecessary fixed costs.

Tip: Look for a firm that offers flexible service options and allows you to adjust the level of service as your business grows.

Reduce the burden of financial management

As a founder, you often wear many hats, and managing finances might take a backseat to your myriad other responsibilities. Financial management is time-consuming and can distract you from your core business activities. Outsourcing frees up valuable time and energy for founders to focus on their core strengths, such as innovation, strategic planning, and building customer relationships.

Tip: Discuss communication protocols with your outsourced controller. Delegate routine tasks like preparing the income statement and monitoring accounts receivable and payable. This allows you to focus on higher-level strategic thinking without getting bogged down in daily financial details.

Allow founders to concentrate on growth

While managing finances is crucial, it can hinder your ability to focus on the bigger picture. By outsourcing your controller, you gain the confidence and peace of mind that your finances are in capable hands. This allows you to dedicate time and energy to growth initiatives and realizing your company's full potential.

Tip: Develop a strong working relationship with your outsourced controller. Regular communication and clear expectations foster trust and allow you to leverage their expertise to support your long-term growth objectives.

Outsourced bookkeeping and controller services help reduce costs and streamline accounting operations. You also gain access to specialized expertise, improve financial analysis, and free up valuable time and resources for growth. Remember, outsourcing can be a powerful tool for entrepreneurs and business leaders to achieve their goals and unlock the full potential of their business.

How to select an outsourced controller

Finding a suitable outsourced controller can be a game-changer for your startup. With the right partner, you gain financial expertise, efficiency, and strategic guidance. But with so many options out there, how do you find the right professional who understands the financial heartbeat of your startup and helps achieve your goals?

Follow these steps to confidently navigate the selection process and find the financial soulmate for your business.

Identify your startup's specific needs

Like any other team member, your outsourced financial controller must be the right fit for your startup. A one-size-fits-all approach will not work. Identifying your business needs ensures you find someone with the skills and experience relevant to your industry, growth stage, and financial complexity.

Scope of work

Before diving into the search, figure out what type of financial partner you need. Do you need someone to handle basic bookkeeping and taxes, or are you looking for a strategic advisor to help you forecast, budget, reduce operating expenses, and make smart decisions? Knowing the differences between a controller vs. bookkeeper can help you define the scope of work.

Understanding your current situation and future goals helps you define the specific scope of work. Identify tasks, responsibilities, and the level of involvement required.

Industry expertise

Just because a controller has a stellar profile, it doesn't necessarily mean they're the right choice for you. Look for an experienced controller who has prior experience working in your industry. They should understand your sector's regulations, accounting practices, and how things work in your competitive landscape. Bonus points if they've helped similar startups (industry, age, growth stage) like yours navigate their financial complexities.

Technology comfort

Modern accounting relies heavily on technology: cloud-based accounting software, automated data processing, and advanced AI-powered analytical tools. Look for a tech-savvy controller who can leverage these tools to streamline accounting processes, reduce manual errors, and free up time for more strategic tasks.

Another crucial factor to consider is data security. Check if your shortlisted candidate understands the latest cybersecurity threats and best practices, helping your accounting team implement robust security measures. That said, financial technologies are fast-changing. Look for a financial controller who is adaptable and keen to learn and implement new technologies, future-proofing your business.

Communication style

A financial controller is not just a number cruncher. They're a crucial part of your team. You need an expert communicator who can translate complex financial terminologies into easy-to-understand language. Look for a controller who can bridge the gap between the numbers and the people. They must have strong presentation skills to explain financial concepts to the rest of the team, founders, investors, and other stakeholders.

Research options

Skipping the groundwork when choosing an outsourced controller might lead you to hire the first candidate solely based on what's on their resume. But an outsourced controller is a vital part of your core financial team. They are crucial in determining your business's financial health and growth. Choosing the wrong one could lead to costly mistakes, missed opportunities, or even legal trouble.

Now is the time to leverage your professional connections. Spread the word out that you're looking for an outsourced controller to join your team. Post on LinkedIn or other social media pages that you're hiring. Ask mentors, investors, clients, and fellow entrepreneurs for referrals and recommendations.

Start sourcing candidates

The next step is clearly outlining your needs, expectations, and ideal candidate profile. What services do you need (e.g., basic bookkeeping, advanced financial analysis)? What industry expertise is crucial? What's your budget? Knowing your needs makes targeted searches easier.

Once you've crafted the job description, expectations, and ideal candidate profile, the next step is strategically reaching out to potential candidates. Use platforms like LinkedIn to connect with candidates who have expressed interest in your job description or those who seem like they might be a good fit. Express your interest and provide a brief overview of your needs. Briefly chat with each candidate to gauge their communication skills, understanding of your needs, and overall fit to your company culture. Make a shortlist of candidates who pass the initial requirements.

Screen candidates

Once you have a pool of potential candidates, you can ask each person on your list to submit a formal resume or proposal outlining their experience, qualifications, and expertise. Here are a few tips to effectively screen candidates before scheduling in-depth interviews:

• Schedule brief phone calls with each candidate on your shortlist. Ideally, the initial phone call should be within 15-20 minutes. Briefly introduce your company and needs. Ask about their experience, industry knowledge, and availability.
• Assess communication skills and clarity: Listen for clear and concise answers, and assess their relevance to the role and your industry.
• Gauge their enthusiasm and interest: Look for someone genuinely excited about your company and the role.

Conduct in-depth interviews and meetings

Select the most promising candidates for further evaluation by scheduling interviews. You can consider conducting virtual interviews via video conferencing platforms to reduce the cost and time. This also opens your pool to candidates who might not be located in your city, but have the essential skills.

In the interview, check if the candidate has:

• Technical expertise: Prepare insightful questions that assess their technical skills, experience with similar clients, and problem-solving abilities.
• Industry knowledge: Ask questions specific to your industry and its unique challenges. Ask them to analyze real-world case studies related to your industry. This is a great way to evaluate their practical approach and analytical skills.
• Technology comfort: Discuss their experience with cloud accounting software, data security practices, and other tools you use.

Check references

Once you've selected candidates who impressed you during the interview, the next step is to check their references and credentials. Request candidates to submit at least three references to get diverse perspectives. Ask the references about their overall experience and satisfaction levels working with the controller. You can also ask the controller to share specific examples of their previous work to get ideas on their day-to-day tasks and expertise.  

Verify qualifications and certifications and check if their credentials align with your industry standards and business needs. You can also check independent online platforms for reviews and testimonials shared by clients of the controller.

Be patient and thorough

Finding the perfect financial partner takes time. Don't rush the process — remember, a bad fit can be costly and time-consuming. Make sure you prioritize cultural fit, too. You want someone who clicks with your company's vibe and values, not just someone who crunches numbers. Take your time communicating with your shortlisted candidate. You can even meet them in person to evaluate their communication skills, working style, and overall attitude. You're looking for someone who feels like part of the team, even if they don't work full-time on your payroll.

Next, negotiate a clear agreement. Discuss expectations, deliverables, communication protocols, termination clauses, and fees. Have a detailed contract and review it with the candidate to ensure you're on the same page. Finally, opt for a trial period before diving headfirst into a long-term commitment. This lets you see how they work in action and helps you evaluate if they're the right cultural and technical fit for your team.

Finding a suitable outsourced controller is like finding your financial BFF. Take your time, do your research, and trust your gut. With the right partner by your side, you can transform financial chaos into calm, strategic growth!

Make the right decision for your startup

To outsource or not? There's no answer that works for every business. Ultimately, the decision depends on your requirements and current growth stage. Opting for outsourced bookkeeping and controlling services can be a smart decision, especially if you're looking to cut costs without compromising the quality of the hire.

Hiring an outsourced controller can also empower your startup to thrive in a competitive landscape. They offer numerous advantages, like access to specialized expertise, enhanced financial reporting, and improved flexibility. By freeing up valuable time and resources, this approach allows founders to focus on core business activities like innovation, growth strategies, and building customer relationships.

With the strategic guidance of an outsourced controller, you can free yourself to focus on what you do best — building your dream and blasting off towards a bright future!

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