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Consider outsource controller services

Outsource controller services – pass the baton

Should you consider outsource controller services?  Your company is growing and your accounting demands are increasing proportionately; now the question arises, do you hire a controller or accounting manager or do you outsource the service.  With a small turn in the economy nationally, and an even bigger turn in the Brentwood/ Nashville market, more and more small companies are seeing some nice growth and their respective administrative demands are growing, in particular, their accounting departments.  At Fragnoli & Company, CPAs we are seeing an increase in the interest in the hiring or outsourcing of the controller position among our current and prospective clients.  The question being asked is should they hire a full time controller, should they hire a temp from an agency or should they outsource it to their CPA or another firm that specializes in outsource controller services.

The key element in determining the correct answer to this question is how high a level of an accountant does the position really require, the cost of hiring a full time person and the cost to outsource the service to a third party.  Frequently, there is a transition period from the need for a bookkeeper to the need for a full time controller.  There may not be a need for a full time controller, just someone to oversee the bookkeeper’s work.  Also, facilities, systems and trust may be a issue and the company just may prefer to outsource the service.  The cost of higher level accounting personnel, such as a controller, are rising.  There are many costs in addition to the base salary that must be considered.  At Fragnoli & Company, CPAs,we have just recently seen a perfect example of this situation.  We are being engaged to perform the controller functions for a client whereby the position really is not full time.  Further, based on the size and demands of the operation, the company could not justify hiring a truly high level controller/ accountant and instead hired a less qualified person.  As a result, the expected job function was not being met; the records were not in good order, the owner is not receiving any usable financial reports and no real systems have been implemented.  The result is that by outsourcing the service to our Firm, the company will save nearly $30,000 a year in costs and will receive a much higher level of internal reporting and advice then currently being received.  Their day to day operations will not be impacted by outsourcing this service.

One of the most critical risks to outsourcing a company’s controller function is the impact on day to day operations.  When considering outsourcing the function to a third party, company ownership or management must consider whether or not it is feasible given the day to day accounting requirements.  If the company being considered for the outsourcing does not raise this question, then you should immediately consider another firm.  There is virtually no way an outsource firm can be at your company’s operation on a day to day basis and still be cost effective.  When making the decision to outsource or hire a controller, one must consider all factors.  The primary points of consideration are as follows:

  1. Has the company reached the level requiring the need for frequent higher level reporting and accounting functions.
  2. Does the situation require a full time or part-time controller.
  3. How much will a controller cost the firm including all payroll taxes and benefits paid for by the company.
  4. Will outsourcing the function be more cost effective.
  5. Will outsourcing impact day to day operations.
  6. Does my company have the internal controls to put the full accounting function in the hands of a controller.
  7. Will the quality of the work be better or worse if outsourced.

Ask yourself these questions and discuss this with your CPA or other trusted advisor.  Not all CPA firms offer this service; but, if they don’t, they certainly know of firms that do.  At Fragnoli & Company, CPAs we prefer that the function be maintained in house by our clients whenever it is feasible and makes sense.  It will almost always be more convenient to the company and it will allow for further growth.  However, there is that transition time and certain situations where it is just better to outsource and that is where we come in.  Both of our partners have experience as Chief Financial Officers and as controllers with small to medium sized businesses.  Jim Fragnoli, our head of outsourcing procedures and reporting, is the CFO for a $50,000,000 food company and has experience in that capacity in a number of different industries.  So consider all the factors contained in this article and if you are interested in an analysis of your situation or just prefer to outsource, we at Fragnoli & Company, CPAs would love the opportunity to discuss your situation with you.  The initial consultation is free so you have nothing to lose.  Give us a call at (615) 377-0705 or e-mail us.  Our contact information is on our website.