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Business resilience and outsourced finance – Is there a link?

By Paul Barnes, MD of MAP

If the last year has taught us anything, it’s that resilience in business is more than just your capacity, capability as a leader, who you have in the team, or how your customers are reacting. It has shown us that resilience is also about flexibility and access to appropriate support when it is needed most.

One area where this has shown to be highly effective through the recent challenges businesses have faced is that of outsourcing, and outsourced finance in particular.

Paul Barnes, the MD of MAP, which provides such an outsourced finance function for digital and creative agencies, explains why.

The demands of a pandemic

The pandemic has added extra pressures onto all businesses. Running the business remotely, workers at home, furloughed employees and the need to navigate Government support, from the Coronavirus Business Interruption Loan Scheme (CBILS) through to furlough claims, have put immense strain on finance teams, especially in SMEs.

Many smaller businesses do not have dedicated finance professionals within their team and so those responsible for finance have struggled, specifically when faced with sudden and pressing demands on their time and resources. The need to firstly understand, and then process, furlough claims whilst better managing costs and cash flow were just some of the immediate challenges that businesses have had to address.

Many different industries required specific solutions and many businesses reacted differently, pressurised to divert resources, or change operating processes quickly. However, those businesses with outsourced finance functions appeared to have been at an advantage during the pandemic.

Already set-up to manage finances remotely and with the expertise and experience to hand, outsourced finance functions have helped many organisations of all sizes to steer through the crisis more effectively. This link between an outsourced finance function and business resilience can’t be ignored and the learnings we have taken from this period should be explored further.

The advantage of scalability

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The pandemic has seen furloughed staff, redundancies and freezes on hires, significantly cutting in-house resource.

When unexpected events take place, be it a pandemic or a financial crash, having resource flexibility is an advantage. Even in more ‘normal’ times, businesses may need to suddenly downsize or scale-up, such as with the loss or win of a big client. An outsourced finance resource can be rapidly dialled-up or down as needed to support a business through change, removing the pressure and costs associated with quickly hiring and firing staff.

Resilience through expertise and experience

The typical SME business can’t be expected to have a wide range of specialist skills and knowledge in their finance team. Many businesses may simply have an in-house bookkeeper supported by an external accountant. It’s therefore understandable if the company is lacking the necessary knowledge and skills required during a crisis, such as how Job Retention Scheme (JRS) grants work, and how to access appropriate funding through Bounce Back or CBILS, optimise cash positions, prepare financial analysis and undertake scenario planning. The right outsourced finance partner will have a cross-section of skills and expertise, from accounting technicians through to finance partners, who can provide financial modelling and vital strategic advice.

Many industries have specific needs and require industry-based solutions and so a generalist accountant may not always be able to give the best advice. This is especially detrimental during a crisis when Government support schemes and regulatory advice need dissecting, understanding and implementing quickly to provide meaningful advice on how  new regulations and schemes work within a specific sector.

Resilience through technology

Outsourced finance functions are well-placed to advise businesses about the latest technologies to support them as they grow. The right systems will automate processes, reducing time-consuming administration while ensuring all data is available in real-time, so there isn’t a reliance on outdated spreadsheets. And by putting systems in place to automate credit control, for example, this saves time and improves cash flow. Seamless and integrated financial processes, not only provide an excellent foundation for business growth, they can prove a lifeline when a crisis hits. With an instant and up-to-date view of business performance, cash flow, budgets and forecasts, and with an efficient credit control process in place, the organisation is best placed to navigate any challenges ahead.

A final word

The pandemic has forced organisations to move swiftly to deal with unexpected and pressing issues.  No company has been immune to the impacts of the crisis, however those with an outsourced finance function were already on a solid footing to manage the ever-changing landscape. With financial experts to draw-on, the latest technology to hand, and the ability to dial-up and down the support as needed, outsourced finance functions offer much needed resilience during uncertain times.


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