Outsourced Accounting Function

Problem identified

The business was a small asset management and investment research company with a turnover of ~£3.5 million employing 12 people.  They needed a full service accounting function (i.e. transaction processing, bookkeeping, credit control, supplier payment management, VAT returns, payroll, tax compliance, financial reporting to management and preparation of annual financial statements) but didn’t have the resources to employ the range of specialist personnel needed to meet all their requirements.

Solution Proposed

Given the lack of resources it made sense for the company to outsource the entire accounting function to a third party firm who could co-ordinate all the specialist input needed to run the finance department for a fixed monthly fee. This process required agreeing a number of key deliverables with the client. For example, all employees would be paid on the 25th day of the month; all suppliers would be paid within 5 working days of month end; management accounts plus an updated rolling cashflow forecast would be delivered and explained to the managing director (with proposed action points if necessary) within 10 working days of the month end. Finally a single point of contact was agreed with the client so that any ongoing issues or problems could be discussed directly at all times.

Outcome

Outsourcing the accounting function enabled the managing director to fully understand the financial performance of his business each month, ensured that all the company’s statutory obligations were being met and he could clearly convey to all the company’s stakeholders (employees, HMRC, bank and suppliers) how and when the company would deliver under its obligations to each of them. This was provided for a fixed monthly fee giving the company greater cost control over a key operational function.