Small business owners often face a dilemma when it comes to managing crucial financial tasks such as payroll and accounts payable/receivable. They must decide whether to hire dedicated external financial professionals or cross-train existing administrative staff to handle these responsibilities. Forbes Finance Council members offer insights and strategies to help guide this decision-making process. By considering factors such as complexity of tasks, budget constraints, scalability, and expertise, business owners can make informed choices that align with their company’s goals and resources.
The complexity of financial tasks, budget constraints, and the skills and availability of existing staff are important considerations for small business owners. While simpler tasks like accounts payable/receivable can be managed in-house with bookkeeping software, more complex tasks such as regulatory compliance and taxation management may require the expertise of financial professionals. Rapidly growing businesses may find that the volume of financial transactions quickly overwhelms in-house administrative staff, making it more efficient to outsource to outside bookkeeping services or accountants.
Selecting and setting up software carefully can make a significant difference in how payroll and accounts payable/receivable tasks are managed. Current software makes it easier to handle these chores in-house, especially if there are no employees in multiple jurisdictions or complex invoicing requirements. Proper training and support are essential for cross-training administrative staff to handle routine tasks effectively, while hiring outside financial professionals may be necessary for complex matters such as tax planning, audits, or financial forecasting.
The core competencies needed in the business at its current stage should guide decisions around hiring external financial professionals or cross-training admin staff. Outsourcing specialized functions can provide small businesses with access to expertise and creativity that they may not have the resources for internally, allowing the team to focus on core business activities. Cross-training staff may be a cost-effective solution for routine tasks, provided they receive proper training and support, while hiring external providers can free up time for business owners to focus on growth and expansion.
Small business owners should consider both internal and external controls when deciding whether to hire outside financial professionals or cross-train admin staff. Outsourcing may be a more cost-effective and less risky solution for small internal teams lacking the resources to separate responsibilities and prevent one person from having too much control and access. Prioritizing core business activities and strategic initiatives by outsourcing financial tasks can help business owners focus on growth rather than administrative work, while also assessing the cost and risk of outsourcing to third parties.
Financial professionals should be seen as an investment rather than a cost, as they can provide invaluable expertise and insights that drive long-term success. Tracking workload and time spent on critical tasks can help determine when expert help is needed, and following the ‘rule of 20’ can guide decisions on when to fully outsource financial activities or shift them to in-house roles as the business grows. Hiring a broader cross-section of skills within finance teams can drive better outcomes, while considering the complexity of necessary financial tasks can help determine whether to hire external professionals or cross-train staff.
