Looking Beyond Company Walls For Financial Expertise

Adoption of third-party FinTech and reliance on outside experts is a natural choice for small businesses (SMBs), which often lack the resources necessary to hire and develop technology in-house. For mid-market firms, though, growth has allowed for decision-makers to hire accountants, controllers and other key financial management leaders — as well as explore development of proprietary technologies.

That strategy has its perks. For instance, any personnel brought onboard, and any technologies developed in-house, would be solely dedicated to the unique needs of that business. At least, that’s what many business leaders believe. However, Scott Tynes, chief executive officer at Consero, says that assumption may be misguided.

“The traditional mindset is that you need somebody here in my office focused on my business,” he told PYMNTS in a recent interview. “We think that thinking is a little flawed, and that there’s a bigger challenge out there.”

The rapid evolution of corporate financial management demands flexibility and deep understanding of today’s current technologies, trends, processes and regulations, and in-house personnel aren’t always the right fit for this pressure.

To explain just how drastically the accounting and financial management landscape has changed in recent decades, Tynes pointed to the rise of the general ledger, cloud-based accounting systems and scanning technologies. The emergence of digital workflows is a relatively recent phenomenon — one that some businesses still struggle with — and ushered in what Tynes described as “massive transformation” in how companies manage money.

Businesses may be concerned that an outsourced controller would not be able to dedicate all their time, effort and attention to a single business client, but the concern is misplaced, Tynes noted. Instead, business leaders must be focused on how their accounting processes and service providers are able to handle that transformation.

“The bigger skillset we see missing is the transformational skillset — the ‘builders,’ we call them,” he said. “They come in and implement and change processes.”

Meanwhile, internal financial analysts and controllers are “maintainers,” added Tynes. They’re highly qualified to manage processes like the monthly close, but aren’t always able to take on the task of digitally transforming a company’s accounting systems and processes. It is, indeed, possible for companies to create proprietary tools in an effort to upgrade systems and move beyond legacy solutions, but the process can be more expensive than turning to external solutions, and can take months or even years to deploy.

“Whether [outsourced personnel] are dedicated or not isn’t the challenge,” he said. “The challenge is: Do they have the right skillset to transform the finance function?”

Organizations that have turned to the outsourcing strategy appear pleased with the results. A 2018 survey from CPA.com and Bill.com found that 80 percent of companies agreed that use of outsourced client accounting services (CAS) offers them more time to focus on strategic initiatives, and most agree that their outsourced CAS yield efficiency.

Outsourcing is easier than ever with the array of FinTech providers in operation today. However, jumping to adopt an array of software platforms and tools won’t solve the issue of a lack of understanding among internal personnel, Tynes said, emphasizing the importance of access to both technological and human resources.

Consero — which targets the middle market with its financial management, consulting, bookkeeping and cloud services — aims to provide clients with the ability to adjust and grow their financial management tools and strategies. The middle market, sometimes defined by analysts as businesses with between $10 million and $500 million, encompasses a vast array of firms, each in their own phase of growth and transformation.

Middle-market firms that land venture capital or private equity must be audited and conduct investor reporting, and must have the capability to look at their finances in real time, as well as historically and in forecasting. Tynes noted that international expansion, M&A and product development are all additional factors that make mid-market financial management a volatile, ever-changing process.

At the same time, accounting processes and technologies continue to change, too. It’s this malleability that offers an opportunity for businesses to gain the right services and products from outside of their organizations’ walls.

“There is more automation coming,” Tynes added. “If you think about artificial intelligence [AI] and machine learning, almost everybody would say that finance and accounting are one of the top five spaces in which you can apply that technology.”

He said there is “no doubt” that these tools and technologies will impact the corporate finance space. It perhaps makes less sense for businesses to create AI and machine learning solutions internally than it does to seek external experts on these tools, especially as new solutions emerge.

“This will [help] the same companies solve finance and accounting problems,” said Tynes. “In-house teams are going to have the challenge of keeping up with that technology, so companies will have to turn to external providers to leverage that technology. It’s never going to make sense to build the technology in-house.”