Let’s be honest, business owners. No matter how exciting your company, industry, product, or service, back-office work isn’t fun. It’s tedious, arduous, exacting, and highly demanding.
And that’s exactly how it should be — if your back office is doing it right. By “right,” we mean staying on top of the critical, foundational aspects of running your business operations — at minimum, bookkeeping, accounting, and compliance; ideally, human resources and IT/cybersecurity, too.
Problem is, many business owners, in the justifiable pursuit of thinking big, driving sales, winning clients, pleasing customers, and cornering markets, aren’t sure how efficiently, effectively, or securely their back office is operating. Are you?
A quick test:
- Are you and/or your investors receiving regular, timely financial statements?
- If you called your back-office staff right now, are they able and equipped to give you a precise financial picture of where your company stands today, where it’s likely to be next quarter, and if it’s on track to reach its goals for next year and five years into the future?
- Can you access all the data you need to make informed decisions about pricing your products or services, timing capital purchases, etc.?
- Are after-the-fact accounting adjustments a rarity?
- If an error has been made — with a customer, vendor, or payroll tax — was it a singular event that was quickly rectified, and was a change implemented to ensure said error doesn’t happen again?
- Are manual processes (e.g. payroll, accounts payable, reconciliation, etc.) things of the past?
- Are you confident your accounting team is on top of the latest federal and state tax regulations?
- Does your business have an updated employee manual outlining policies regarding remote work, benefits and leave, health and safety, and other workplace guidelines?
- Are all personnel files and employee issues properly documented?
- Are you certain your company’s data is secure?
- Is your back-office workflow designed, through cross-training or other measures, to continue uninterrupted if one or more staff members leave for vacation or another job, while key duties remain separated in a way that reduces the opportunity for fraud?
Suppose you answered no to even one of these questions. In that case, you’re not only wasting time, money, and manpower that could and should be bettering your bottom line, you’re also putting your company at risk — of costly violations and litigation, employee embezzlement, government penalties, data breaches, and more.
Panicked? Don’t be. Having worked with dozens of business owners who’ve found themselves in a similar position — with a great product or service (and even strong sales numbers!) yet struggling with their back-office operations’ efficiency, accuracy, or security, we can assure you: This isn’t rare. But it’s fixable.
The key is that, once you recognize an issue, you act quickly. How? Many business owners assume the cheapest and simplest solution is to hire more in-house staffers to help.
And while that’s certainly a viable option, it’s rarely cheap or easy — especially in today’s hyper-competitive labor market. According to the 2022 report of the Society for Human Resource Management (SHRM), it costs employers about $4,700 dollars and 42 days to fill the average open position.
Unfortunately for employers, the higher the skill level, the higher the cost. (And, one can assume, the tougher the competition and longer the time spent finding the right candidate.) A report by the Center for American Progress determined that filling skilled positions costs between 100 and 150 percent and as much as 213 percent of the position’s annual compensation.
If you’re lucky enough to find and win the right candidate(s), great. But keep in mind that you’ll pay far more each year than just a salary; there are also benefits, state and federal taxes and insurance, plus any PTO, retirement-plan matching, hiring bonuses (increasingly prevalent these days), and additional perks you offer.
And should you need more than one position filled — if you answered “no” to more than one question in the quiz above, trust us, you likely do — expect to be on the hook for hundreds of thousands of dollars annually.
Another route worth taking
So, before you default to the high-cost, high-commitment approach of hiring more in-house staff, we suggest you consider an easier, faster, more cost-effective, and infinitely more flexible and valuable option. It’s one that too many small- and mid-sized organizations assume they can’t afford: outsource your back-office needs to a trusted, vetted third-party provider. Importantly, look specifically for one that has a broad range and deep bench of experienced back-office experts — in accounting, financial reporting, tax compliance, human resources, and IT/cybersecurity.
Fact is, outsourcing back-office work to a seasoned firm that houses teams of accomplished specialists in multiple disciplines is often less expensive and easier than hiring back-office employees. Think about it: Rather than relying on less experienced hires because that’s all you can afford (or paying premium salaries to hire the highly skilled and experienced candidates you want), outsourcing to a firm lets you borrow the firm’s highly skilled and experienced individuals only for the specific tasks, projects, and/or services — and associated hours per week or month — that you need.
In the unlikely event the firm’s outsourced people struggle to fulfill their duties or don’t deliver what they promised, it’s the firm’s issue to remedy, not yours.
Contrary to many business owners’ fears, outsourcing to a quality firm doesn’t mean you’ll need to fire or replace existing employees. In fact, it more often means valuable employees will be retained and, in our experience, enjoy more job satisfaction.
How? Because a firm that offers back-office experts will be adept at working with and empowering your valuable employees — reprovisioning them to do what they do best, taking on those tasks and projects the employees struggle with, and/or providing them with the tools and training to perform more efficiently and accurately to meet the company’s needs, minimize its risks, and remain proactive, rather than reactive, in its operations and planning.
The right outsourcing partnership
Having spent decades working in the finance and accounting sector with businesses large and small, we highly recommend seeking out a firm that houses myriad subject matter experts with extensive experience in a variety of business operations. You’ll not only be able to leverage the know-how of many but also enjoy the benefit of a solution (or set of solutions) tailored to your specific needs.
Assigning subject matter experts to various back-office tasks brings value in other ways, too. The timely, accurate, and secure information the outsourced team is obligated to deliver will enable you and your executive team to make better, more well-informed decisions. Each expert will be proficient in process efficiencies, which typically translates to reduced costs of operations, less taxed (and more engaged) employees, and an executive team that is freed up from the day-to-day and able to focus on planning and moving the company forward.
Finally, when those specialists are already interconnected, they’re adept at working holistically to ferret out and remedy any issues your company is facing now, as well as proactively working together to empower your business’ purpose and ready it for any challenges or opportunities that might arise in the future, (e.g., new products or partnerships, an impending executive retirement, a global pandemic, etc.).
It doesn’t matter whether you know exactly what support your back-office needs — or if you simply worry your company’s current accounting, compliance, or other back-office operations aren’t working as efficiently, accurately, or securely as they should. A third-party firm with a scope and bench broad and deep (and experienced) enough in back-office operations will be equipped to offer objective analysis, identify any problematic issues, and tailor and prioritize solutions to fit your needs where you are now. It can also help design and implement a feasible plan for the future and — this is key — remain accountable every step of the way.
Like the idea of being able to answer “yes” to every question in the quiz above and resting easy in the certainty that your company isn’t wasting needless time, money, or manpower? Reach out to Rehmann’s Solutions Team for a preliminary consultation about your company’s back- office operations — HR, IT, accounting, budgeting and forecasting, financial, payroll, other tax reporting, and more: 866.799.9580 or [email protected].
Get started, download our one-page guide – The Great Advantage: 5 Outcomes Your Organization Can Experience with Outside Help