Is outsourcing my finance functions a sensible option?

31 August 2006
Is outsourcing my finance functions a sensible option?

I am the chef-proprietor of a large restaurant and am struggling to keep on top of book-keeping and general administration. Is outsourcing my finance functions a sensible option?

John Mendes, Macintyre Hudson Outsourcing the finance function of any business - where the internal staff resource is limited in capacity, experience and financial expertise - is now the most advantageous option for any small business enterprise. It provides a practical and cost-effective solution, allowing you the time to manage your restaurant and develop your potential as a chef.

Outsourcing is a service designed to meet your specific requirements, from the daily processing and reconciliation of your accounting documentation, the weekly processing of your payroll and assisting you with the preparation of your VAT, PAYE and related returns to the preparation of more meaningful and regular management reporting.

The outsourcing of your payroll requirements to a service provider better equipped to deal with frequent staff and legislative changes provides comfort from a compliance viewpoint as well as reducing the need to regularly maintain and upgrade your payroll software.

The outsourcing of your accounting function will lead to a more controlled data-processing and reconciliation function, primarily because the procedures adopted by the service provider are likely to be better defined and in line with your requirements. This data-processing function can be carried out off-site, freeing office and IT capacity.

Outsourcing your finance function is therefore more than a sensible solution to the constant struggle to maintain your accounting and payroll records. It will provide you with the tools to monitor your restaurant's performance and the confidence to carry out the job you desire - that of chef and proprietor of your restaurant.

Paul Davey, Davey & Co I would certainly be cautious with this. I can understand that you probably went into business for yourself because you wanted to succeed in what you are good at for your own benefit and not somebody else's; and what you are good at is being your own head chef, not a book-keeper or office administrator.

The fact is, however, that you are in business - and you must accept that one of the central tenets of running any successful business is effective financial management and control.

It is extremely tempting to cast aside aspects of business which interest you the least, particularly as you grow. There is, however, no substitute for knowing exactly where your money is going - not only to whom, but at what rate relative to other suppliers in the market.

It is unlikely that you will have as firm a grip on purchasing if you allow a third party to check and enter your purchase invoices in place of doing it yourself - even if they do produce a regular analysis.

There are far too many businesses whose owners receive a surprise at the quarter, half-year or year-end point, purely because they are not on top of their own business's buying policy or purchase ledger.

I would recommend that you consider employing a part-time administration assistant or secretary. You will probably be amazed at how much this person can do to help with your current back-office tasks, as well as take on a whole raft of additional jobs - phoning suppliers, health and safety issues, staff records and rotas, customer satisfaction surveys, just to name a few.

Richard Fifield, Tenon Group
Ask yourself a few simple questions that might help you decide whether outsourcing is a realistic option.

  • Are you getting the relevant management information you need to help you run your business - weekly flash reports, occupancy levels, sales versus targets, weekly wage trends?
  • Do you use the best technology to help your business - such as integrating front-of-house software with finance systems?
  • Is your financial information delivered on time every month and, more importantly, do you know how to interpret it?
  • Can you and your team grow your restaurant unaided?
  • If you use professional stocktakers, are you happy that the margin they are calculating is in line with your accounts?

If you answer "no" to any of these, it is worth considering an outsourced solution. Outsourcing can allow you to:

  • Focus on your core business - creation of new menus, sales and marketing, customer service.
  • Have access to more resources and increased support.
  • Increase flexibility - cope with shrinkage and growth through seasonal peaks and troughs.
  • Improve processes and systems based on independent advice.
  • Make better business decisions based on accurate and timely management information.
  • Reduce costs.

Outsourcing is about delegating, not abdicating, responsibility. To gain the most benefit you need to work in partnership with your outsourcer.

Outsourcing has been proven to work for some in the same business as you, but it's not for everyone. It should be considered on its merits alongside alternatives. With all the information, you can then make an informed decision that fits your requirements.

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