For small firms, outsourcing financial management may be a requirement. Tight resources often mean the inability to hire personnel or develop financial management platforms in-house.
High-growth, middle-market firms, though, have a choice. Mid-market companies, with revenues of between $10 million and $500 million, may have the bandwidth to bring accountants and controllers on board, and may very well initiate projects to develop proprietary financial management platforms of their own.
According to Scott Tynes, chief executive officer at Consero, middle-market firms are often concerned that outsourcing may lead to problems, like service providers failing to pay enough attention to a single client or to understand that client’s unique needs. But those concerns are misplaced, Tynes told PYMNTS in a recent interview.
“The bigger skillset we see missing is the transformational skillset,” he said. The professionals with this skillset are what he calls the “builders,” and aren’t often found on existing financial management teams.
While internal accountants and controllers are certainly capable of closing the monthly books, these professionals fall behind in the ability to transform the enterprise and align their firms with the evolving corporate finance landscape. As technologies like artificial intelligence (AI) and machine learning (ML) come into the fold of cash management, middle-market companies should be asking themselves a different question about outsourced services and personnel.
“Whether they are dedicated or not isn’t the challenge,” Tynes said. “The challenge is: Do they have the right skillset to transform the finance function?”
Plus, he added, developing internal infrastructure is often more time-consuming and expensive than outsourced offerings. By the time a company has created a proprietary accounting platform, newer technologies may have impacted the market with which internal staff are unfamiliar.
“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,” he said.