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How to Lead an ERP/Accounting System Implementation

In my 28+ year career, I have seen countless ERP system implementations and accounting system implementations. While some have been very successful and made a huge difference in the company, I have seen disasters. Millions of dollars spent over budget. Complete failure for the system implementation. This is one of my “hot boxes” when I hear consulting clients, coaching participants, colleagues, and companies in my network considering new systems. If you follow my steps on how to lead an ERP system selection process, then you will save thousands to millions of dollars depending on the size of your company.

The biggest disaster was with a company that did not follow any of the steps listed below. Their original budget of $8 million went to over $30 million, and if that wasn’t bad enough, they lost nearly half their revenue because of that bad system implementation.

Reasons For Selecting a New ERP System

Before I go into how to lead an ERP system selection process, let’s look at some reasons for selecting a new ERP system.  I will use the term ERP to include accounting systems as well (although they can be two different things). But they do have common challenges and I refer to them as one in this blog. There are many reasons why you may be shopping for a new system. Some reasons include:

  • Buying your first system
  • Outgrowing your current your system
  • Entering a different industry through growth or acquisition
  • Wanting better technology

There are many reasons why you may be shopping for a new system.


The system selection process and system implementation process can be very expensive – thus tying up you cash flow. Learn about other ways to improve your cash flow. 

Download the 25 Ways to Improve Cash Flow


Mistakes Made During ERP System Selection Process

Over the years, I have seen or been involved with so many different systems being implemented. While I am not an implementation expert by any means, I have been involved with enough of them that I feel very strong about the right way to implement a system. When I have seen failed system implementations, they all have many common variables. So, I came up with my list of “must haves” for a system implementation.

As a financial leader, you need to be spearheading the ERP selection process.  You want to make sure it is done right because it is well documented that a system implementation gone wrong can cost millions of dollars of over run and precious time.

11 Tips on Avoiding a Failed Implementation

Critical items that will spare you from a failed implementation:

  1. Do not set arbitrary dates for “Go Live”; be flexible
  2. A new system is NOT an I.T. project. This is a very common mistake made. Do not allow your I.T. Manager to serve as the project manager. They will have some involvement, but it must be measured.
  3. Go through a System Selection Process
  4. After you select a system, make sure the implementer blue prints your process and system, and you sign off on it
  5. Be open to changing how you operate/process; if you do not, then you will want the system to fit your process and this will cost you dearly in customization fees
  6. Have a designated Project Manager that represents your interest, not the software company’s
  7. Avoid customization; remember, you will pay up front for customization, and you will pay again when ever there is a update in version or technology because now you are stuck with a customized system
  8. Test the system, and process thoroughly in a sandbox environment; do not proceed until the system does what you want
  9. Consider running parallel old system and new systems for at least 1 or two closes
  10. Provide substantial training to your employees
  11. Be prepared to change your go live date

Go Through System Selection Process

There are many firms that do the system selection process for you. They come in and evaluate your requirements for this system. Then they narrow down the choices from dozens to a handful. This not only helps the company not get overwhelmed by the number of choices, but it also helps the company find solutions they may not have known to look for. These system selection firms are experts in this field. If you want to do it right, then hire an outside firm. It is worth every penny and will likely save you a lot of money in the future.

Assign a Project Manager for ERP Implementation

Because this is a huge undertaking, it cannot be managed by someone who a) does not represent your interest, b) is in your I.T. department, and c) does not understand your operation and processes.  This can be someone for your organization, but you might have to hire someone from the outside.

Run a Blue Print / Test Before ERP Implementation

The Blue Print designed represents your operations and process, so you must fully understand it and sign off on it.  This is part of your contract for the new system. Once you sign off on it, the burden is on you. Test your new system in a sandbox environment. This testing can also be incorporated with training your staff. Making errors in the sandbox environment will not affect your business. Errors post Go Live will affect your business.

Be Open to Change

While you are working with the system selection firm, you may not check everything off your list. While it’s tempting to just say customize it, it may be better (and less expensive) to change the way you do things to fit the system. When you customize these systems, you increase the chances of it breaking when there are updates, requiring more support, and being harder to adjust when you need it to.

By customizing your system, you are significantly increasing the cost of the implementation and future maintenance of the system. Be open to change how you do things today and try to adapt to the system.

Provide Expensive Training

Now that you have invested in the system and started the actual implementation, you need to provide extensive (and expensive) training for your team BEFORE YOU GO LIVE. The training should be on site, not remote.  They will always offer remote training because it is cheaper, but it is not the same as on site training. The last thing that you want to run into is not investing in training and no one using the system. This training will not be given in a couple hours; it will probably take weeks. Invest in it to get the greatest return on investment. Or you risk them using the system and making mistakes because they were not properly trained. I have seen way too many examples of systems implemented and little to know remote training.

Run 1 or 2 Closes Parallel

What I recommend to every client and company implementing a new system is to run 1 or 2 month end closes parallel. This will help avoid disasters by getting rid of the existing system prematurely and smooth out any kinks or breaks in the new system. I always get the same response, “this is a lot of work and will cost me more man hours”.  Yes, it will. But you will avoid a blow up in the future.


Running 2 systems for 2 months can be costly – restricting your cash flow. To find other ways to improve cash flow when leading an ERP implementation, click the button below to download our 25 Ways to Improve Cash Flow whitepaper.

Download the 25 Ways to Improve Cash Flow


Be Flexible with the “Go Live” Date

Many times, the CEO or another executive driving the investment sets an arbitrary “go live” date. I have seen many cases where a CEO wants to launch the new system January 1 and has 50 people working around the clock… That’s a sure way to create a disaster. Have a goal, but do not have a hard deadline because there will always be something you did not plan for. 

I recently spoke to a CFO of a successful company, and she was telling me about their recent new system implementation. I was ready to hear another horror story. She told me it was a great experience. They had no real big issues and stayed with in the budget and timeline. I asked her to please tell me what they did to be successful. She basically listed the items 1-11 above.  It is a coincidence that I have listed those items for years now. But it proved my point.

Implementing a new ERP system is expensive, so if you’re company isn’t cash rich, then you may need to improve cash flow in other areas of your business to keep you afloat. Download our 25 Ways to Improve Cash Flow whitepaper and start making a big impact on cash flow.

ERP Selection Process, ERP System Selection Process 

ERP Selection Process, ERP System Selection Process 

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Quotes Every Financial Leader Needs to Read

A few weeks ago, I started another series of our Financial Leadership Workshop, and in Day 1, we discuss that paradigm shift that needs to take place to go from accounting to financial leadershipSo, I compiled all the quotes from all of my curriculum that make me think… How can I lead my company differently? What can I do to better serve my clients? Take a look at following quotes every financial leader needs to read. Leave a comment below to suggest any other quotes and/or your take on the quotes I listed.

Quotes Every Financial Leader Needs to Read

While each of the following quotes is focused on a specific need or issue, I believe that every CFO, CEO, and financial leader needs to explore what each of these quotes mean.

Having a Plan

So often, entrepreneurs do not have a plan. We hear horror stories of executives telling their teams that there is no plan. Having no plan is a plan and it usually ends in disaster. Or maybe you have a plan but it is in your head and not documented.  You must get your plan down in writing.  Do you remember Captain Sullenberger landing the plane in the Hudson River on that chilly winter day? Here’s his take on having a plan.

“During every minute of the flight, I was confident I can solve the next problem. My first officer, Jeff Skiles, and I did what airline pilots do: we followed our training, and our philosophy of life. We never gave up.  Having a plan enabled us to keep our hope alive. There’s always a way out of even the toughest spot. You can survive.” – Capt. Chesley B. Sullenberger III

Role of a Leader

Do you know the role of a leader? Condoleezza Rice, former Secretary of State, said the following about a leader’s role.

“The role of a leader is to inspire people to a common goal and enable them to get there.”– Condoleezza Rice


Are you financially leading your company (or trying to)? We are starting a new series of our Financial Leadership Workshop this March 2019. Click the button below to learn more about what this coaching workshop is all about.

Learn More About the Financial Leadership Workshop


Leadership Habits

“The 8th Habit is to find your voice and inspire others to find theirs.” – Stephen R. Covey

Attraction

“The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor”– Charles Mundger

The Rest is Just Details

Our very own founder, Jim Wilkinson, had this saying that business is pretty simple… It’s all about sales! When a financial leader is able to shift their mindset from accounting to supporting sales and enabling sales to grow, then you become a whole lot more effective. Read more about this phrase here.

“It’s all about sales; the rest is just details!” – Jim Wilkinson, founder of The Strategic CFO

Budgeting

There are several budgeting quotes every financial leader needs to read.

“A well-constructed numerical estimate is worth a thousand words.”  – Charles Schultze, former Director of the US Bureau of Budget

Budgeting is the bane of corporate America.”  – Jack Welch, former CEO of GE

“Without a yardstick, there is no measurement And without measurement, there is no control.”  – Pravin Shah

The Hedgehog concept – created by Jim Collins – is when companies identify what they do best and focus on that. For example, a hedgehog knows how to defend itself. That’s what it does best! It does not try to expend time or energy hiding or fighting.

“The purpose of budgeting in a good-to-great company is not to decide how much each activity gets, but to decide which areas fit the hedgehog concept and should be full funded and which should not be funded at all.” – Jim Collins

“The only things that saves us from the bureaucracy is its inefficiency.” – Eugene McCarthy, US Senator

Problem Solving

Equip yourself with multiple tools, and more specifically, the right tool.

“If the only tool you have is a hammer, then every problem looks like a nail!” – Abraham Maslow

My Own Quotes

Here are two of my own quotes I use with entrepreneurs and coaching participants over the years:

“I do not believe in sacred cows.”

Working capital is like your diet; if you do not manage it, then it can kill you.”

What other quotes have changed the way you lead your company? Leave them in the comments below. Also, click to access our 7 Habits of Highly Effective CFOs – this is everything CEOs have told us what they want from their CFO.

quotes every financial leader needs to read

Quotes Every Financial Leader Needs to Read

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The Importance of Using GAAP Financial Statements

Use GAAP Financials, Using GAAP Financial Statements, GAAP Financial StatementsI have written about this in the past, yet it is an ongoing subject that we deal with business owners day after day. A client recently asked me why we (The Strategic CFO) were insisting on generating the clients financial statements on an accrual basis and per GAAP. He insisted that cash basis was fine and that we were just creating a lot of busy work. He also stated that he did not care or need the balance sheet, just the income statement. Today, we’re talking about the importance of using GAAP financial statements.

GAAP Financial Statements

Our firm did not invent GAAP financial statements. GAAP means Generally Accepted Accounting Principles. These principles have evolved over time as we get smarter and more advanced. The main principle behind GAAP financials is to generate a set of financial statements that represent the most accurate picture about your company. They should be comparable, not misleading and clear so a third party can understand. So the uniform application of GAAP to business transactions would most clearly represent a true picture of your business.

The Importance of Using GAAP Financial Statements

There are several reasons companies should be using GAAP financial statements. First, public companies and certain loan documents require GAAP financial statements. We recommend that all private businesses also use GAAP financials as a best practice so you can have the best information to run your business. By not having your financial statements per GAAP (which uses accrual based accounting), you are basically 60-90 days behind your business.

Use GAAP Financials, Using GAAP Financial Statements, GAAP Financial Statements

Running Behind Your Business without GAAP

Let’s look at an example of a manufacturing facility. Someone in the manufacturing facility orders $50,000 worth of raw material, but you have not yet received an invoice from the vendor. The vendor takes 30 days to generate an invoice because they have an inefficient accounting department. The invoice gets mailed, taking 1 week to get to you. Your staff person got the mail and did not enter the invoice in the system for a week. Then because you did not review your aged payables until the end of the month, you are likely to be 60 days behind your business. You will not have the liability section reflecting the payable for this example until much later. That means your balance sheet is not accurate. Plus, you ay not have that payable in your cash forecast for payment.

This example is one transaction, but it adds up when you consider all the transactions in your business. You will be 60 to 90 days behind your business by not keeping your books on accrual basis.


Don’t let something as simple as not having your financial statements per GAAP take value from you! Learn about 10 other destroyers that could be taking value away from your company.

Download the Top 10 Destroyers of Value


Accurate Reports on Your Business

As a business leader, you want the most accurate reports on your business on a timely basis so you can make business decisions.  Your income statement, balance sheet, and statement of cash flow paints the picture of the recent historical performance of your business. You need to monitor the trends so that you can make business decisions timely.

Critical for Growth

We see it over and over again… A good business is mismanaged because the CEO or entrepreneur does not want to spend the money or take the time to understand his financials or keep them per GAAP. Eventually, they are upside down on working capital and run out of cash. This is especially true in a high growth environment.

Reasons for Using GAAP Financial Statements

If you have a small business of 3 employees with one legal entity and have sales of $800,000 per year with no plans for growth, no debt, no outside investors, then you can certainly keep your books on cash basis and ignore GAAP.  But if you grew beyond that and have a substantial business that you want to grow, or you have debt, our outside investors, then you seriously need to consider keeping your books and records on an accrual basis and per GAAP. In short, why should you keep your books and records on an accrual basis and per GAAP.

  • Working Capital – Not having them per GAAP can lead to operational disaster
  • Outside Investors and Lenders will require them
  • Growth – If you are beyond a mom and pop shop, then these financials will be your key tool for growth
  • Value – From a valuation standpoint, GAAP financials add value

Why Use GAAP Financials

So to answer the question we started this blog with why use GAAP financials? First, using these principles allow your business to be presented correctly to third parties. Then, you need accrual based financials to properly run your business. Otherwise, you are 60-90 days behind running your business. It may be required by your lender. Having your books kept per GAAP actually adds value to your business from a valuation perspective. While you are working on adding value, make sure there aren’t “destroyers” taking value from you. Download our Top 10 Destroyers of Value whitepaper and protect your company’s value.

Use GAAP Financials, Using GAAP Financial Statements, GAAP Financial Statements

Use GAAP Financials, Using GAAP Financial Statements, GAAP Financial Statements

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Transform Your Accounting Department By Outsourcing

Many businesses owners and CEOs come to us because they are experiencing frustration with their business’s bookkeeping and accounting. Whether they have severe inefficiencies in their systems and processes, have continuous cash flow issues, or that they’ve been a victim of fraud… Each one negatively impacts the success of their business. They find themselves being tethered to closely managing their bookkeeping and accounting back office. As a result, this prevents them from dedicating their time and energy to leading and growing their business. If this sounds like you, then it’s time to transform your accounting department by outsourcing your bookkeeping and accounting to an outsourced full-service accounting department.

Past Bookkeeping and Accounting Options

In the past, the only bookkeeping and accounting options for business owners were one of the following:

  • To handle the back office themselves or with a part-time in-house hire.
  • Ask their CPA that files their taxes to help with daily bookkeeping functions.
  • Try building an in-house accounting department, hiring one or more full-time employees to manage the back office

But thanks to recent technologies, like cloud-based software and platforms, small businesses now have a better option when it comes to managing the back office.

So, how does outsourced bookkeeping and accounting compare to having in-house staff? What are the challenges and benefits, and how do you choose the right partner?


Click here to download: The Guide to Outsourcing Your Bookkeeping & Accounting for SMBs


Compare In-House vs Outsourced Bookkeeping and Accounting

Building an in-house accounting department brings many challenges. Likely, it will not yield the results expected or desired in order for the business to grow.

The costs of having in-house staff is a major concern, not just with salaries, but also the costs of overhead, IT, and employee turnover. Other hidden costs that inevitably begin to surface, such as:

  • Bookkeeping mistakes
  • Continued education
  • Unfortunate costs and risks of fraud

Businesses with internal back offices also do not typically have back up plans to cover/replace employees in the event of illness, vacation, or employee loss.

Outsourcing your back office with a fractional share of a full-service accounting department provides many of the same benefits and functions of having in-house staff. But it’s a fraction of the cost.

By outsourcing your bookkeeping and accounting functions, you will see a return on investment in the form of streamlined operations and risk mitigation. Relying on a purely compliance oriented back office will not help your business grow.

Outsourcing to the right partner will help your business gain a competitive edge with optimized systems, improvements in your cash flow, increased profits, and the ability to have management reporting delivering actionable financial intelligence for making data-driven business decisions.

How to Recognize When Your Business is Ready to Outsource

Outsourcing will bolster your business’s back office at an affordable price. Many business owners and CEOs do not know when the time is right. The following are common signs that it is time for you to consider outsourcing:

  • Vision and goals are delayed because you spend more time functioning as a bookkeeper than you do as CEO
  • Back office has no separation of duties, exposing your business to risk
  • No contingency plan for the loss of your in-house bookkeeper
  • Financial reports are geared toward compliance and tax compliance, but not managing your business
  • Base business decisions on gut feelings, rather than data
  • Business is growing
  • Cash flow concerns

Your business can begin outsourcing some or all of its back office functions at any time or size. A strong outsourced accounting partner will work with you to provide the services you need at the right time. In addition, it will set your back office processes up in the beginning to accommodate growth in the future.

Best Time to Outsource Your Back Office Function

You can transfer your bookkeeping and accounting functions from in-house to outsourced whenever you are ready.

Many businesses think that it would be better to begin outsourcing at quarter-end or after this year’s taxes have been filed. Waiting for these timelines, however, just delays receiving priceless data, saved money, and extra time that comes from having a smart back office that combines the tools, technology, and expertise necessary for a solid financial foundation.

Common Outsourcing Pitfalls to Avoid

If you decide outsourcing some or all of your back office functions is right for your business, then careful discern who you want to partner with.

Outsourcing your bookkeeping and accounting can do wonders for your business and its future. Choosing the wrong provider can be costly. Be on the look-out for the following when selecting services.

Hidden Costs

Be very clear about your expectations of service. Ask questions about what your scope of service includes up-front to avoid unexpected costs appearing on your invoice.

Availability

Consider how much involvement you want to have with your bookkeeping and accounting. Be sure you choose a provider and service level that will include enough availability to meet your needs. While some will only communicate on a weekly basis, on a different plan, other providers will be available whenever you call.

Small Firms

Although a small firm might be full of amazing individuals, they might not have a plan if someone quits or goes on vacation. Ask your potential Client Accounting Services (CAS) providers how many team members will be dedicated to your account and what will happen in the event someone leaves their firm.

Offshore Firms

These CAS providers often come at a much lower price, but they also have many drawbacks. They often operate in different time zones than your business, making their availability difficult. Communication, skill sets, expertise and processes can be a challenge when being serviced by firms in other countries.

Transform Your Accounting Department By Outsourcing

There are scalable solutions that grow with your business. With a highly personalized touch, GrowthForce dedicates an entire 3-person team to each of its clients. We offer a range of outsourced bookkeeping and accounting service options designed to grow with your business, as its back office needs expand and change with growth.

With the right outsourced bookkeeping and accounting partner, you can transform your standard back office (performing housekeeping duties) into a solid financial foundation for your business (providing actionable data and management accounting to grow your business).

If you would like to learn more about the process and reasons to outsource your back office’s bookkeeping and accounting functions, we encourage you to speak with a GrowthForce specialist today or take a look at our latest resource, The Guide to Outsourcing Your Bookkeeping and Accounting.

Transform Your Accounting Department By Outsourcing


Stephen King is a guest blogger at The Strategic CFO. He is the President and CEO of GrowthForce – an outsourced bookkeeping firm based in Houston, TX.


Transform Your Accounting Department By Outsourcing

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Becoming a Smart CEO

While larger companies typically employ an in-house CFO to measure and manage the organization’s financial risk as well as financial planning and allocation, most small businesses do not share the same luxuries. As a result, many growing businesses choose to outsource their financial processes such as bookkeeping, billing, and financial reporting. The CEO then becomes is the company’s only financial leaderWithout having a CFO on staff, the CEO makes major financial decisions. They are also responsible for reporting, growth, and business strategy. Becoming a smart CEO starts with becoming a financial leader.

Becoming a Smart CEO: Learn From 4 Types of CFOs

By looking at the 4 types of CFOs (once outlined by McKinsey & Company), we will narrow down how CEOs can adopt traits from each CFO to becoming a smart CEO.


Download The CEO's Guide to Keeping Score


The 4 Types of CFOs

There are 4 types of CFOs that CEOs need to know about.

1. The Numbers Expert

The numbers expert type of CFO traditionally has experience with multiple positions within the finance department, including controllership, treasury, auditing, and financial planning. They are usually an internal hire. Because of this, they tend to hold a great understanding of the inner workings of the company.

2. The Strategist

The strategist is a CFO that a company usually hires from outside of the finance department. They typically have experience working in other verticals, such as operations, marketing, and general management. These folks focus on tightly run operations and the allocation of business resources. They also often have a major influence on their colleagues regarding major business decisions.

3. The KPI Advocate

The KPI advocate type of CFO love their scorecards. Many are hired from outside of the organization because they provide a non-biased look at performance metrics, cost reports, and standardized data. To them, everything is measurable. They often have a strong focus on meeting or exceeding established goals.

4. The Growth and Development Wizard

Although the least common among CFOs, the growth and development wizard type is becoming more popular. Growth and development wizards are usually hired externally. They generally have years of experience in mergers, acquisitions, private equity, and venture capitalism. They keep their eye on the prize of expanding the current business operations of the company.

The Smart CEO

Just because there are four established types of CFOs doesn’t mean that every CFO fits into one singular category. Consider the same for CEOs who operate without an on-staff CFO.

A smart CEO will embody multiple attributes of each type of CFO. With the help of their outsourced financial services firm, a smart CEO will pay close attention to bookkeeping and financial management while using KPIs and reports to make data-driven decisions and build better business strategies.

Smart CEOs then use their existing financial data to identify opportunities for growth and can start to make plans for expansion, product line extensions, partnerships, or even mergers and acquisitions.

Becoming a Smart CEO


Stephen King, President and CEO at GrowthForce, is a guest blogger at The Strategic CFO. Interested in outsourcing your accounting and bookkeeping? Learn how GrowthForce can help.


Becoming a Smart CEO

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Burned by Outsourcing Accounting

Making the decision to enlist an outside company to handle any portion of your business is a big choice, and you should not take it lightly. With the right outsourced professionals, your business stands to improve leaps and bounds. However, we have heard so many stories of companies being burned by outsourcing accounting and bookkeeping. If you select the wrong outsourced service provider, you risk causing irreversible damage to your company with things like:

  • Inefficient and unorganized systems
  • Poor communication
  • Lowered standards
  • Unhappy customers

So, before you select an outsourcing company, be sure you understand their strengths, expertise and service model, and the types of pitfalls to avoid. When you select the right company to partner with, your business will work smarter, your systems will improve. You and your employees will have more time and resources to dedicate to your company’s primary functions. Then, your business will flourish.

4 Common Mistakes to Avoid Being Burned by Outsourcing Accounting

Like almost any choice you make in business, outsourcing your company’s bookkeeping, accounting, controller and/or CFO has both pros and cons. While outsourcing frees up your time, saves company dollars on benefits and payroll, secures an unbiased perspective on business finances, and can potentially increase profitability, choosing the wrong company outsourcing can be detrimental to your business. Before you decide to partner with an outsourcing company, take precautions to avoid the following 2 things:

  • Being burned by outsourced accounting
  • Running into these all-too-common problems with outsourced accounting and bookkeeping services

1. Inefficiency

We often have new clients approach us because, in spite of having a complete outsourced accounting department, their businesses continues to run into cash flow issues. When our representatives look into their back office practices, we find extreme inefficiencies. When evaluating the bookkeeping practices established by other outsourced providers, we have seen everything including the following:

Facing these types of concerns, companies have no chance of leveraging the numbers reported by their back offices for strategic planning, cash flow improvement, or revenue generation. They also face audits and paying potential fees and penalties due to non-compliance and tax errors. In these cases, extremely inefficient outsourced bookkeeping severely curtail the potential for business growth.

2. Hidden Costs or Prices Which Seem Too Low to Be True

Many outsourced services advertise prices way below average. They collect the true value of their services in additional fees and hidden costs. In the end, clients are not happily surprised when the bill arrives. Outsourcing providers will also sometimes charge well below average. They will consequently deliver well below average quality service with copious mistakes and a disregard for timeliness. It is also a good idea to be wary of rigid, all-or-nothing service options. Most reputable companies offer a range of flexible, customizable service plans.

A truly professional bookkeeping provider will openly disclose the cost of service, additional fees for add-ons, and offer clients a range of pricing and subscription options.

3. Lack of Communication, Expertise, and Professionalism

We group these outsourcing concerns together because they often occur together. Below-average outsourced accounting and bookkeeping providers hire self-taught bookkeepers. They often do not keep enough employees on staff to provide consistent service in the event of an employee’s illness, vacation, or decision to leave their company. In addition, businesses working with outsourcing companies located overseas might also face a breakdown in communication due to cultural differences and time zones. All of these concerns can lead to a lack of communication, expertise, and professionalism.

These providers often operate without a written set of policies or established procedures for their own business operations, nor do they apply these sorts of high standards to their clients’ operations. A low quality outsourcing provider leads to the following:

  • Inaccurate work
  • Non-compliance
  • Regulatory concerns
  • Communication issues
  • A lack of transparency

4. Threats to Your Company’s Confidentiality and/or Security

Poorly run, mismanaged outsourcing service providers can also pose a threat to the security and confidentiality of their clients’ personal or proprietary information. Outsourced accounting providers receive lots of confidential information pertaining to their clients’ employees and businesses. Whether an outsourcing provider has a poor vetting process for bringing in new hires or lacks information technology security, these oversights put their clients’ confidential information at risk.


Click here to download: The Guide to Outsourcing Your Bookkeeping & Accounting for SMBs


Top 3 Outsourcing Best Practices

If you conduct some research on professional outsourced bookkeeping companies, then you can avoid many of the problems faced when partnered with undesirable outsourcing providers.

1. Understand Your Scope of Services

Before signing the dotted line to a particular deal, understand every aspect of your contract. Understand which services they include, what might cost extra, and how flexible you are to downgrade, upgrade, or otherwise modify your level of service before your contract has ended. Be sure to ask questions so you completed understand the process, policies, and procedures involved.

2. Find Out about Industry Experience

Your back office has the power to drive your business to success or failure. As a result, it is extremely important to ask about industry experience when looking to outsource your company’s bookkeeping, accounting, controller and, maybe even, CFO functions. You should choose a company that understands the ins, outs, and intricacies of your business’s industry. You would be best partnered with an outsourcing company that has employees with plenty of experience working with other clients in your industry.

3. Ask about the Team and Technology

Consistency and efficiency of service are essential to choosing a strong outsourced accounting company. Before making your decision, find out how many people they have on their team. Then, find out how many members will be dedicated to your account. You should also ask about their policies, procedures and contingency plans for employee loss.

In addition, ask them what technologies they offer to improve efficiency, accuracy, and compliance in your financial department. Find out what type of technology support they provide. And learn how they will help you streamline your financial department’s software integration to best partner with them and grow your business.

When it comes to outsourced accounting services, your company should get everything it needs from the company you choose. Look for a company who provides the experienced team and robust technology your business needs for an efficient, smart, and strategic back office. It should not only accurately records your financial history, but it should also leverage the information to accelerate your company’s growth well into the future.

GrowthForce: Outsourced Accounting & Bookkeeping Services

“The GrowthForce methodology and management accounting practices, combined with the fact that you understood my needs for the business, established the P & L the way that I needed to have it set up to run the business, was very beneficial to me. We were profitable the first month, and I knew it because my accounts and books were clean and I could understand where the money was coming from and going to.”

~ President, JTAM Engineering

GrowthForce is one of the original U.S. based outsourced bookkeeping and accounting leaders in the industry! Tap into over 20 years of expert bookkeeping and accounting experience.

To learn more about how our reliable and professional teams can assist you with our online accounting services, get the Guide to Outsourcing Your Bookkeeping and Accounting. Avoid being burned by outsourcing accounting again!

Burned by Outsourcing Accounting


Stephen King is a guest blogger at The Strategic CFO. He is the President and CEO of GrowthForce – an outsourced bookkeeping firm based in Houston, TX.


Burned by Outsourcing Accounting

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Why You Need to Have a 13-Week Cash Flow Report

Why You Need to Have a 13-Week Cash Flow ReportHave you ever been in a cash flow crisis? You aren’t able to make payroll. You can’t pay your vendors. There is simply not enough cash. BUT sales are rocketing. So in theory, there should be enough cash. Wrong. I say this during every Office Hours I host for our SCFO Lab members… “You need to have a 13-Week Cash Flow Report. If you don’t have one, get one.” As we are quickly coming into the holidays and the new year, let’s look at why you need to have a 13-Week Cash Flow Report.

Or, do you live in a company that is cash rich, and you simply do not see the need to forecast cash because you know you have plenty in the bank?  Well, you still need a cash flow forecast.

Handling a Cash Flow Crisis?

Handling a cash flow crisis is never easy because it puts financial leaders in a difficult place. It may look like asking vendors to extend their payment terms, selling off assets, or laying off employees. Whether your cash flow crisis resulted from the fluctuating market or mismanagement, there are a couple of tips in handling a cash flow crisis.

(NOTE: Regardless of whether cash is tight or flush, every company should have a 13-Week Cash Flow Report.)


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Update Financials & Reports

Look at your financial statements regularly, and make sure they are updated – especially your Statement of Cash Flows, 13-Week Cash Flow Forecast, and Daily Cash Report. You cannot make smart and strategic decisions without the most up-to-date facts.  Having an updated cash flow forecast for your business that is updated weekly allows you to have a true pulse on the business. Your accounting records should be based on accrual based accounting.  But your cash flow forecast ties in nicely as a great tool.

Communicate Effectively

Communication is key to handling a cash flow crisis. Talk to your vendors about extending the payment schedule. Communicate with your banker that you don’t think you will meet your bank covenants. Coach your sales people to collect all outstanding sales.

Why You Need to Have a 13-Week Cash Flow Report

The #1 reason why you need to have a 13-Week Cash Flow Report is because it’s active cash management. This report is a big picture tool that tells companies how much cash is required on a forward rolling basis. More specifically, it gives you the freedom to make big decisions.

Cash Rich or Cash Poor – You Need a Cash Flow Forecast

So, we briefly discussed that in a cash flow crisis the cash flow forecast allows you to manage cash and adjust payments to vendors while making payroll and keeping the lights on. What about in a cash rich company?

I recently started on a client, and the company is a cash rich company. The CFO was surprised when I mentioned to him that he should have a cash flow forecast. Here are a few reasons why a cash rich company would want to know exactly how rich they are:

  1. If you are cash rich, then you may be looking at acquisitions. It would be nice to know who much you pay as cash and how much you finance.
  2. CAPEX acquisitions – you want to know how much actual cash you have to acquire CAPEX.
  3. Distributions/Bonuses, etc. – how much can you pay out?
  4. Plan for the worst –  I do not care what industry what you are in; they all eventually have downturns. Plan ahead and save up for those rainy days.
  5. If you are cash rich, then that means you made a large profit. That also means you have to probably pay taxes, or distribute cash to pay taxes. How much cash for taxes do you need?

How to Create a 13-Week Cash Flow Report

Now, let’s look at how to create a 13-Week Cash Flow Report.

There are several pieces of information that you need to gather as you build this report, including the following:

Why You Need to Have a 13-Week Cash Flow ReportTips on Making Your Cash Flow Report Successful

Here are a couple of tips on making your cash flow report successful.

Get C-Level Support

If your C-level is not supportive of creating the 13-Week Cash Flow Report or using it as they run the business, then it’s just going to be another report that never gets used. Don’t let it become that! This tool is so valuable AND every company should be using one. Not using a 13-Week Cash Flow Forecast is like deciding not to drink water for an extended time. You know you need to water/cash, but you do nothing about it. Eventually, you become so illiquid that you are financially distressed, if not bankrupt.

For example, we once put together a 13-Week Cash Flow Forecast for a company that was making a small percentage of what they used to make when the market was better. We predicted that if they did not take any action, then they would be out of cash within 9 months. Unfortunately, the CEO and senior leadership did not make any changes and had to shut their doors. Our long term cash flow forecast was accurate and we warned the CEO.

Use The Report As A Playbook

The report is useless unless you actually use it as a playbook and use it to make strategic decisions. When you use the report as a playbook, you go from being an accounting/finance professional that knows how to build reports to a financial leader that strategically directs the firm.

How to Use a 13-Week Cash Flow Report

Once you have created the 13-Week Cash Flow Forecast, it’s important to maintain it. We suggest to maintain and update it at least weekly. We also suggest that you use this report in conjunction with the Daily Cash Report.

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Why You Need to Have a 13-Week Cash Flow Report

Strategic CFO Lab Member Extra

Access your Cash Flow Tuneup Execution Plan in SCFO Lab. This tool enables you to quantify the cash unlocked in your company.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Why You Need to Have a 13-Week Cash Flow Report

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