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Reposition Your Accountants to Revenue Generating Positions

A concern we often hear from CEOs when transitioning to outsourced accounting services is that although they’ve outgrown their current in-house bookkeeper, but they don’t want to fire them. This employee may be hard working, knowledgeable about the business, and add value to the company. How might their role adapt when switching your bookkeeping or accounting to an outsourced service provider? Simply, reposition your accountants to revenue generating positions or value-adding positions.

Reposition Your Accountants to Revenue Generating Positions

So, how do you reposition your accountants to revenue generating positions? You could have your bookkeeper continue to handle certain accounting functions in-house. Or if you transition completely to a virtual accounting department, then the outsourced service team will still need a liaison. Either way, your in-house bookkeeper could continue to have some of the same responsibilities, but it will allow them to have an opportunity to use their knowledge and time to contribute more effectively to profit generating activities.

Reevaluated Responsibilities

The best thing you can do for your bookkeeper (and for the business) is to reevaluate their responsibilities and give them the opportunity to grow their skills and interest. If you value your staff as important resources in your company, listening to their training needs, career goals and ideas for your business will allow them to feel like the transition is not a threat to their job.

Train Accountants to be Profit-Producing Assets

If your employee becomes a profit-producing asset, then it will help increase productivity and profitability. They know your business well. If you put them into an income generating role, then they will feel encouraged with how they are contributing to the success of the company.


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Examples of Repositioning Accountants to Revenue Generating Positions

Below are two short stories of clients that were able to reposition their bookkeeping employee to their profit center after transitioning to outsourced accounting services…

Office Manager to Revenue Generating Position

This first client example is about an office manager, Greta. She was with the company since it was founded. Greta didn’t have an accounting degree but was doing the bookkeeping and office management. She was really doing a bit of everything – bookkeeping, HR, managing the office… Management realized that the company was outgrowing her bookkeeping skills.

Greta knew all the clients and knew about all of the services they provided since she did the bookkeeping and the invoicing. She would also call the clients to do collections. As a result, she was aware of what services people were happy with and what they were not happy with.

Greta has been there from the very beginning and is very knowledgeable about the company. The CEO wanted to grow the business but needed help, and decided to transition to outsourced accounting services. The CEO asked Greta if she would help with the proposals. She was thrilled about the idea. It turned out that because of all of her domain knowledge, she became exceptional at being a proposal writer. Greta knew all the clients and all the services. Since she was already helping with the proposals and doing the billing from those proposals, she also understood the process. Greta now feels more engaged getting involved in the sales process and is glad to be in an revenue generating position.

Bookkeeper to Revenue Generating Position

This next client example is about a bookkeeper, Lisa. Lisa was doing all of the bookkeeping tasks. Lisa also helped with HR, IT, and office management. She actually hated doing the bookkeeping and accounting tasks, but she was a good employee and very knowledgeable about the company and services. The company had decided to transition to outsourced bookkeeping and accounting but didn’t want to fire Lisa. So they decided to reposition her into a business development position.

Lisa was now in charge of networking, going to the Chamber of Commerce events, and working their booth at trade shows. She also visits with clients and makes client calls and because she’s been with the company so long. In the end, she’s as comfortable talking about the company as the CEO is.

Preventing Employee Turnover by Changing Roles

Repositioning a valuable employee into a role that can be profitable and productive, contributes to the growth and success of the organization.

A goal for management should be preventing the negative implications and financial impacts of turnover. You want to keep your valuable employees, but you also want to be sure you are getting what you need from your bookkeeping and accounting financial operations.

Many businesses transition to outsourced accounting services as a more cost-effective, efficient, and viable alternative to in-house accounting. The cost of outsourcing your bookkeeping and accounting makes it easier to budget and helps remove the burden of hiring, managing, and training accounting staff.

Benefits of Outsourcing Bookkeeping and Accounting

Benefits of outsourcing bookkeeping and accounting for small businesses include the following:

Valuable employees are an asset to your business. If you are ready to switch to outsourcing, but want to keep your bookkeeper as an employee, then consider repositioning them. You can outsource all or portions of their job and have them spend their time on revenue generating activities.

Reposition Your Accountants to Revenue Generating Positions


Stephen King is the President and CEO of Growthforce, an outsourced bookkeeping firm.


Reposition Your Accountants to Revenue Generating Positions

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5 Ways a CFO Adds Value

ways a CFO adds valueCheck out the following 5 ways a CFO adds value and how they can take their role to the next level – gaining more respect, increasing salary, etc.

Ways a CFO Adds Value

1.  The CFO Enables the Company to Grow Faster

CFO responsibilities include the following:

  • Formulating and implementing financial strategies
  • Managing the company’s financial departments
  • Ensuring that the company is in compliance with industry and legal standards

An effective CFO analyzes the company’s current financial position and market trends. Furthermore, this enhances financial strategies and improve cash flow and profits, while still keeping a lid on costs. This also enables the company to grow faster and more resourcefully.

2.  The CFO can Improve Company Profitability

Controlling costs, improving productivity, and analyzing and suggesting pricing strategies are three ways the CFO can impact the bottom line. Through oversight and management of the financial departments, the CFO has access to past and current financial reports. Access to this information gives the CFO ability to evaluate how the company can control costs in order to maximize profits. The CFO should also evaluate the productivity of employees in different departments. Then determine if there are any patterns of bottlenecks or slow-downs in operations. The financial reports will then enable the CFO to analyze net income from sales revenues and operational expenses. Then he or she can recommend optimal pricing strategies for the company’s products or services.

3.  The CFO can Improve Cash Flow

By managing the cash conversion cycle, the CFO can help the company improve collections, pricing, and terms resulting in increased liquidity. Cash flow projections prepared by the CFO provide a means for management of the lifeblood of the company – cash.

4.  The CFO has the Ability to Obtain Increased Leverage from Banks

Banks want to see in-house financial expertise. An effective CFO will enhance the financial know-how and of the company when working with banks. In smaller companies, the CEO usually handles bank relationships. In larger companies with different departments and extensive operations, a financial team led by a CFO is necessary to handle company finances and communicate with banks in financial language. An effective CFO knows that maintaining open lines of communication with their banker will enable the company to better access the funds needed for growth.

5.  The CFO Provides Leadership and Direction Throughout the Company

The CEO looks to the CFO to be a sounding board for new ideas, present and sell the financial picture to others and “peek around corners”. An effective CFO can also bring financial insight to sales and operations departments who often distance themselves from company finances or financial strategies. If both sales and operations work together with the CFO to maximize profits by increasing cash flow and minimizing costs, the entire company will become more successful.

If you want more tips on how to improve cash flow, then click here to access our 25 Ways to Improve Cash Flow whitepaper.

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EBITDA Valuation

See Also:
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Calculate EBITDA
Adjusted EBITDA

EBITDA Valuation Method

There are multitudes of ways to value a company, as well as specific equity and debt claims on a company’s assets. One is the EBITDA valuation method, which relies on a multiple of EBITDA to arrive at a company’s enterprise value.

The definition of enterprise value is the total value of a firm’s equity and debt. It can also be thought of as the total market value of a company’s expected cash flow stream. A company’s EBITDA is a measure of that stream. Furthermore, EBITDA is a company’s net income with tax, interest, depreciation, and amortization expenses added back. It is not an exact measure of a company’s cash flow, but it is one which has gained wide acceptance in the banking and investment communities.

Use the following enterprise valuation formula:

Enterprise Value = Multiple * EBITDA

where EBITDA is typically projected for the next twelve months. Sometimes, the amount used is the actual EBITDA of the company over the last twelve months. Label it as “LTM EBITDA.”

EBITDA Valuation Multiple

Base the multiple on comparable actual sales transactions occurred recently in the company’s industry. Often, one will use the derived multiples of publicly traded companies in the industry in addition to or in lieu of actual transactions.

Also, while you may use a single value for the EBITDA multiple, you often get a range. This range is based on the distribution of comparable multiples, with abnormally high or low multiples excluded so as to provide a useful range for the end user of the valuation.

Valuing Equity Using the EBITDA Valuation Method

Use the EBITDA valuation method to value a company’s total equity. After arriving at the company’s enterprise value using the formula described above, subtract the net debt of a company to determine the value of the equity claim on the firm’s total cash flow. Methods used to directly value equity adjust the firm’s cash flow to yield the cash flow available to shareholders. This is also known as “Free Cash Flow to Equity.”

Use the following formula to value equity using the EBITDA valuation method:

Equity Value = Enterprise Value – Total Debt – Cash and Cash Equivalents

Problems with the EBITDA Valuation Method to Value Equity

The primary problem is that this method relies on EBITDA as a measure of a firm’s cash flow, ignoring other significant factors which can impact a company’s cash flow, such as changes in working capital and capital expenditures. If you’re looking to sell your company in the near future, download the free Top 10 Destroyers of Value whitepaper to learn how to maximize your value.

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Strategic CFO Lab Member Extra

Access your Exit Strategy Checklist Execution Plan in SCFO Lab. The step-by-step plan to get the most value out of your company when you sell.

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

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LEARN THE ART OF THE CFO