Planning and monitoring the company’s finances are the only ways through which one can know that the operations are healthy and positive results have been achieved. In this regard, many entrepreneurs always ask whether this financial control should be internal or outsourced.
This is a very common question because there are several aspects that must be considered in order to make the best decision. It is necessary to compare, for example, the costs of each alternative and the benefits for the company’s financial management in the short, medium, and long term.
Want to know which is the best option between in-house and outsourced financial control? Keep reading to learn how each of these approaches works and how to make the best choice for your business.
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What is financial control?
Before learning how to compare the two alternatives, it is beneficial to understand the concept of financial control in the company’s operations. As the name suggests, it represents the set of practices aimed at planning, monitoring and evaluating the organization’s financial processes.
Thus, cash flow management , investment and compliance with financial obligations are present in financial control. In addition, the production and analysis of sector reports are relevant processes in this set of practices.
The purpose of financial control is to ensure control of information regarding the organization’s resources. Therefore, it plays an essential role in the company’s decision-making and in achieving its objectives.
How does internal financial control work?
Now that you understand what financial control is and its importance, you can begin the process of comparing alternatives. In view of this, you should know how internal and outsourced control works.
There exists internal financial control whereby the practices are implemented by the company itself. That means there is either a team or sectors which form a unit, which is assigned to planning as well as managing the company finances.
This requires that investment must be done towards training the employee as well as providing the workforce with the tools needed to effectively execute their activities. Investment on training should still be continued by the team involved.
As you can see, internal financial control involves planning and costs. After all, the sector needs to be structured and the team must stay up to date with market demands to meet the needs of the business.
How does outsourcing work?
On the other hand, your company may choose to outsource financial control. That is, instead of setting up an internal structure to execute the processes, there will be a new organization that will perform the services for your business.
This practice is called business process outsourcing (BPO). It allows you to delegate part of your financial control to organizations with expertise in the area.
Outsourcing can be an advantageous strategy for your business operations, as it reduces operating costs. This is because, instead of investing in setting up a structure and training a team, you will receive the support of a system ready to perform the services.
Outsourcing the sector also allows you to increase your company’s day-to-day productivity . For example, you can dedicate your team to more strategic activities while outsourced support carries out more operational processes — increasing the company’s efficiency.
Internal or outsourced financial control: which is the best option?
By now, you understand how internal and outsourced financial controls work. Since each of them has positive points, it is important to know how to choose the best option for your company.
Know what to consider!
Assess your business needs
Each company has its own reality and deals with unique challenges on a daily basis. Therefore, the beginning of your assessment begins with identifying the business needs. Then, analyze how financial control is currently carried out in the company and what the main bottlenecks are.
This will make the areas that need attention clearer. From this analysis, you will know the current priorities in financial control. This will make it easier to assess whether it is possible to find internal solutions or if there are BPOs that can solve the problem.
Analyze market opportunities
After identifying the company’s needs in the area of financial control, it is possible to analyze the opportunities that the market offers. After all, there are outsourced organizations that operate in the most diverse areas of management.
In this sense, it is important to highlight that you do not necessarily need to delegate all financial control to another company. If it makes sense for planning, it is possible to outsource only specific services — such as cash flow management.
Therefore, listing your company’s shortcomings will be essential for the decision-making process. Through it, you will search for the best alternatives for your case.
Compare the cost-benefit
Setting up an internal financial control structure can be advantageous for creating a work model aligned with the company’s objectives. However, as you have seen, investments are needed to ensure the work is carried out properly.
Outsourcing, however, is different. By bringing in a new partner for financial control, you will have access to a team that is already ready and has expertise in the service. Therefore, to find the best alternative, it is necessary to compare the cost-benefit of each solution.
Consider outsourcing support
Relying on a financial BPO brings advantages that go beyond providing the service. It can also offer qualified support for other tax and accounting needs of your company.
In light of this, it is important to consider all the benefits during your decision-making process. This way, you will be able to evaluate the different opportunities and limits between internal and outsourced financial control.
If you believe that outsourcing is the best alternative, it is essential to create an open and transparent channel of communication with the service provider. This way, the work will be more efficient for all parties.
As you can see, both internal and outsourced financial control offer opportunities for company management. So, now that you know how to evaluate the features, it will be easier to choose the best solution.