When people ask what NPS does, I say, “We’re the guys in accounting. All those activities that end in the phrase ‘walk it over to the number crunchers’—that’s us.” We’re an outsourced Accounting Department, from bookkeeper to controller to CFO.
Outsourcing is a buzzword that has generated business and media attention for decades. You’ve heard about Fortune 500 companies moving call centers or accounts payable or software development to India or the Philippines or China. They use outsourcing to transfer responsibility for an internal business function to an external service provider.
Cost savings typically gets cited as the driving reason behind these changes. While I’m all for using your cash wisely, it’s important to know that outsourcing frequently offers operational and strategic benefits that extend beyond the bottom line.
To Outsource or Not to Outsource—Answer These Questions
How can you tell if this is a good time for you to use outsourcing? Your answers to these four questions will guide you.
1. Is this a non-core but essential business function? Accounting, IT and logistics are a few examples of work that must get done in any business. But they’re not central to how most companies make money. At NPS, accounting and bookkeeping are basic to our operations—but we outsource IT and marketing. If you’re looking at something that’s critical to your operations, but ancillary to what you sell or make, check the YES box.
2. Is the non-core getting in the way of the core? Are you spending too much of something—time, money or energy—worrying about something that is not central to what puts dollars in the bank? And it might not just be you. Here’s something we often encounter. Harried office managers are handling bookkeeping— simply because they are organized people and drew the short straw when work assignments were given out. Are you spending too much time on activities outside of your job description? Are others who report to you? Then check the YES box.
3. Has someone already built a better mousetrap? Outsourcers are experts in their field. They are more experienced, up-to-date and efficient with their service or product than you will ever be. That’s because what’s non-core to you is their business. My IT guy knows more about computers than I ever will. Thank goodness! If an outside resource can handle the workload better than you and your staff can, check the YES box.
4. Can I save money? Often a third party can do the work cheaper and better than you can. For example, when the accounting manager for one of our clients resigned, we replaced this full-time person (salary + benefits) at about half the cost. If you see an opportunity reduce your costs, check the YES box.
If you answered all four questions with YES, then you should have outsourced that business function long ago. What are you waiting for? If you answered at least one of the questions with YES, then it’s time to start talking about outsourcing that job.
And If your list includes billing, collections, payables or any other activity related to keeping track of your money and improving cash flow, I hope you’ll contact us.
Wishing you lots of positive cash flow.
What Can I Learn Today to Improve Our Financial Performance?
You can hear when an engine is running smoothly—or racing or sputtering. The same is true for the financial drivers of your business.
You just need to know what to listen for. The good news is that your numbers are talking all the time!
Here are the best ideas we can find on how to ask your business for the information you need, to understand what it says, and take action on what you learn.