How can charities benefit from outsourcing their finance team?
Discover how outsourcing your charity’s finance function can deliver expert support, improve efficiency, and free up vital resources, helping your organisation thrive in a challenging sector.
Charities today face a range of financial challenges. These include the need to comply with increasingly stringent compliance and governance standards, as well as the ongoing difficulties of securing funding and accessing capital. In this environment, accurate and timely financial reporting plays a crucial role. Such reporting is essential for trustees and management teams, enabling them to fulfil their roles effectively while steering their organisations through the ever-changing landscape of the Charity and Not for Profit (NFP) sector.
Nevertheless, managing finance is no small feat for such organisations, especially those working with limited resources that may not have the luxury of full-time finance personnel or expertise.
Smaller charities often rely on office administrators to manage their day-to-day financial tasks, while larger organisations have typically employed financial staff, who may also be given administrative duties during quieter periods.
However, in recent years there has been a notable shift, with an increasing number of charities, regardless of their size, recognising the significant benefits of outsourcing their finance function. This article outlines how this approach provides expert support, enhances operational effectiveness, and can help alleviate the financial and administrative pressures faced by the sector.
What are the key benefits of outsourcing a finance team?
Access to expertise
Finance roles can be particularly insular when not part of a team and smaller organisations are unlikely to need a full-time qualified team member. Using a professional firm as an alternative can provide charities with:
- Up-to-date knowledge: Keeping up to date with shifting regulations is essential in the voluntary sector. Professional firms understand this and therefore dedicate resources and professional development to staying ahead.
- Diverse skill sets: The financial obligations of an organisation demand varying levels of expertise to transact in the most efficient way. A firm will usually assign the charity with a dedicated point of contact, but tasks will be distributed across the team to harness the appropriate skills and expertise in a cost-effective and efficient manner.
- Known quality: Outsourcing provides a known level of quality, whereas recruiting carries the risk of an individual having limited charity-specific knowledge.
- Quality control: Outsourced finance teams use an internal review process to check work at regular intervals, reducing the risk of errors or omissions.
At Price Bailey, we support over 350 organisations in the Charity and NFP sector.
Cost-effective resource
Cost is often a key driver of outsourcing, especially for charities aiming to keep expenses low. It’s important for organisations to assess the level of service and complexity of processing and reporting they require. Investing in these areas can provide tangible benefits, for instance, outsourcing offers lower costs by enabling charities to pay solely for the services they require and adjust resources as their needs change. Additionally, outsourcing eliminates recruitment and training costs, by granting access to experienced professionals without the ongoing responsibility of recruitment, training and development.
Did you know: Price Bailey provides predictable billing through a fixed-fee setup, allowing you to spread the annual cost over 12 months via direct debit.
Enhanced efficiency
During the onboarding process, professional firms typically review clients’ existing systems and procedures to help establish an effective finance function. The use of technology is central to driving automation and efficiency, but many charities lack the in-house expertise required to select and implement it.
- Streamlined processes & access to technology: By using tried and tested technology, an outsourced finance team automates processes wherever possible to improve efficiency. Generally, they stay up to date with the latest software and, where possible, pass on any discounts received to clients.
- Flexibility: As your charity’s needs change, professional firms can quickly adapt to suit, allocating further resources or adapting their processes to accommodate further tasks or involvement.
- Continuity: Outsourcing helps build continuity by reducing the risks associated with staff turnover, illness, or sudden departures.
Our department of over 30 full-time professionals ensures that tasks are always assigned to suitably experienced individuals, with annual leave and absences carefully planned to maintain consistent service and support.
Improved governance and compliance
Charities face scrutiny from regulators, donors, and the general public. Therefore, it is imperative for them to clearly understand how they generate income, monitor costs, and manage cashflow – a need that outsourced finance teams can address. Most firms help charities minimise mistakes by preparing a dedicated roles and responsibilities document, which outlines workflows and important deadlines. They also keep track of regulatory changes and provide information to alert clients about new risks or requirements.
Did you know: Price Bailey invests heavily in IT security and tests all software thoroughly before deployment.
Strategic insight
Beyond handling transactions, an outsourced finance function can become an extended part of your team. Reporting can be a time-consuming, complex task for charities, especially those with restricted funds, outsourcing can provide you with:
- Real-time reporting: Using accounting software with integrated reporting means instant updates and quick responses to funder requests.
- Budgeting and forecasting: A finance team will often support clients with looking forward as well as backwards. Forecasting enables organisations to make timely strategic decisions and pursue larger contracts with confidence.
- Trusted adviser: Price Bailey offers complimentary support for ad hoc queries throughout the year, so long as the advice can be provided over the phone and does not require in-depth investigation or formal documentation.
Our expertise in producing bespoke reporting for charitable organisations enables us to deliver clear, timely, and relevant management information, which can build credibility with funders and provide comfort to trustees.
What issues are charities often concerned about?
While there are significant benefits to outsourcing a finance team, it can feel like a big change. Concerns often centre around:
- Loss of control: Some organisations may fear losing control of their finances, but a roles and responsibilities document, alignment with in-house team members and strict updates and approval policies, can help to alleviate this worry, and maintain a charity’s control over their finances. Outsourced firms will aim to provide an engagement that feels like an extension of your in-house team.
- Limited availability: Outsourced finance teams typically do not adhere to predetermined schedules; instead, they are generally available during standard office hours to respond to clients’ needs as they arise.
- Change management: There is a worry that switching providers or transitioning to an outsourced model can be disruptive. Professional firms like Price Bailey are sympathetic to their clients’ busy schedules, which is why we plan and stage integration to suit them.
- Lack of flexibility: Charities sometimes worry that outsourcing forces them into unfamiliar systems or rigid processes. In practice, it offers the flexibility to work with your current software and procedures or provides guidance for improvement. Every engagement is tailored to your organisation’s specific needs.
Many charitable organisations are choosing to outsource their finance functions. By partnering with Price Bailey, they can access tailored financial expertise and resources designed specifically for the unique challenges of the Charity and NFP environment.
For more details or advice, contact us using the form below or read our article on engagement pricing.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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