Key points
- External finance support can strengthen existing teams, adding capacity and specialist expertise without replacing the people already in place.
- A flexible outsourced model gives Not for Profits (NFPs) access to the right level of expertise when they need it, from day-to-day accounting support through to CFO-level advice.
- Greater capacity and continuity can free internal finance teams to focus on higher-value work, while giving management and Boards greater confidence in the organisation’s financial management.
For many NFP organisations, maintaining a strong finance function is a balancing act.
Financial and compliance responsibilities can be significant, but the size and complexity of the organisation may not justify having every level of finance expertise in-house. Even organisations with an established finance team can experience periods when additional capacity or specialist support is needed.
This is where outsourcing parts of the finance function can provide a practical and flexible solution.
Importantly, outsourcing does not have to mean replacing an internal finance team. In many cases, it is about supporting the people already there, providing additional resources when required and giving finance teams access to expertise they may not need on a full-time basis.
Getting the right level of support
An effective finance function involves much more than bookkeeping.
NFPs need to ensure payroll and superannuation obligations are met, BASs are prepared and lodged correctly, annual accounts are completed efficiently and management and Boards receive timely and meaningful financial information. There may also be a need for budgeting, forecasting, cashflow management, improved financial controls and strategic financial advice.
Finding one person with the right skills across all of these areas can be difficult. After all, managing these responsibilities can be complex, with legislative, regulatory and financial reporting requirements continuing to evolve. It may also mean senior finance people spend valuable time on transactional or administrative work when their experience could be better applied elsewhere.
A cost-effective and flexible alternative
Recruiting an internal finance manager or CFO also involves costs beyond salary. Superannuation, leave entitlements, recruitment, onboarding, training, professional subscriptions and continuing professional development all contribute to the true cost of maintaining the role.
An outsourced model can provide access to different levels of expertise depending on what the organisation needs. Day-to-day accounting support might sit with one team member, while a finance manager or CFO-level adviser can become involved when more senior input is required.
This can deliver real cost savings by allowing an organisation to pay for the level of support it requires, when it requires it, rather than carrying the full cost of a permanent internal role.
Supporting, rather than replacing, internal finance teams
Many NFPs already have capable finance people in place.
External support can complement that team by providing additional capacity during particularly busy periods, filling temporary resourcing gaps or bringing specialist expertise to a particular project or challenge.
For example, an organisation might seek additional assistance with:
- budgeting and forecasting
- Board and management reporting
- cashflow modelling
- year-end preparation
- payroll and superannuation compliance
- financial controls and processes
- finance system changes
- temporary gaps within the finance team
- CFO-level advice on significant decisions.
This can allow internal finance managers and CFOs to focus on higher-value activities, such as analysing performance, advising management, improving processes and supporting the Board.
The objective should not be to duplicate an existing team’s role, but to make the overall finance function stronger.
What if we need CFO expertise but not a full-time CFO?
Not every organisation needs, or can justify, a full-time CFO. That does not mean it cannot benefit from CFO-level thinking.
Growth, changes in funding, investment decisions, restructuring, new reporting obligations or a major systems project can require more senior financial input. An outsourced CFO can provide that expertise without the organisation appointing a permanent senior resource before there is sufficient work to justify the position.
For organisations with an existing CFO, external support can also provide a useful sounding board on complex or strategic matters. It does not need to be an either/or decision.
Building greater continuity into the finance function
Continuity can be particularly important for NFPs with small finance teams.
Where significant financial knowledge sits with one or two people, annual leave, illness, parental leave or an unexpected departure can place considerable pressure on the organisation. Payroll, reporting, BAS lodgements and other compliance activities must continue even when a key employee is unavailable.
External support can provide another layer of capacity and knowledge, helping critical processes continue during periods of absence or transition. It can also assist organisations to strengthen documentation and processes so that financial knowledge is shared rather than sitting with one person.
This is not about making individual roles less important. It is about giving the organisation, and its finance people, greater support and resilience.
Bringing an external perspective and peace of mind
Another benefit of external support is access to experience gained from working across different organisations.
An external finance professional will never have the same day-to-day organisational knowledge as an internal finance team, and nor should they try to replace it.
The value comes from combining that internal knowledge with an external perspective.
Someone who works across a range of organisations can bring different approaches to reporting, forecasting, systems, processes and financial management, helping identify opportunities for improvement or alternative ways of addressing a challenge.
The best relationships therefore operate as a partnership. The internal team brings its understanding of the organisation, while the external team contributes additional capacity, experience and specialist knowledge.
A flexible model that can change with the organisation
There is no single model for outsourcing a finance function.
An organisation might retain its finance team and bring in specialist support for particular areas. Another might outsource transaction processing and payroll while keeping financial management internally. A smaller NFP might require an external team to perform a broader finance function until the organisation reaches the scale where additional internal appointments make sense.
The model can also evolve over time.
Ultimately, the question is not whether finance should sit internally or externally. It is whether the organisation has the right combination of people, capacity and expertise to support its needs.
For NFPs, external finance support can provide additional capability, continuity and flexibility while allowing the people already within the organisation to focus their time where they can make the greatest contribution.
For management and Boards, it can provide greater confidence in the organisation’s financial management. And for internal finance teams, it can mean more support, greater access to specialist expertise and more capacity to focus on higher-value work.
