Although some of the most successful businesses routinely take advantage of financial consulting services, many leaders neglect to engage consultants or are reluctant to do so. When hiring a consultant, you are essentially paying a third party to come into your organization, research operations and make recommendations for improvement. Some might ask: Why outsource such important work? Why would outsiders be better at making financial decisions for my company than employees who already know the business inside and out?
Let’s answer those questions by taking a look at some of the top reasons why successful businesses leverage financial consulting services:
Expertise As Needed
By utilizing financial consulting services, companies have a way to fill talent gaps as needed. Full-time employees with the same level of expertise would be expensive to hire, and there might not be enough work to keep them busy year-round. Even though consulting fees are generally higher than an employee’s salary, it makes sense over the long run. Once the challenging project has been successfully navigated, companies can then let go of consultants without having to worry about continued costs.
Consultants offer the advantage of experience. They often work with many different companies and may have helped other clients with the same problems in the past. They know what works and what doesn’t. Consultants can be chosen for their industry-specific experience or experience with M&A transactions, for example, and they can be experts on accounting rules, government regulations and the like. By bringing in consultants, you can tap into a wealth of experience accumulated over many years and engagements.
Often, the projects that companies need help with are really important but have not been prioritized due to lack of resources. Even if companies have capable internal experts, these staff members still have to focus on day-to-day operations. New projects would require reprioritizing their core job responsibilities.
While hiring new employees is an option, it often doesn’t make sense for one-off projects. With full-time employees, you have to factor in the costs of salaries and other benefits, onboarding and training, advertising for open positions and other recruiting expenses, employment taxes, space needs, equipment and costs associated with employee management.
Financial consultants can help companies add resources without making costly, long-term commitments. In fact, companies can actually save thousands of dollars a week by using financial consulting services versus hiring full-time employees.
An External Perspective
Financial consultants can help identify problems or errors. Employees are often too close to the issue to see what’s wrong. This is especially true for small to mid-size companies where management and owners are heavily involved and have invested a lot of their own time, resources and energy into the business.
An outside perspective can also help in making difficult decisions. Sometimes having an objective third party analyze facts and identify shortcomings you might have missed can provide the confidence you need to know you are making the right call. Alternatively, a fresh take on things can steer you in another direction.
To Do The Dirty Work
Running a business is not easy. Sometimes, business executives are forced to make some necessary yet unpopular decisions – the “dirty work.” This is especially true given the economic downturn associated with the COVID-19 pandemic. For instance, in an effort to cut costs, a company may need to lay off some of its workforce, eliminate a product line or do away with an entire department.
The CEO or management can distance themselves from unpopular decisions like these with the help of consultants, or consultants can be brought in to handle problem areas that no one else wants to clean up. Impartial consultants can assist with the financial analysis needed to decide which employees, departments, products, etc. should be cut, and they can handle the implementation of these unpleasant tasks.
Additional Benefits of Financial Consulting Services
Financial consultants can save a failed system conversion, organize the physical inventory count and manage the year-end audit process. In addition, a financial consultant can:
- Fill an interim finance/accounting role when employees leave. Consultants can then stay and cross-train the full-time hire so that knowledge is retained by the company.
- Assist in cost cutting efforts by not only helping to identify areas that are unprofitable, employees that don’t add value, etc. but also implementing changes.
- Help determine areas for growth by providing insight on cash flow patterns, inventory management, pricing and business financing.
- Provide advice on the type of accounting software you may need. They can help with software selection as well as implementation.
- Make sure your accounting procedures comply with government regulations and US GAAP.
- Assist in IRS audits and financial statement audits/bank compliance.
- Create financial forecasts so you can make better business decisions.
- Work with you to create a business budget that will support your business goals.
- Provide advice and resources to assist you with the sale of your business.
- Manage both buy-side and sell-side M&A transactions including data room maintenance, due diligence support and investor reporting for multiple investor and private equity transactions.
- Support functional leaders in post-merger integration of accounting and finance processes.
To Drive Business Success
Whether you need financial consulting services related to the challenges of COVID-19 or you’re ready to address longer-standing issues, an 8020 consultant can help your company reach its full potential. Reach out to us here, and we’d be happy to discuss how to handle today’s unique challenges or promote future growth.
About the Author
Jessica is a CPA and Deloitte alumnus with over 12 years of experience, including leadership roles from Controllership to her most recent position as the Senior Director of FP&A at Maker Studios, a next-generation entertainment company. Her industry experience spans the entertainment, new media, e-commerce, advertising, consumer products and financial services industries at companies including U.S. Auto Parts, Napster, Canyon Capital Partners, TCW, Procter & Gamble, Toyota and UTi Worldwide. Among other accomplishments, Jessica has provided all internal and external financial reporting (including SEC), supported a successful IPO, led M&A transaction support and due diligence efforts, as well as providing financial modeling, data mining and budgeting/forecasting. Jessica holds a BS in Accounting and an MBA from the Indiana University, Kelley School of Business.