What Can Your Small, Mid-Sized or Start-Up Business Have That the Fortune 500 Companies Have?

It happens almost every day. A large company, often listed in the Fortune 500, makes a strategic acquisition of a small entrepreneurial company to increase their product portfolio and to increase revenue . Usually when this occurs the small company core business remains very much the same as before the acquisition. After all, the large company typically prefers to maintain the core technology and entrepreneurial spirit existing in the acquired business. But for support functions that is not the case. The administrative infrastructure of the smaller company disappears being ostensibly outsourced to the parent company.

Why? The larger company already has an effective HR, Legal and Accounting infrastructure can absorb the administrative functions of the smaller company. When it comes to accounting this makes particular sense. An accounting department is expensive to form and sustain. It requires a skill set that is not often possessed by the entrepreneur founder/manager. Typically and effective and cost efficient accounting department contains at least four levels of staff and expertise: clerks/bookkeepers, accountants, controller, and CFO. Each has a defined role based on skill and compensation level.

Trained clerk/bookkeepers and deployed for recording daily transactions efficiently, timely and accurately. These staff are counted on to crunch through the data entry so that meaningful financial reporting can be prepared. These staff are unusually lower paid since they are not skilled in making reliable and accurate accounting decisions.

Degreed accountants supported the Clerk/bookkeeping staff tackling issues related to more challenging transactions and to provide best-practices guidance: Coding transactions for proper budget tracking and applying the matching principal. The accountant function is key to support proper internal controls by reviewing the work of the clerk staff and by preparing monthly balance sheet reconciliations. The accountant also performs analytical review preparation procedures prior to financial statement preparation.

The CPA level controller is more senior and seasoned than the accountant and enlisted by all excellent accounting departments. This key contributor provides guidance to all accounting contributors addressing the more complex accounting issues. Also the controller ensures internal control by reviewing financial statements and performing analytical review procedures.

At the top of the accounting department is the familiar CFO who guides the organization in its long term strategic goals. The CFO leads the organization in planning , guidance through the budgeting and planning process, and ultimately driving the financial plan. The CFO also represents the organization in forming strategic relationships with banks, insurance providers and the technology partners. The buck stops at this level.

Logically it can be an unnecessary overhead burden to continue to staff each of these roles in a small organization. Therefore, as a common practice, when large company purchases a smaller company one of the first measures taken to cut costs and increase the profitability of the purchased company is to eliminate the on-site accounting department and have the roles absorbed by the parent companies established accounting department. In effect, the accounting function has been outsourced with all the necessary functions provided by the parent company on an as-needed basis.

Your small, mid-sized or start-up company can and should realize the same benefits of the large company TODAY by outsourcing your accounting function to an organization that can provide each of these roles on demand. Rather than have a fully staffed department you pay for the service when it is required and keep your overhead and administrative costs at a level that maximizes profitability.

e-Bookkeeping provides the benefits of a large company outsourced accounting solution customized to fit your companies specific need and your company pays only for the services it needs.