Financial outsourcing brief

A 6 year plan to grow the business had been executed by the owners of the organisation. The primary objective was to strengthen the financial infrastructure within the business to support any potential sale. In addition to back-office support LBS was instructed to lead and manage the in-house resource to ensure a joined up approach was taken.

Implementing a strong foundation

Our first task was to gain clarity on the department functions. We looked at how resources were structured and, most importantly, why they were not able to deliver the management information on time.  As we delved deeper, it became apparent that there were a few problems leading to the delay. Key aspects were:

  • Staff capability
  • Lack of interaction
  • Lack of communication

Positive change and a structured approach

We set about putting in structured processes that ensured the correct information was collected at the right time. We made sure these processes were communicated clearly to department heads and that training was put in place. This helped to build the knowledge and understanding for all of the staff, setting everyone on the same page using a simple process that was clear and concise. Taking a ‘big bang’ attitude can be detrimental in this situations, so we implemented a change management process with a phased approach.

The roll out revealed that the processes within the procurement department were very informal and not integrated into the finance function. This caused a great deal of duplication for both teams and was identified as a key cause of the long lead times in producing management information.

Whilst this was outside of our scope, it impacted our brief so we looked at what areas were in our remit to change. This was broad enough to reach about 80% of what we needed. For the remaining 20%, we set about detailing a set of assumptions, which allowed us a position where we could report the full state of affairs to the management team. Again, the changes needed would need a phased approach, but by gathering the information into one overall report, it would allow the management team to drill down into each of these areas over time.

Financial outsourcing to support business growth

Managing people, process and change

With company-wide change, it is not just about processes but also the culture within the business that needs to change. That’s why a key mantra for us is “you don’t need everything to be perfect to make the first step”. We often encounter an unwillingness to make changes because people don’t have all the answers, and while it is important to have information to lead from, you will never have all the answers. It’s our experience that it’s better to start the journey with what you have and be prepared that the journey will evolve as you peel back the layers.

Our outcome for this client was that we were now in a position where their finance department could pull together information relating to project profitability that had not been available previously. However, this was still taking too long to produce.

Financial support for business expansion

Alongside this, and now a couple of years into our work with this client, they began to expand into the US. One of the owners, who was based in the States, was looking to tap into the lucrative markets available. The issue was that their set up was too rudimentary and unsupported. It became clear that if this section of the business was to make the kind of deals with well-known brand, as they had in Europe, they needed to present themselves professionally and as an established organisation. We helped them to incorporate properly in the US by working with the owner to create a subsidiary with its own stand-alone finance function, which would set them up for the first couple of years, at which point it could be reviewed.

With management information from finance still taking too long and the expansion of the business into global markets in the US and Asia, we could see that a further change was needed. With stability in the finance department, we recommended that the finance team be centralised in their UK HQ where the main business and expertise resided.

Access to better management information and ensuring compliance

Management information and reporting

With the business finance centralising, the reporting cycle became more robust and core management information was now being produced in a shorter turnaround cycle. With access to better information, another issue was highlighted in the different reporting criteria between departments. This was a major issue as it meant that comparisons between reporting were not possible straight away and too much time was being spent in trying to reconcile what should have been a single message. This had also begun to create compliance issues and so needed to be addressed quickly.

We set about identifying ways to resolve this, developing KPI’s and measures to further assist management and processes, ensuring compliance within the business kept pace with the fast growth it was achieving.KPI-Dashboards

Our remit continued to evolve with the client requiring a group structure with 6 components over 3 continents. It now dealt in multiple currencies and jurisdictional requirements, so we needed to ensure the business could focus on developing new sales opportunities while the finance team evolved. In particular, we worked with the team to improve cash flow management so this growth could take place.

The business grew to approximately 4 times the size it was at the start over those 6 years. Of course, this was due to better sales and improved operational delivery, but also better management information that enabled confident and data-driven business decision.

Being the right resource for clients, at the right stage of growth

This client had reached a point where the balance tipped in favour of an in-house finance department rather than the outsourced service. The business was now turning over in excess of $20m with a double-digit EBITDA, so they had reached the point of needed full-time, in-house support. Having presented our thoughts on this, we worked with the client and agreed a plan to transition. This included:

  • Assisting with the recruitment of a new FC/FD
  • Providing clear and concise handover documentation
  • Post the completion – to remain available for project work where necessary as we had, by this point, such an intimate knowledge of their business.

Helping the client stand on their own financial feet

This case study has been written to demonstrate our approach to working with clients. We will always remain open and honest and always want to create a lasting relationship.

In this case, by being focused on their needs and remaining professional in our handover, we have created a solid relationship and achieved what was best for  their business. We remain on great terms with this client and often see opportunities for them to improve systems, or notice a lead that might be relevant, and we pass that on to the business owners to use as they see fit.

As for us, it is a testament to our work during that time that our client was able to focus on seizing opportunities to become successful while we supported them behind the scenes. We left them with a structure and process that allowed them build upon this and grow further. We are delighted to be part of their story and they are part of ours.

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