There is nothing more important to you than the financial health of your business. Without a healthy outlook for your business’s finances, you can quickly find that costs are spiralling out of control, profit margins are non-existent and your business is under real threat of closing. This is why some people, who perhaps don’t have the financial skills that others do, should seriously consider outsourcing aspects of their financial management.
There are several options when it comes to the right financial support for your organisation but the two main ones are engaging a financial advisor or outsourcing the financial management of your business.
Each of these services offers you something different. Understanding the differences can help you choose which option is best for you. So what are the differences?
1. Active Versus Passive
Both the terms have a rather obvious difference. A financial advisor will only provide you with suggestions on what you need to do to make your business’ finances work and it will be up to you to implement their suggestions and reap the rewards. For some this might be difficult – especially if they aren’t confident actually implementing.
Someone who specialises in the management of finance will not just advise; they will also perform take real steps to help you take action. There are several benefits to this which include:
- They will have wide ranging commercial experience and will proactively steer you through the implications and your options.
- A shorter response time to complete financial tasks.
- Tasks are completed by a trained professional and so are likely to be more accurate.
- Challenges are spotted earlier so a response can be made more quickly, limiting long term problems.
- It frees up time within your staff structure to complete tasks more associated with your and your team’s skill set.
Someone who specialises in the management of finance will also advise you on what actions need to be taken – you’ll have the final decision but with them completing the tasks for you.
2. Level Of Advice
Someone who specialises in the management of finance is more likely to have a firmer grasp of your financial landscape; this isn’t necessarily because of the level of skills or experience– it is generally because they are working in your organisation as part of your team and so see more details than others might.
A financial advisor might rely on details that are provided by you in conversation, by email or other documentation. This could mean that certain, critical pieces of information are left out and this could have significant impact on the quality of advice that is given.
To get the most out of your financial advisor, you need to carefully consider what information you are sharing and always maximise the data provided. This will give them a broader understanding of what is currently happening in your business and generate a better outcome. But the onus is still on you to give them the right information.
3. Level Of Commitment
Someone who specialises in the management of finance is likely to be more readily available at short notice than a financial advisor.
Financial advisors have many clients and therefore appointments need to be made well in advance which means that you can expect a time delay between when you ask for help and when it can be delivered.
On the other hand someone who specialises in the management of finance is likely to be available sooner because they are being paid to be an active part of your business’ financial plans and management team. Therefore, they will set regular time aside each day or week to help you manage your business. This can be hugely advantageous to those that have little inclination or indeed the skill to participate in the financial workings of their business.
There is a wide range of financial help available. A financial advisor will only provide you with suggestions, advice and guidance, you may want to retain complete control of your organisation’s finances. However, someone who specialises in the management of finance will help you run your finance function and you would probably find that you are running a more effective organisation.
So, the Tectona view is firmly “Get the management right … and you will get the finances right.”
And it will come as no surprise to you that while others manage the finances, Tectona are focussed on the management of finance.
Speak to the Tectona Parternship today to find out precisely how we can help you.