Accounting departments are expensive. As a percentage of revenue, they generally cost between 2-6% of revenue depending on the industry you operate in and what business functions are loaded into the department.
First, you have the personnel, which includes payroll, taxes, benefits, and office overhead (office space, equipment, supplies, etc.).
Second, you have training time, teaching them about your business, your vendors, your departments, and most importantly your customers.
Third, you have management, for errors, segregating duties and controls to prevent fraud, performance evaluation and coaching, and making sure they are completing their work timely and accurately.
On top of the above, you have to assess your return on accounting. Are you getting the value you want from your accounting team after all of those costs? Does your CFO guide you in wise financial decisions for your operations? How strategic is your CFO in management accounting? How well does the accounting team support other departments by collaborating with them and communicating budgets and financial results? What happens when an accounting employee leaves, how long will it take to rebuild the team?
How effective is the team and how would it rank across other accounting departments of similar sized companies, which are similar to your industry and your hiring region?
All the while you are thinking and working through all of these areas as an owner, you could be focusing on generating revenue, connecting with customers and following the passion that lead to you starting the business in the first place.
That’s where virtual accounting departments thrive, saving the owner time and work, by being an accounting department worth investing in. Just like employees, there are different virtual accounting departments, so it is very important to vet the virtual CFO that oversees the virtual accounting department and ensure they have the experience, skills and leadership needed to make your business successful.