Late last year, Metrodiner Ltd, a Bristol-based restaurant company outsourced its finance function.
Instead of maintaining a three-strong in-house team, it decided to buy in its financial expertise by hiring a company called Open Administration Systems (Oasis). Subsequently, the purchase ledger, management accounts and payroll were all outsourced.
Although it was a ‘gruelling’ decision, managing director Eren Ali says there will be no turning back. ‘We can get on with running a restaurant. We don’t have to run an accounts office,’ he says.
Outsourcing has other advantages for Metrodiner. It also allows the Latin American-style restaurant chain – which has a turnover of £3.2m – to drive down labour costs and make the company more disciplined. ‘When you have your own accounts department, everyone tends to accept short-cuts.’ With outsourcing and legally binding contracts, short-cuts are history, he says.
Metrodiner’s story is one that could soon be replicated. Although outsourcing has been around for years, usually only larger corporations have used it. BP pioneered the concept of outsourcing accounting services with Andersen Consulting in Scotland, but it’s now touching smaller companies.
The attractions of outsourcing are not limited to cutting labour costs.
By buying in financial expertise, a company can buy into a provider’s advanced software.
To develop the software in-house, costs would be enormous. ‘Why not outsource the lot?’ says Geoff McClure, a chartered accountant for 30 years, now MD for Tahola, a company which provides financial information to retailers.
He has some original theories on the ‘revolution’ afoot for those working in the finance field. And, if he is right, the implications for accountancy are huge.
The 21st century accountant
McClure says increased outsourcing across the economy, not just among larger firms, will lead to the phenomenon of ‘the 21st century accountant’.
As the business environment moves faster, he claims, managers will need quicker and better-interpreted financial information.
To satisfy this demand, he believes there are two options: maintain the status quo and provide a central finance function; or, move the ‘interpretation resource’ – the accountant – into the business function. ‘This is already becoming a reality,’ he says.
Two types of accountants will emerge in the future, adds McClure. The ‘financial accountant’ who concentrates on the balance sheet, and the ‘management accountant’ who will use information tools to help managers find out what happened and why, and how good results can be repeated.
The ramifications do not stop there. Accounting bodies will have to decide where they stand in this ‘revolution’ and how they will train members. This may seem fanciful, but McClure warns that if accountants do not adapt there is a precedent. ‘They will look up, like bank managers, and say “nobody needs us anymore”.’
But at least accountants have a choice, says McClure. And that is they can either ‘drive these changes or be driven by them’.
More than financial awareness
David Buxton is hoping to drive these changes. His company, Oasis, launched in October, is providing the outsourced service to Metrodiner. Buxton’s experiences reflect McClure’s theories. He says companies want to buy into a ‘higher level of skill’, not just financial awareness.
‘Service is the key. The role of the accountant is much more commercially aware,’ says Buxton. ‘The days of the an accountant stuck in his room pushing his numbers around is long gone.’
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