29 November 2023

8 Signs That You’ve Outgrown Your Current Accounting or Finance Department

As companies strive for growth and inevitably evolve, their needs change and processes that once worked perfectly fine may begin to show signs of strain. This is particularly true when it comes to your business’ finance and accounting needs. Whatever the current makeup of your accounting or finance team, it’s crucial to recognise the signals that indicate you may have outgrown your current finance team setup. Otherwise, as is often the case, your business may continue using processes that are hindering progress until a major crisis arises. Let’s delve into the 8 typical signs that may indicate it’s time to reassess your finance or accounting department’s structure. Understanding these indicators is the first step toward considering alternative solutions to meet your evolving finance department needs.

Your accounting processes are slow

In a well-oiled business machine, each separate department should work to complement the others. However, if your finance team is struggling to keep pace and causing delays in crucial processes, it’s a clear signal that your current accounting setup may be detrimental to overall business efficiency and in need of a change. In business, time is money, and slow or inefficient financial processes can have a negative trickle-down effect on the entire organisation.

You’re receiving ATO penalties, adjustments or notices

If you are receiving frequent,

  • penalties
  • adjustments 
  • notices

or any other form of negative communications from tax authorities, this is a major red flag. It not only indicates potential errors in your financial reporting (many of which may have gone unnoticed) but also raises questions about legal compliance. A proficient accounting team should navigate the regulatory landscape smoothly, ensuring that your business stays on the right side of the law and free from unnecessary regulatory hassle.

You aren’t sure which of your service lines are most profitable 

Understanding the profitability of your various product or service lines is fundamental to strategic decision-making. It’s integral to have a means of comparing the independent success of each of your offerings. If your current accounting system leaves you in the dark about which areas of your business are thriving and which areas are struggling, it’s a costly oversight that needs immediate attention. 

Your finance department stops when key personnel leave

Over-reliance on a single individual or a small number of key financial personnel is a risky proposition for any business. If your finance operations grind to a halt, or at least struggle to continue when a key team member is absent, it’s a sign that your team lacks the cross-functional knowledge required to sustain year-round success and efficiency. Having a contingency plan in place and team members with diverse skills and responsibilities is key to building a resilient accounting function for your organisation.

Your management reports aren’t showing drivers, only historical data

Modern businesses thrive on data-driven decision-making. If your accounting reports are merely historical records and do not offer insights into future trends, important growth drivers or potential financial risks then you’re missing out on a crucial aspect of accounting management. Upgrading your accounting capabilities to include predictive analysis and forecasting can provide a significant competitive advantage to your organisation.

Your tax estimates don’t align with your results

Tax planning is a critical aspect of financial management, which means it’s also an important space to monitor for signs that your current finance department isn’t cutting it. If you find that your tax estimates consistently deviate from your actual end-of-financial-year results, your current accounting department is likely falling short of its responsibilities. Remaining informed about tax and rebate opportunities is also a necessary function of your accounting department and can be financially beneficial. So, if your finance or accounting department is not proactive about considering various tax incentives and grants, then, for the sake of your bottom line, it may be time to make a change.

Payrolls are paid late or poorly

Timely payroll processing is a fundamental responsibility of any accounting team; it’s the backbone of business trust and efficiency. Not only do late or missed payments affect employee morale but on the extreme end, they may also lead to legal issues. If your current finance and accounting team struggle with consistently meeting payroll deadlines, it’s a warning sign that your accounting function may be overwhelmed, inefficient and in need of a change.

You’re not regularly meeting with your CFO to align your finance strategy

Regular communication with your Chief Financial Officer (CFO) or the head of your finance function is an important step toward aligning your financial strategy with your overall business goals. If you find that meetings with your CFO are:

  • unclear,
  • infrequent,
  • unproductive,
  • or even combative,

it’s a clear indication that your current accounting structure isn’t operating as smoothly as possible, nor is it fostering effective collaboration between the financial and operational aspects of your business.

Are you looking for a solution to any of these finance and accounting challenges? 

Our Dexterous finance function team can help. Recognising when you’ve outgrown your current finance team is essential for sustained business success and ignoring these signs may lead to missed opportunities, compliance issues, and a potential hindrance to your business’s overall growth trajectory. This doesn’t necessarily mean that a complete overhaul is required but that at least considering alternative solutions, such as outsourcing, is a strategic move needed to propel your business forward. That’s where our team of finance specialists can help. At Dexterous, we provide an outsourced, customisable finance department solution that works for you.  We can leverage our industry experience and financial expertise to help you design and implement a productive incentive and bonus strategy for your business that avoids the common pitfalls we’ve discussed.

Partner with the expert outsourced finance team at Dexterous

At Dexterous, we provide a comprehensive managed finance solution. This means that we leverage all the latest business tools, access global talent and manage your company’s finances with the local expertise of our Sydney team. We also equip you with a strategic approach and cost-effective accounting function that supports your growth. Reach out to Dexterous and transform your finance department today. For more information, get in touch with us today or connect with us via LinkedIn.