Mike O’Connell, CEO, Isosceles Finance

If you relate to one of the following, now would be the right time to outsource part or all of your finance and accounting function:

•  Rapidly growing or contracting businesses (quite often wanting to vary the costs of finance and accounting)
• You want a smaller highly focussed team concentrating 100% on developing great products and services and delivering these profitably – all the other clutter of business you want someone else to take care of.
• The business cannot afford a full-time Finance Director so the CEO is trying (and often failing) to fulfil this role – whilst also trying to grow the business
• Lack of, or poor quality, management finance and accounting information
• Experiencing high rates of staff turnover or skills shortage
• The business needs to generate operational efficiencies

Incidentally outsourcing doesn’t require firing existing staff and starting again, or binning the in-house finance systems.  At Isosceles we provide our service at our site or yours, on our web-based systems or yours, using your personnel and/or ours.  We also deliver a service tailored to each clients individual requirements – this is not a ‘one service fits all’.

Dave Eaton, Manager Sheffield Office, with Claire and Aiysha

I am delighted that we have opened our second office, in the very welcoming city of Sheffield.

We have successfully supported over 100 ambitious companies from our South West London Head Office but we are now ready to implement the next stage of our growth strategy.

I haven’t used the term ‘welcoming’ lightly in my opening statement.  I cannot thank Ann Allen and her team at CreativeSheffield enough for their welcome, guidance and the quality of their city briefing and information pack.  They were without doubt instrumental in our choice of Sheffield.

If  you are not familiar with CreativeSheffield, they are the city’s economic development function, funded by Sheffield City Council with business growth its core activity.  Between 2008 and 2011, CreativeSheffield leveraged over £75 million of private sector investment and assisted in the creation and safeguarding of 5,000 jobs.  Not bad eh?

What is the true cost of an accountant?

The true cost of a £60,000 accountant is actually closer to £100,000 or £445 per day during their first year.   So what is the cost if you incur all the recruitment and training costs and then you find out after six months that you have recruited the wrong person?

I feel another blog coming on.

(Click here to see table for my full calculations)

Getting up to speed

In terms of training and induction, the heaviest load will be the first three months.  There is usually a month’s handover with the member of staff being replaced at zero productivity. The cost of getting up to speed is therefore £5,000 (plus NI and loaded costs).

Tools for the job

The cost of office space, rent, rates, service charges, utilities, reception, photocopier, fax, is about £50 per square foot in the South East; an average desk space per person is about 75 square feet per person.  So the cost per annum is £3,750 per person.

Productive time

The other issue that employers fail to take account of is the actual productive time of an employee.  There are 260 working days in the year, however after holidays (say 25 days) bank holidays (8 days) sickness, company meetings, appraisals and training days it is unlikely that there are more than 220 working days.

Employee management

The final issue is what is the cost of managing and developing an employee? This includes the cost of appraisals, setting objectives, informal one-to-one meetings to discuss career aspirations or providing feedback on progress.  This is likely to absorb at least three days of management time (£1,500 cost or £3,000 opportunity cost) across the year and much more than this if issues arise.

Final instalment coming shortly ………

 Mike O’Connell, CEO, Isosceles Finance

Once a business manager knows the real cost of an employee they can then answer the even bigger question, “what is the value of my employee?”

Finding the answers to these two questions is not as difficult as one might think, but what may surprise is how cost effective outsourcing some parts of the business really is.

In order to calculate the cost of an employee we need to look at the true cost of employment and the cycle of employment.  First the individual must be recruited and inducted; secondly they must be trained both through formal and on-the-job training; and thirdly there is a period of getting up to speed.  Once up to speed there is the cost of managing that individual, setting objectives, appraising performance against these objectives whilst bearing the burden of personnel and administrative costs of holidays and sickness, etc.

An employee also requires certain tools to do the job. They need a desk, phone, mobile phone computer, software, a network to store documents, a printer and paper to be able to print documents off and general stationery.  Our employee also needs internet access and a clean safe environment in which to work.

Click here for Part 2

 Mike O’Connell, CEO, Isosceles Finance

There I had the pleasure of meeting Kevin Murrell , Stephen Flemming and Tony Sale  together with other members of the team who had rebuilt Colossus -  the world’s first programmable, digital computer.  Colossus was designed to decode the highest level German ‘Lorenz’ codes much more complicated than those created by Enigma machines.

In today’s world of miniaturisation Colossus is unimaginable, for a start it’s the size of a large room.  It is a beast of a machine, it clicks, whirs, flashes and growls like the flight deck of the starship enterprise.  The paper tape carrying the code runs around wheels and cogs at 30 miles per hour, like a hamster on drugs on his wheel.   

Surely never in Britain’s history – if not the world’s – has a computer had a more important job.   Watching the machine in action it seems to process with a sense of urgency, you can almost hear it whispering to its German counterparts “I’m coming to get you, I’m going to crack you”.  I’m sure any British member of the armed forces entering the room in the 1944 would have left the room confident that, with this snorting giant on their side, anything was possible.

The tour then took us through the ages of computing.  It was fascinating to see the evolution and development of the things we take for granted today, such as the evolution of paper tape with holes to magnetic tape to huge circular storage disks to the small hard drives in today’s computers.  

There were plenty of chances to reminisce (whatever age one harks from) - for me it was  back to the ZX81, the BBC Acorn, early Apple Macs – computers which were the iPad of their day and which are still things of beauty. 

I was amazed at how much progress this dedicated group of volunteers had achieved.  There is so much to take in that one could fill many hours.  It is also clear to see how much potential there is to further develop the museum.

InsightSoftware.com one of our fastest growing clients has been an important sponsor of the museum.  It is very satisfying to see the money that they have donated being used so productively, I know InsightSoftware.com  is very pleased with the progress

Isosceles is delighted to provide outsourced accounting support to the National Museum of Computing.  It is especially appropriate that Isosceles, who have so many cutting edge technology clients, should now be supporting the place at the forefront of computing technology some 60 odd years ago.

Mike O’connell, CEO, Isosceles Finance

Part of the problem is that there is no real market leader in this space and companies are forced to do a lot of homework before making decisions – this is a daunting task.

We are so fed up that we have decided to try and save you some of that time. We have looked at the market leading professional services solutions and compared functionality – click here for your free PSA Summary.

The products evaluated range from simple web-based time capture, through fully functional project and staff planning systems, to integrated accounting and enterprise solutions. These systems are appropriate to companies ranging in size from a couple of consultants to 200+ with budgets to match.

As always delighted to help anyone who needs help.

Mike O’connell, CEO, Isosceles Finance

There has been much speculation in the press over the last couple of weeks about a double dip recession.   Whilst no one can predict with certainty when, or indeed if, it will happen, one thing is for sure the likelihood has significantly increased.

I hope and pray, like you, that it doesn’t happen but I must prepare myself for the fact that it might.  I need to review and tweak my Plan B  – the one I wrote at the beginning of 2009 but thankfully didn’t need to execute!

‘Plan B’ encompasses many things for example: better cash management; better debtor management; identification of alternative sources of funding; cost reduction; labour force reduction.  In a ‘nut shell’ it identifies the creative ways of achieving more with less.

 I have prepared a paper to get you started 10 Things to Include in Your Plan B.  I must emphasise at this point though that just because you have a Plan B doesn’t mean you have to execute it – but never has the saying ‘better safe than sorry’ been more apt.

Invariably the development and execution of ‘Plan B’ is easier (less painful?) with expert help.  It’s not without its challenges but we have guided many businesses through difficult times. 

“The only thing harder than planning for an emergency is explaining why you didn’t” (Unknown)

 Mike O’connell, CEO, Isosceles Finance

If we engage a builder, plumber or decorator we find it is easy to generate an expectation of the result we want and to measure the output against this expectation. We can be a very exacting customer indeed. If we buy a product off the internet, we now spend hours reading reviews comparing prices and again make an exacting purchase – the best quality for the money we can afford.

I find it interesting to contrast this with how businesses generally measure the output of their employees. How many companies set out a detailed SLA for each employee? How many companies measure the performance each month against that SLA before they pay an individual’s salary?

In the world of accounting we may agonise before buying a software product for a few thousand pounds say to help with accounting or reporting, but if a Financial Controller spends a month building a spreadsheet do we really acknowledge that the model costs thousands. What about the ‘opportunity cost’ of what they should have been doing?

As an outsourced accounting services provider I find the process of defining an SLA and invoicing every month means that my customers ask themselves (and me) “What is the real cost of the finance department?” “What value has finance brought to my business during this month?” “Why did it take that length of time to deliver that task?” “Why did that activity cost that much?” “Are we monitoring and measuring the right things?” This level of scrutiny is a positive thing, in my opinion, it keeps our standards high and I genuinely feel that out outsourced accounting service gives a better value for money service than an in-house team where the monthly cost of finance has not been monitored for a long time and gets washed into the general bucket of all the other salaries.

Mike O’connell, CEO, Isosceles Finance