Structuring Your Finance Department – The Various Options & Which Is Correct For You

When you are structuring your Finance Department, the structure needs to reflect your company’s functional priorities. Is it a single entity or do you have multiple sites or franchises? Your plan needs to define each of the subfunctions with a clear and realistic scope of the activities performed to maintain consistency while also avoiding duplication.

You also have to establish clearly defined reporting structures and relationships, so all players have ownership of their duties and responsibilities. With the right reporting structure, you optimize talent and improve performance. Defining roles and reporting structure ensures processes are streamlined and everyone has a sense of accountability. So how do you organize your finance department effectively? Here we explain the various options to help you choose the one right for you.

How to Strategically Structure Your Finance Department

In order to come up with the right structure for your finance department you have to consider the common roles and their function:

• Bookkeeper: Bookkeepers are the day-to-day gatekeepers who keep your books organised. They don’t play a strategic role, but they are the person who maintains records for sales, invoices, payroll, bill payments and more. Smaller companies without this role won’t have control over their finances as there isn’t anyone tracking them.

• Accountant: An accountant is the next level for financial management. They create data-based analysis and reporting to help drive financial strategy, although not necessarily being involved in the strategy itself.

• Financial Controller: Controllers care about accuracy and allocation. They focus on cash management and ensure the numbers don’t lie.



• External Tax Accountant: Usually external, the tax accountant prepares regulatory returns to satisfy compliance requirements. They also help you create the right tax strategy to eliminate costly mistakes and manage your tax obligations.

• Chief Financial Officer (CFO): A CFO provides important insights and strategies for financial management. Their job is to drive profits and oversee accounting functions. They develop an accounting system that the team uses to do their jobs more effectively. They are the champion of best practices, playing the role of the brains to your controller’s eyes so to speak, and the strategic partner for navigating the challenges of running an efficient and profitable business.

Your team structure is usually influenced by the size of your business.

Two Common Structures

As a very rough guide, there are generally two common structures:

1. Internal teams: In large organisations, they will usually have a larger team with varying depths of experience. They incorporate all of the above roles, but instead of a bookkeeper, they often have internal resources that manage payables, receivables and payroll and a role that is responsible for providing financial information for the leadership.

2. External teams: Smaller organisations don’t have the need for full-time resources, so they often have an external bookkeeper and rarely have senior financial experts on staff. They are more likely to use an outsourcing partner to provide the expertise to run their business.

Businesses may also use a hybrid approach, with internal teams supplemented by external resources. The key to success is making sure that you have the right people doing the right role providing you with the right information. All too often, we see small businesses relying on people without the right skillset or experience to perform key roles, which increases the risk of costly errors and even worse, the risk of fraud. Working with the right outsourced partner can help you get what you need and provide you with the benefits of independence and segregation of duties.

Accounting is far too important to be driven by annual tax lodgments and compliance requirements. Regardless of your business size, you need real-time information at your fingertips and the best advice to manage the performance of your business.

Inhouse vs Outsourcing Your Finance Department

One of the most important considerations when planning your finance team structure is whether you can afford the right in-house team or leverage the expertise and skill of an outsourcing partner. Keep in mind demand for each role might vary drastically so having four full-time people for each basic role is not always cost-effective. The cost of employing people is not just the wages and superannuation - it also includes the cost of absences (planned and unplanned), turnover, training and countless other costs to ensure you have the best available people helping you run your business. By working with an outsourcing partner, you get the benefits of their expertise, the ability to scale up and down based on the changing needs of your business and mitigate the risks of employing your own team.

Considerations in Planning Your Finance Department Structure

Regardless of whether you choose to go with an in-house or outsourced team, the most important consideration for your finance department structure boils down to accountability. As a result, you need to establish a clear point of accountability and determine who does what. Your ability to maintain full control depends on having the right people with the right skillset doing the right work and verifying it is done correctly.

With outsourcing, you work with experienced professionals who share responsibility and help guide you to make informed decisions. Outsourcing can also help free up your time and still give you access to the information you need to run your business. 

It is also important to consider the infrastructure, processes, training and quality systems that are needed to set yourself up for success. A professional outsourcing partner will take care of the necessary infrastructure and processes to ensure their own success, which ensures you get access to what you need to create success.

Working with an Offshore Team

Last but not least, if you are considering hiring an offshore team, you need to consider the infrastructure and processes needed to ensure the offshore team is effective and efficient. The lower cost can be eroded quickly if the processes are inefficient or ineffective. Unstructured offshore teams also require safeguards that protect your sensitive financial information. You need to have the confidence that you can hold the offshore team accountable to the standards of delivery that you expect. And finally, without the necessary leadership and training, they may not understand the compliance requirements.

To help mitigate the risks of outsourcing to an offshore team, it is a better option to engage an outsourcing partner that has Australian based leadership and compliance.