Why Building An Accounting Team Is Harder Than You Think

If you’ve reached a certain level of success, you’ve probably passed the point where your books are an afterthought.   You may be at the point where you are looking to bring on that first accounting whiz - or perhaps you hired a Controller, but you find them spending too much time being a bookkeeper and not enough time being a Controller.  This is very common for a company that is venturing out to build an in-house accounting department.  Often, the first accounting hire is brought in with the expectation that they will run the full stack of accounting and finance needs.  Unless you’ve previously built an accounting or finance team before, it can be very easy to underestimate the needs and requirements.

Here are 5 challenges you’ll face when you start an internal accounting team:

1.       People Volume

If you’ve crossed into the multi-million dollar revenue range, keeping good books (and I’m not talking about making entries in QuickBooks once a week to record total revenue) is a full-time job.  That person needs to record every transaction (income and expense), make sure the bills are paid, reimburse employees - the list goes on.  By the time they finish doing that, the week is nearly finished.  So what happened to those Excel reports you wanted that are supposed to show how much money last month’s Facebook campaign made?  Maybe next week.  Especially in the e-commerce world, with high transaction volumes, the demand for bodies in an internal accounting department will likely grow much more rapidly than originally anticipated.  This is especially true if you are hoping to get reports and data that are meaningful to your decision making process.

2.       Technology & ERP Systems

To get the most out of your accounting team they need strong tools.  There are plenty of low-cost options for startups (less than $1M in annual revenue) that do a serviceable job.  Once you’ve passed the $1-2M range, they’ve probably run their course.  As a company grows the need to view cross-sections of data becomes greater and greater.  Think about how easy it is to view data and reports in tools like Google Analytics.  You should be able to view your financial data with that same level of ease.  You also really want data that comes from other applications to be factored in – apps like your shopping cart, shipping providers, advertising platforms, etc.  When you start an internal team, those technology challenges can be tough to handle and get really pricey very quickly.  Typically, this requires a team of consultants to work out integrations and implement a true ERP system.

3.       Skillsets

Its tempting to think that there is a single hire to cure your accounting woes.  As a CPA and one who’s helped hundreds of companies through my career – I sincerely appreciate your faith in our profession.  However, lets be honest – that person probably doesn’t exist – and if they do, be prepared to break out your checkbook because they are going to be really expensive.  Bookkeepers can usually do a very nice job of ensuring transactions are recorded properly and bills are paid on time – assuming they have all the necessary software and processes in place.  Setting up those software components and creating the accounting processes are typically outside the call-of-duty for a bookkeeper (and probably for an Accountant or Senior Accountant as well).  The high level knowledge required to design proper industry specific accounting processes is usually found at the Controller level or higher.  Its common to see companies try to forego the bookkeeper/accountant role and go straight for a Controller with the assumption they can get it all done.  The downside is that you’re paying for that much higher skillset and very often they spend more than 90% of their time getting the numbers correct and very little time on analysis.  If you’re going to implement a true ERP system and plan to integrate other applications, you’ll likely need a developer too.  Most ERPs (not QuickBooks or Xero) are not ready to rock right out of the box.  To get everything done properly, there will certainly be technical knowledge required that a Controller rarely has.

4.       Cost

It’s the ultimate 4 letter word.  If you’re a multi-million dollar company with plans for growth, a single bookkeeper and QuickBooks won’t cut it.  In order to get the right systems in place, have your books kept in good detail, get in depth reporting and analysis, and have it all done in real-time – you’ll likely need a team of a few people and an investment in more advanced systems.  The annual cost for that team and technology will climb to 6 figures in the blink of an eye and will continue to grow as long as you do.  Technology and salaries are typically the two cost components that people think about, but they often forget the overhead that goes into running an internal department – things like computers, benefits, training, and mandatory continuing education for CPAs.  These also add up rather quickly and can easily add another 20-30% on top of the tech cost and salaries.

Our goal is not to discourage you from getting strong accounting processes, procedures, people or systems in place.  We really believe that it’s the foundation by which a business grows and scales profitably.  We also believe we’ve built a solution that is not only more empowering and scalable – but more cost effective as well.

At Lumiola, we’re using automation, artificial intelligence, and skilled accounting professionals to own the whole accounting process.  We relieve you of the headaches and make sure you have insights to help make important decisions.