- A growing franchise must continue meeting changing business demands. An up-to-date and scalable accounting system can help capture the financial details needed for budgeting, reporting, and research.
- Effective accounting processes, such as proper cut-off dates, timely third-party information, and financial systems integration, are essential to creating an efficient accounting function.
- Deciding how to staff your accounting function depends on what is strategic to the business and what can be performed routinely by others.
Take time to assess your back-office systems and processes.
Whether you are franchising a restaurant, gym, or other service business, it’s essential to keep your back-office records organized and maintain effective accounting processes — physical and virtual.
Keeping information organized, employing leading accounting practices, and assessing staffing mix can help you align systems, processes, and people for back-office success.
Keep data storage well structured
When preparing for your annual tax return or various types of audits, you must have your historical information organized and stored well. This is especially true if your business works with vendors that trigger required Form 1099 reporting.
Choose a document storage product that can be organized like a physical file cabinet. Create folders for your business: legal, contracts, human resources, policies, insurance, accounting, etc. Build a further framework within the accounting folder: vendor invoices, accounts receivable, credit card statements, and bank statements — by month and year for each. Where ownership structure is a factor, keep records arranged by legal entity.
Having records organized and immediately accessible can save hours when you need to seek additional capital or have a conversation with a banker or CPA.
Maintain adequate business systems
An up-to-date accounting system can help capture the financial details you need for budgeting, reporting, and research. In the case of franchising, your accounting system will need to keep pace with the rapid growth franchisees.
Choose a system that can meet changing demands — one that can increase performance levels and storage capacity without the need to invest in additional hardware. Scalable software with advanced programming and integration of multiple business functions can also help you see potential problems and opportunities in real time.
Establish effective accounting processes
Accounting processes involve major financial parts of your business, such as cash, receivables, payables, debt, fixed assets, and equity. Establish procedures for each of these areas to maintain effective and efficient accounting.
- Your back-office procedures should segregate banking and cash handling duties and use technology for security (e.g., positive pay and unique password storage for systems)
- Integrate your accounting system with your bank, point of sale system, and credit card provider to receive sufficient information on a daily or weekly basis
- Establish proper cut-off dates for reporting periods and connect with third parties to convey expectations for timely statements and information
- Follow standard accounting practices, such as not paying vendors without a W-9 form or employees without proper paperwork
These processes may seem easy to follow, but they require attention to detail.
Consider a combination of in-house employees and outsourced talent
When staffing a small franchisee back office, keep several questions in mind:
- How much of the work needs to be done on-site, in person?
- What is the minimum staff needed to maintain effective practices and provide administrative support to business operations?
- Would outsourcing key roles or functions make sense at various stages of growth and development?
In today’s business world, many companies perform back-office functions remotely, either with their own employees or using outsourced providers for payroll, bookkeeping, tax preparation, human resources when services are not needed full time. Deciding whether to hire in-house employees or outsourced contractors depends on your business strategy and what can be performed routinely by others.
In the early stages of a business, outsourcing key functions like payroll and bookkeeping may be appropriate due to the low amount of work. As the company grows, in-house employees may be hired to handle larger volumes of work and provide backups for emergencies or planned absences. However, it may still be advantageous to hire more senior or experienced talent on a fractional basis from outside.
How we can help
We can provide full- or part-time outsourced professionals to support the accounting function, whether you need staff to handle day-to-day transactions, a controller to help you scale back-office operations as you grow, or a consulting CFO to weigh in on financial management issues. And throughout our relationship, we provide relevant guidance so you can focus on day-to-day operations and feel confident that your accounting needs are covered.