The CFO'S Perspective

During the course of normal business, it is sometimes necessary to cut ties with established business partners in favor of other organizations that are better able to meet your company’s needs. Any number of reasons might lead to this transition, including, but not limited to:

• Growth of your firm that exceeds what your business partner can offer.
• Growth of the business partner that takes their service offerings in a different direction.
• Poor service or reliability.
• Increasing costs.
• A change in business circumstances that no longer makes you a good match.

A change in service providers can apply to bankers, CPAs, outsourced payroll providers, HR, outsourced accounting, IT, accounting platforms, and any number of other business services. The challenge when making a switch is managing the transition so that it goes smoothly for all parties involved to minimize business disruption.

In this article I’ll share some lessons learned from a recent outsourced payroll provider transition that has caused considerable pain for my client, their employees, and owners. My hope is that the real-world example I provide will serve as a cautionary tale, so you understand why it’s so important to be strategic when changing business service providers.

There is a misconception that business services companies do not need to prioritize cash flow management in the same way that retail businesses do because they do not have the same kind of inventory demands. However, cash flow planning is just as important for service providers as it is for retailers because cash is the lifeblood of both!

People are asking, “How much office space do service providers need these days?” But perhaps it is more appropriate to ask, do service providers really need office space at all anymore?

Since the shift to remote work, it seems everything from making introductions and generating quotes to signing contracts and conducting client meetings can be done virtually now. With that in mind, many services companies are left wondering if they even need their office space these days. As a result, they are leaning on their CFOs (Chief Financial Officers) to do the cost analysis required to determine if they should keep their existing office space, downgrade to a smaller space, or forgo having a centralized office entirely. Where service providers do retain their office space, a CFO’s job is not done. In these cases, service companies are relying on their CFOs to re-negotiate office leases and make leasehold improvements to help improve their cost efficiency in today’s tight economy.

To keep the office or not keep the office – that is the question. What should your business do?

Creating authentic connections with customers can help companies to attract new customers, retain existing customers, and develop brand advocates to increase customer lifetime value across the organization. It can also benefit employees, strengthening the company from within. Having a meaningful connection with the people they are serving allows employees to find meaning in the work that they do, simultaneously increasing employee retention and making it easier to attract top talent for new roles. The net effect of these internal and external shifts is greater, more sustainable revenue.