How Large Should the Finance Department Be?
We got asked this question- someone with a $15 million telecom business asked how large the accounting department should be.
It all depends – on many factors:
1. How many customers do you have?
2. How large are the orders? Do you have a lot of orders or very few large ones?
3. How automated are your collections? Is it recurring or online revenue covered by credit cards or is there a collection effort involved?
4. How complex are your collections and invoicing? Healthcare for example can have very complicated billings. Some businesses with retail customers get involved with some very involved chargebacks.
5. Do you resell or develop your own products and services? If reselling, it can be
6. How complicated is the production of your product or service? How elaborate is the reporting that is needed?
7. How diverse is your structure- different offices, countries, organizations?
8. What other complicating factors are there in your business- for example:
a. Commission structures
b. Customer contracts
c. Expense reports and travel
Depending upon the answers to these questions, you could have a wide range of staff needed, from just a couple to a dozen or more.
The above cover your type of business and what you might not be able to control. Within your control however, are how good your systems are, what type of people you have and how well your people are mentored. Good systems can minimize staff. So can having the right person at the top; some people have not made the transition and still require a lot of staff.
As an example of a lean finance department, we have one client who has just two finance people for a roughly $20 million business.
Your business can set a range for how large your finance area needs to be. To be at the low end of the staffing range, take a hard look at the person at the top, your system and your processes.
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