January 2, 2025 Reimagining Cost Management for Manufacturers

Manufacturers are turning to flexible talent to tackle rising costs, workforce shortages, and drive sustainable growth.

By Matt Wood, Global Head of Finance and Accounting, Personiv

Today’s manufacturers are facing unprecedented pressures. From rising inflation and workforce shortages to the increasing costs of raw materials and labor, even the most resilient businesses are having to shift strategies and navigate unpredictable landscapes. 

For manufacturers, the challenge isn’t just about cutting costs, it’s also about finding smarter ways to manage resources while maintaining growth and quality. The current state of the industry presents a unique opportunity for manufacturers to reimagine cost management strategies and reevaluate finance and accounting approaches. By identifying when it’s time to adjust in-house models, shifting models to manage costs without compromising quality, and embracing the advantages of flexible, scalable solutions, manufacturers can regain control and thrive in an increasingly uncertain landscape.

When it’s Time to Rethink Finance Models

Manufacturers often hold onto traditional finance and accounting structures for too long, not realizing when these systems are no longer serving them effectively. Indicators that it may be time to rethink in-house strategies include delayed financial reporting, increased compliance risks, or difficulty scaling operations. For example, if a finance team is consistently late with reports or struggling to provide accurate data, it could be a sign of an overwhelmed or under-resourced system. When manual processes or outdated technology create inefficiencies or errors, this is also a good indicator that it’s time to look for alternate solutions. 

An internal finance team that’s stretched too thin or constantly firefighting may benefit from outside expertise or technology solutions that can streamline operations. This could mean outsourcing certain functions, like accounting or payroll, to more scalable, cost-effective providers who specialize in manufacturing needs–freeing up internal teams to focus on more impactful work. 

Achieving Cost-Control without Sacrificing Quality

One key challenge for manufacturers is maintaining cost control without compromising product quality. This is particularly difficult when margins are already tight due to rising raw material prices and labor shortages. One way manufacturers can address this challenge is by adopting smarter financial practices that increase efficiency, especially for repetitive finance and accounting functions. Shifting models allows manufacturers to control costs more effectively by adjusting staffing levels, scaling operations, or automating back-office functions when needed. 

For example, leveraging outsourced talent in non-core areas like bookkeeping or compliance can reduce staffing costs while maintaining operational efficiency and freeing up internal resources. Similarly, outsourced accountants may recommend strategies like bulk purchasing to minimize procurement expenses or more strategic payment terms to improve cash flow. This empowers manufacturers to shift efforts back toward innovation, rather than being bogged down with routine tasks. 

Specifically, collaborations between outsourcing companies and manufacturing companies underscore the value of scalable and adaptable support, enabling businesses to achieve cost control without compromising quality. From winery and distilleries businesses to automotive manufacturers, businesses across industries who outsourced finance functions saw optimized operations, the flexibility to adapt to changing staffing needs, and the ability to better manage rising costs. 

The Strategic Advantage of Flexible, Scalable Finance Solutions

One of the greatest advantages of outsourcing finance and accounting in manufacturing is the ability to scale services based on the needs of the business. This flexibility is critical, especially for companies experiencing fluctuations in production volumes, seasonal demands, or changes in the market landscape. For example, many mid-size businesses start by outsourcing just a single role to get that extra support, and can save up to 50% on costs to hire someone through traditional routes.  

Outsourcing allows manufacturers to tap into a range of specialized skills without the overhead of maintaining a large in-house team. For instance, during periods of rapid growth, manufacturers can scale up their finance team with outsourced professionals who can help manage increased financial complexity. On the other hand, during slower periods, they can scale back to save on costs, ensuring that they’re only paying for the services they need.

Moreover, outsourced finance professionals bring in valuable industry expertise, offering strategic insights on financial planning, risk management, and future investments. This allows companies to make data-driven decisions on issues from purchasing new equipment and expanding product lines to managing debt.

Embracing Financial Flexibility for Sustainable Growth

As manufacturers continue to grapple with the challenges of rising costs, inflation, and workforce shortages, rethinking traditional in-house financial models can be the key to maintaining profitability and growth in a turbulent market. Resources like automating processes or outsourcing roles provide a unique opportunity to improve profitability and position businesses for long-term success. Not only do these models offer significant cost savings, but they also provide the expertise needed to navigate a constantly changing market. By leveraging flexible finance solutions, manufacturers can stabilize their operations and uncover new opportunities for growth.

About the Author:
Matt Wood is the Global Head of Finance and Accounting Outsourcing (FAO) at Personiv, responsible for delivering exceptional finance and accounting solutions to clients worldwide. Under his leadership, Personiv has experienced significant growth and expanded its client base and capabilities. He played a pivotal role in enhancing the company’s client support and recruiting programs, working closely with global operations teams to develop a best-in-class recruiting and account management program, ensuring client success and satisfaction. Matt joined Personiv in 2016, bringing a wealth of experience from organizations including HireBetter, Dell and Princeton Recruiting Group, with a focus in recruiting and operations.

Subscribe to Industry Today