March 24, 2025 - Manufacturing is a complex industry. From managing inventory to ensuring profitability, every decision counts.

In a recent episode of The Manufacturers Network Podcast, host Lisa Ryan sat down with Jason Kruger, a partner at Citrin Cooperman, to discuss how manufacturers can thrive with the help of outsourced financial management.

Tune into the full episode, here.

In this blog, we'll explore how outsourced financial management can help manufacturers tackle financial complexities, improve cash flow, and scale operations more effectively.

Why Outsourcing Financial Management Works

For many small to mid-sized manufacturers, financial management begins with basic accounting functions—payroll, bookkeeping, and invoicing. However, as the business grows, so does the complexity. Increased inventory tracking, forecasting cash flow, and evaluating the profitability of product lines all become critical tasks.

This is where outsourced financial management becomes a game-changer. When your business outgrows basic accounting, outsourcing to a team of specialists provides:

Access to industry-specific experience

Outsourced financial teams are made up of fractional CFOs, controllers, and accountants who specialize in manufacturing. They bring a wealth of knowledge to help your company navigate the challenges unique to the manufacturing industry.

Cost-effective solutions

Hiring a full-time CFO or controller may be out of budget for many manufacturing businesses. Outsourcing offers access to the same level of expertise without the high overhead costs, giving your business the financial edge it needs.

Scalability for growth

Whether you're experiencing a rapid surge in sales or dealing with seasonal demand, outsourced services can scale with your business. This flexibility ensures that you always have the financial expertise you need, when you need it.

Advanced tools and technology

Outsourced providers come equipped with the latest financial tools and software, allowing for seamless integration and real-time reporting. These systems help manufacturers make informed decisions quickly, —keeping operations running smoothly.

By outsourcing financial management, manufacturers can focus on what they do best—producing high-quality goods—while leaving the complexities of financial planning to the specialists.

The importance of real-time financial insights

In manufacturing, delays in financial reporting can lead to missed opportunities or costly errors. Real-time financial insights allow businesses to make informed decisions quickly. For example, having up-to-date data can help you identify which product lines are the most profitable or determine where operating costs are spiraling out of control.

With real-time insights, manufacturers can:

• Monitor gross margins to ensure profitability across different product lines.
• Identify inefficiencies in production and address them promptly.
• Adjust pricing strategies to align with current market conditions.

Investing in systems that provide real-time data is no longer a luxury but a necessity for staying competitive in the manufacturing industry.

Mastering cash flow management: Strategies for success

Cash flow is a critical element for manufacturing businesses, especially those with inventory-heavy operations. A common pitfall is cash being tied up in inventory or accounts receivable. Without a proper cash flow management system in place, businesses risk running into financial strain.

Accounts receivable optimization

Improving cash flow starts with ensuring timely payments from clients. Setting clear invoicing terms, establishing automated reminders, and following up on overdue accounts can all contribute to faster payments and healthier cash flow.

Accounts payable management

Managing payables is just as important. Taking advantage of vendor discounts for early payments can save money, but it’s equally crucial to plan outflows carefully to maintain liquidity and prevent shortfalls.

Inventory alignment

Excess inventory ties up valuable cash flow that could be invested elsewhere. Analyzing sales trends and aligning your inventory levels ensures that you're not overstocking or understocking. This helps keep your operations smooth while freeing up cash for other business needs.

Proactive cash flow management enables manufacturers to avoid financial strain and maintain operations smoothly.

Key financial metrics to track

To stay ahead in the competitive manufacturing industry, tracking the right financial metrics is essential. These indicators provide valuable insights into your business’s health and help pinpoint areas for improvement.

Gross profit margin

This metric helps you evaluate how efficiently you're producing goods in comparison to their cost. A healthy margin is essential for sustaining long-term growth and ensuring profitability.

Inventory turnover ratio

This ratio measures how quickly your inventory is sold and replaced. If turnover is too slow, it may indicate that you're holding excess stock, which ties up cash flow. On the other hand, high turnover signals efficient operations.

Operating expenses

By keeping operating expenses in line with revenue, you can ensure that your business is not overspending. Finding ways to reduce waste without sacrificing quality is key to improving your bottom line.

Cash conversion cycle

The cash conversion cycle measures how quickly you can convert your investments in inventory and other resources into cash. A shorter cycle means greater liquidity, which allows for more flexibility and growth opportunities.

Tracking these metrics regularly provides valuable insights into your financial health and helps guide your decisions.

Scaling financial systems for growth

As your business grows, so does the complexity of your financial operations. Managing larger inventories, handling more clients, and scaling production all require stronger financial systems. Here’s how to scale effectively:

Automate manual processes

Automation reduces errors, saves time, and helps your financial team focus on more strategic planning rather than routine tasks.

Invest in integrated software

Financial software that connects accounting, inventory, and reporting systems ensures seamless data flow and improved accuracy across the board.

Standardize processes

Creating and documenting standard operating procedures is essential for consistency as your company expands. This ensures that new team members can quickly get up to speed and maintain the same high standards of financial management.

Common challenges in manufacturing finance

Manufacturers face several unique financial hurdles, including fluctuating raw material costs, labor expenses, and inventory management. Outsourcing financial management can help you tackle these challenges head-on with tailored strategies.

Raw material price volatility

Outsourced financial specialists can assist in negotiating supplier contracts or implementing hedging strategies to mitigate the impact of raw material price fluctuations, helping to stabilize costs.

Managing labor costs

Labor is often a significant cost in manufacturing. Analyzing workforce efficiency and overtime usage can provide valuable insights into controlling labor expenses without compromising on quality or production speed.

Streamlining inventory management

Inventory management plays a key role in a manufacturing business’s financial health. Implementing just-in-time inventory systems reduces excess stock, frees up cash flow, and helps maintain operational agility.

Outsourcing helps manufacturers address these common challenges with tailored advice and proactive financial management

How we can help

Outsourced financial management provides manufacturers with the tools, expertise, and strategies needed to thrive in a competitive landscape. By leveraging real-time insights, managing cash flow effectively, and focusing on key financial metrics, businesses can overcome challenges and unlock sustainable growth.

Whether your goal is to improve profitability, streamline operations, or scale for the future, outsourcing financial management could be the solution your business needs.

Interested in learning more? Citrin Cooperman’s Business Process Outsourcing team can provide specialized advisory services tailored to your firm’s needs. Contact Jason Kruger, jkruger@citirincooperman.com, today.