Many nonprofits find themselves overwhelmed by the unique reporting requirements and presentation of nonprofit financial statements that are specific to their industry. From deciphering the statement of financial position to tracking program expenses and donor restrictions, nonprofit leaders often face a steep learning curve.  

Without clear, accurate financial information, it’s difficult to make informed decisions, demonstrate accountability, or plan for the future. Today, we’ll break down the essentials of nonprofit financial statements—what they are, why they matter, and how they reflect your organization’s financial situation.  

Why financial statements matter for nonprofits 

Nonprofit organizations operate in a unique environment where financial transparency and accountability are essential for sustaining your mission and maintaining trust with the community you serve and your donors. Tax-exempt organizations must follow specific financial reporting requirements that reflect their responsibility to donors, grantmakers, and regulatory agencies. 

Building trust and securing funding 

Financial statements show how your organization manages its resources, how funds are allocated to program services, administrative costs, and fundraising expenses, and how effectively you are advancing your mission.  

Donors, grantors, and board members rely on these statements to evaluate your organization’s financial health and stewardship. Transparent, accurate reporting builds credibility, attracts new funding, and reassures existing supporters that their contributions are being used responsibly. 

Demonstrating accountability and supporting informed decisions 

Beyond regulatory compliance, your financial statements are powerful tools for internal decision-making. They provide critical data that helps leadership and board members assess the organization’s financial position, monitor program expenses, and plan for the future.  

Actionable financial information allows you to make data-driven decisions—whether it’s expanding a program, adjusting fundraising strategies, or managing cash flow to ensure sustainability. 

The four essential nonprofit financial statements 

Nonprofit organizations rely on four core financial statements to tell their financial story, demonstrate accountability, and support informed decision-making.  

1. Statement of financial position 

The statement of financial position – comparable to a balance sheet – provides a snapshot of your nonprofit’s financial situation at a specific point in time.  

It details what your organization owns (assets), what it owes (liabilities), and the net assets that remain after obligations are met.  

Key components include: 

• Assets: Cash, investments, accounts receivable, prepaid expenses, property, and equipment 
• Liabilities: Accounts payable, accrued expenses, loans, and other obligations 
• Net assets: The difference between assets and liabilities, categorized by donor restrictions (with or without donor restrictions) 

This statement helps you and your board assess liquidity, understand what resources are available, and identify any potential financial risks. A common misconception is that a positive net asset number always means financial strength; in reality, the composition and liquidity of those assets matter just as much. 

2. Statement of activities 

The statement of activities – comparable to an income statement – shows how your organization’s net assets change over a fiscal year. It highlights all sources of revenue—such as donations, grants, program fees, and investment income—alongside expenses, including program services, administrative costs, and fundraising expenses.  

Key elements include: 

• Revenue: Contributions, grants, program fees, investment, special events, and other income 
• Expenses: Program services expenses, management and general (administrative costs), fundraising expenses 
• Change in net assets: The surplus or deficit for the period 

This statement reveals whether your organization is operating within its means and advancing its mission efficiently.  

Nonprofit leaders sometimes assume that “breaking even” is the goal, but building reserves for future stability is also a sign of good financial management. 

3. Statement of cash flows 

The statement of cash flows tracks the movement of cash in and out of your organization, broken down by operating, investing, and financing activities.  

It shows how cash is generated and used, helping you monitor liquidity and plan for upcoming obligations.  

Key sections include: 

• Operating activities: Cash received from donations, grants, and program fees; cash paid for expenses like employee salaries, office supplies, and program costs 
• Investing activities: Cash used for or generated from the purchase or sale of assets, such as equipment or investments 
• Financing activities: Cash flows related to loans, interest paid, or other financing arrangements 

This statement is crucial for understanding whether your organization can meet its short-term commitments, even if the income statement looks healthy.  

A frequent question is why a nonprofit with a “surplus” on the statement of activities might still face cash flow challenges—timing differences and non-cash revenue can explain this disconnect. 

4. Statement of functional expenses 

Unique to nonprofit financial reporting, the statement of functional expenses breaks down total expenses by both their nature (such as salaries, rent, supplies) and function (program services, management and general, fundraising). This level of detail is vital for transparency and compliance. 

Key components include: 

• Program services expenses: Costs directly related to carrying out your mission and/or providing your services and programs 
• Management and general: Administrative costs necessary for operations 
• Fundraising expenses: Costs incurred to raise contributions 

This statement helps stakeholders see how efficiently resources are allocated to mission-driven activities versus overhead.  

Nonprofit leaders sometimes worry that high administrative costs will deter donors, but clear reporting and context can help explain necessary investments in infrastructure and capacity. 

Understanding these four financial statements gives your organization the tools to communicate financial health, demonstrate stewardship, and make informed decisions for the future.  

If you find these reports overwhelming or struggle to keep them accurate and timely, you’re not alone—many nonprofits turn to outsourced accounting solutions to ensure their financial information is reliable and actionable. 

Get accurate nonprofit financial statements with BPM 

Understanding nonprofit financial statements is essential for building trust, maintaining compliance, and driving your organization’s mission forward. Clear, accurate financial reporting doesn’t just satisfy regulatory requirements—it empowers your leadership, reassures your donors, and provides a roadmap for sustainable growth. 

Ready to strengthen your nonprofit’s financial health and unlock greater impact? Connect with BPM today for a conversation about how our people-first approach to nonprofit accounting can help your organization thrive. 

Companies across industries face pressure to adapt, evolve, and optimize their operations. Market volatility, economic uncertainty, and changing consumer demands force organizations to reconsider their current structures and strategies. Corporate restructuring is a powerful tool that enables businesses to realign their resources, streamline operations, and position themselves for sustainable growth. 

You might find yourself questioning whether your current organizational structure serves your business objectives effectively. Perhaps your company struggles with declining profitability, operational inefficiencies, or competitive disadvantages that threaten long-term viability. Corporate restructuring offers a pathway to address these challenges systematically and strategically.  

This article will explore the fundamental principles of corporate restructuring, examine key strategies available to your organization and provide actionable insights to guide your transformation journey. 

Understanding corporate restructuring fundamentals 

Corporate restructuring involves comprehensive changes to your company’s organizational structure, financial arrangements, or operational processes. This strategic initiative goes beyond simple cost-cutting measures to create fundamental improvements in how your business operates and competes in the marketplace. 

Your restructuring efforts typically address three core areas:  

• Financial optimization: Focusing on debt management, capital structure improvements and cash flow optimization 
• Operational efficiency: Targeting workflow improvements, resource allocation, and organizational design. 
• Strategic realignment: involving portfolio management, market positioning and competitive advantage development. 

Financial restructuring strategies 

Financial restructuring addresses your company’s capital structure, debt obligations and funding mechanisms. Debt restructuring involves renegotiating payment terms, interest rates, or principal amounts with creditors. This approach provides breathing room for struggling companies while maintaining operational continuity. 

Equity restructuring modifies ownership structures, share distributions, or governance arrangements. Companies may issue new shares, repurchase existing stock or restructure ownership percentages to optimize capital efficiency. Asset restructuring involves: 

• Divesting non-core assets 
• Acquiring strategic resources 
• Reconfiguring asset portfolios to improve returns 

Operational restructuring approaches 

Operational restructuring focuses on improving your company’s internal processes, organizational design, and resource allocation. Workforce restructuring may involve layoffs, retraining programs, or role redefinition to optimize human capital. Process reengineering eliminates inefficiencies, automates routine tasks, and streamlines workflows. 

Technology integration plays a crucial role in operational transformation. Digital platforms, automation tools and data analytics systems can significantly improve productivity and decision-making capabilities. Supply chain optimization reduces costs, improves quality, and enhances customer satisfaction through better vendor relationships and logistics management. 

Strategic restructuring options 

Strategic restructuring aligns your business portfolio with market opportunities and competitive advantages. Divestiture involves selling non-core business units or assets to focus resources on primary revenue drivers. This approach generates cash while allowing management to concentrate on high-performing segments. 

Mergers and acquisitions enable rapid growth, market expansion, and synergy realization. Strategic partnerships create collaborative advantages without full integration requirements. Joint ventures allow companies to share risks and resources while pursuing new market opportunities or technological developments. 

Key drivers behind restructuring decisions 

Several factors typically prompt organizations to pursue corporate restructuring initiatives: 

• Economic downturns often force companies to reassess their operations and eliminate inefficiencies.  
• Technological disruption may require significant organizational changes to remain competitive.   
• Market consolidation through mergers and acquisitions creates opportunities for operational synergies and cost reduction. 

Your company might also consider restructuring to address specific performance issues. Declining market share, reduced profitability, or operational bottlenecks signal the need for structural changes. Regulatory changes, industry shifts, or new competitive threats may also necessitate comprehensive organizational transformation. 

Measuring corporate restructuring success 

Effective restructuring initiatives produce measurable improvements in financial performance, operational efficiency and strategic positioning. Revenue growth, profitability increases, and improved cash flow indicate successful financial restructuring. Operational metrics such as productivity gains, cost reductions, and quality improvements demonstrate process optimization success. 

Market performance indicators include:  

• Increased market share 
• Improved customer satisfaction 
• Enhanced competitive positioning 

Additional metrics, like employee engagement scores, retention rates, and productivity measures, can also reflect successful organizational transformation. 

Working with BPM for corporate restructuring 

Corporate restructuring is one of the most challenging and consequential decisions your organization will face. The complexity of modern business environments demands sophisticated approaches that balance immediate needs with long-term strategic objectives. BPM brings decades of experience helping companies navigate these critical transformations successfully. 

Our team understands that every restructuring situation requires customized solutions tailored to your specific circumstances, industry dynamics, and organizational goals. We work closely with your leadership team to develop comprehensive strategies that optimize financial performance while maintaining operational continuity. To schedule a consultation and discover how our restructuring services can position your company for sustained success in an increasingly competitive marketplace, contact us.  

As your business scales from startup to well-funded growth stage, you’re navigating a critical transition filled with opportunity and financial complexity.  

What worked during your early days—spreadsheet-based planning, founder-led financial decisions, and reactive cash management—can quickly become inadequate as investor expectations rise, and operational complexity grows. 

Without strategic financial planning, growing companies often face unrealized revenue potential, funding challenges, and limited visibility into performance drivers. These blind spots don’t just slow growth—they can derail it.  

Let’s take a look at the most common mistakes we see high-growth businesses make (and how you can avoid them).  

Key financial challenges for scaling businesses 

The leap from early-stage startup to a well-funded growth company introduces financial complexities that many founders aren’t prepared to navigate.  

As your business scales, it’s not enough to tracking only basic expenses and revenue—you’re managing multiple revenue streams, complex operational costs, and increasingly sophisticated stakeholder expectations. You’ll likely face: 

• Complex financial operations: As you add layers of management, processes, and infrastructure to support expansion, you’ll expose your business to inefficiencies and financial blind spots, like inadequate cash flow planning, data silos, and disparate systems.   
• Larger funding requirements and investor expectations: To grow you need funding—but how much should you raise? Many startups struggle with accurate financial forecasting for fundraising rounds, which doesn’t just create a financial problem, it also could cause dwindling investor confidence.  
• Managing goals for scale with profitability needs: Perhaps the most difficult balancing act is maintaining healthy cash flow while investing in growth. Many businesses face insufficient or irregular cash flow when expenses outpace incoming revenue, leading to missed opportunities or operational constraints.  

Finding the right pace for scaling—fast enough to capture market share but controlled enough to maintain financial stability—requires sophisticated financial planning that many growing businesses lack. 

For startups transitioning to growth stage, FP&A capabilities fill the critical need to model various financial scenarios, stress-test assumptions, and develop contingency plans. This approach reduces reliance on intuition alone, significantly enhancing the quality of strategic choices through data-driven insights and reducing the likelihood of common mistakes.  

5 financial planning mistakes growing businesses make 

As your business scales from startup to growth stage, financial planning becomes increasingly complex—and the margin for error shrinks dramatically. The financial missteps that were manageable in your early days can become big threats as your operations expand and investor expectations intensify. 

Mistake 1: Ignore data-driven decision making 

Growing businesses often rely on instincts and intuition long after they’ve outgrown this approach. In fact, 58% of companies base at least half of their regular business decisions on gut feel rather than data and information. This creates a significant competitive disadvantage, as a Harvard Business Review survey found that data-driven organizations are 3x more likely to make better decisions.  

For example, a rapidly growing e-commerce tech company might rely on intuition about inventory levels rather than implementing proper demand planning and forecasting. This approach often leads to costly overstock levels or missed sales opportunities due to stockouts.  

The disconnect between available data and decision-making creates blind spots. Many growing businesses track too many metrics (sometimes 30 or more) without understanding which ones truly drive performance, diluting focus from the two or three metrics that actually impact financial outcomes. 

How FP&A helps 

Instead of falling into these traps, scaling businesses should implement FP&A processes that transform raw financial data into actionable insights. This means moving beyond basic accounting to develop forward-looking analyses that connect financial data to strategic decision-making. 

Mistake 2: misaligned budgets with growth goals 

Growing businesses often struggle to align their budgets with their long-term strategic goals, leading to inefficient resource allocation and missed opportunities. Failing to do so can result in overspending or underinvestment in critical areas. This misalignment often occurs when companies focus solely on short-term financial targets without considering their broader strategic objectives. 

For instance, a software company aiming for rapid market expansion might allocate a disproportionate amount of its budget to sales and marketing, neglecting crucial investments in product development or customer support. This short-sighted approach could lead to customer churn and hinder long-term growth, despite initial revenue gains. 

How FP&A helps 

FP&A support can help businesses build annual budgets tailored to organizational objectives, ensuring every dollar supports strategic priorities. This includes (short and long term) goal setting, corresponding KPIs, resource alignment, and regular review sessions for ongoing alignment.  

Mistake 3: lack of clear KPIs and performance monitoring 

Yes, metrics matter. But not all metrics are created equally. Growing businesses often track too many metrics or focus on vanity metrics that don’t provide actionable insights, hindering decision-making and losing sight of the numbers that actually impact their bottom line.  

For example, a subscription-based software company might focus heavily on new customer acquisition numbers while neglecting to monitor customer lifetime value or churn rates.  

Another common issue is the failure to establish leading indicators that can predict future performance. Many businesses rely solely on lagging indicators (like quarterly revenue) that tell you what has already happened rather than what’s likely to happen next. 

How FP&A helps 

FP&A teams develop customized KPIs and frameworks for proactive performance monitoring that align with your specific business model and growth objectives. With these tailored metrics in place, leadership can quickly identify underperforming areas and make data-driven decisions to address issues before they impact financial results. The right KPI framework transforms financial data from backward-looking reports into forward-looking strategic tools. 

Mistake 4: Underestimating the importance of stakeholder communication 

Poor articulation of value can hinder funding opportunities and stakeholder trust. When businesses fail to effectively communicate their financial story and growth trajectory, they risk losing investor confidence and limiting access to capital. 

Many growing companies struggle to translate complex financial data into compelling narratives that resonate with different stakeholder groups. This communication gap becomes particularly problematic during fundraising rounds, when potential investors need clear articulation of how their capital will drive growth and generate returns. 

For example, a promising technology startup might have strong underlying financials but fail to secure additional funding because they can’t effectively evidence their unit economics, customer acquisition costs, or path to profitability in terms investors can easily understand and evaluate. 

How FP&A helps 

Strong FP&A processes help businesses translate financial data into strategic stories that demonstrate value creation and future potential. This approach transforms financial reporting from a compliance exercise into a powerful communication tool that builds stakeholder confidence. 

Mistake 5: Neglecting technology integration 

Under-powered systems can limit visibility into financial operations and slow decision-making processes. Many growing businesses operate with disconnected financial tools—often spreadsheets and basic start-up accounting software—that don’t communicate with each other or provide real-time insights. 

This technology gap creates several challenges: 

• Manual data consolidation that consumes valuable time and introduces risk 
• Delayed reporting that provides insights too late to inform timely decisions 
• Limited scenario planning capabilities when quick strategic pivots are needed
• Inability to analyze data at the granular level needed for optimization 

For instance, when finance teams rely on disconnected systems, they often spend excessive time manually reconciling data from multiple sources, leading to reporting delays and potential errors. These delays mean leadership receives critical financial insights days or weeks after they could have acted on them, creating missed opportunities and reactive rather than proactive decision-making. 

How FP&A helps: 

FP&A teams can help you integrate cutting-edge technology solutions for streamlined financial management and enhanced forecasting accuracy. Tools like NetSuite enable finance teams to create dynamic dashboards that visualize complex data in consumable form. These platforms allow leadership to monitor performance in real-time, drill down into problem areas, and identify opportunities that might otherwise remain hidden in spreadsheets. 

Realize your business’s growth potential with BPM’s FP&A Services  

Don’t let financial planning mistakes derail your growth trajectory. BPM’s collaborative FP&A approach transforms your operational data into strategic assets that illuminate growth pathways, validate strategies, and build compelling cases for investment. 

Ready to turn your financial data into a roadmap for success? Contact BPM’s FP&A team today to start building a future-ready financial strategy tailored to your growth ambitions. 

If you’re a controller or finance leader, you’ve likely felt the pressure to modernize your organization’s financial processes. Legacy systems, fragmented data, and manual workflows are holding you back from delivering the strategic insights your business needs. The solution? A comprehensive finance transformation strategy that puts your controllership function at the center of meaningful change. 

The reality is that successful finance transformation isn’t just about implementing new technology—it’s about reimagining how your finance function creates value for the entire organization. When done right, transformation elevates controllership from transaction processing to strategic business partnership. 

Why controllership should lead finance transformation 

Your role as a controller positions you uniquely to drive transformation success. You have deep knowledge of current business processes, established relationships across the organization, and ownership of critical compliance requirements. These advantages make controllership the natural champion for finance transformation initiatives. 

Consider this scenario: A multinational organization’s newly appointed chief accounting officer inherited a patchwork of disconnected systems from multiple acquisitions. Rather than accepting the status quo, they recognized an opportunity to create globally integrated processes built on a common data model. What started as an accounting system upgrade evolved into a comprehensive finance transformation that engaged the entire CFO organization. 

This isn’t an isolated example. We consistently see that the most successful finance transformation programs benefit from strong controllership leadership because of the function’s: 

• Comprehensive understanding of business processes, data flows, and system requirements 
• Trusted relationships across departments and business units 
• Direct accountability for accounting, statutory, and regulatory compliance 

Building your transformation strategy framework 

Your transformation strategy must begin with a clear vision for the future of your controllership function. This vision should articulate how you’ll deliver enhanced value to stakeholders through real-time data, analytical insights, and automated processes that increase efficiency and agility. 

A winning vision typically focuses on three key areas: 

• Capability development: Building new skills or strengthening existing organizational capabilities 
• Service delivery optimization: Leading processes and applying automation to improve efficiency
• Value creation: Shifting from transaction processing to strategic business partnership 

7 critical components of your strategy 

Your transformation strategy should include sufficient detail to guide decisions on priorities, investments, and resources. The most effective strategies address these essential elements: 

1. Vision and outcomes: How will your controllership function deliver measurable value to stakeholders? Your vision should clearly define success metrics and expected benefits. 

2. Process redesign: What work needs to be accomplished in the future state, and how will that work be executed? This includes identifying opportunities for automation and process optimization. 

3. Data transformation: How can you convert accounting and financial data from an operational barrier into a strategic organizational asset? Consider data quality, accessibility, and analytical capabilities. 

4. Talent strategy: What does future controllership work look like, and what skills will your team need? This includes both technical capabilities and strategic thinking skills. 

5. Resource planning: How will you staff and govern the transformation, including potential third-party partnerships? Consider both transformation team needs and ongoing operational requirements. 

6. Technology architecture: What platforms will enable your vision, and how do they integrate with existing systems? Focus on scalability, flexibility, and user experience. 

7. Implementation roadmap: How will you sequence milestones while considering accounting cycles, reporting deadlines, and business continuity requirements? 

Overcoming common transformation challenges 

Challenge 1: Lack of clear vision 

Starting your transformation journey without a fully formed north star vision often leads to suboptimal outcomes. This typically happens when change is driven by IT mandates or system migrations rather than business strategy. The result? Significant technology investments that simply recreate current-state processes in new systems. 

Solution: Invest time upfront to define your transformation vision and expected outcomes. Engage stakeholders across the organization to understand their needs and build buy-in for your strategy. 

Challenge 2: Late controllership engagement 

When controllership isn’t involved early in transformation planning, critical requirements get overlooked, leading to expensive customizations and delayed implementations. 

Solution: Position yourself as the transformation champion from day one. Use your process knowledge and stakeholder relationships to shape the program direction. 

Challenge 3: Over-customization 

The temptation to customize technology solutions to match legacy processes can derail transformation benefits and increase ongoing maintenance costs. 

Solution: Challenge existing processes and embrace standard functionality where possible. Use transformation as an opportunity to eliminate inefficient workarounds. 

Challenge 4: Decision paralysis 

Transformation programs require rapid decision-making, but many organizations struggle to make choices at the required pace. 

Solution: Establish clear governance structures with defined decision rights. Create escalation paths for issues that require senior leadership input. 

The talent imperative in finance transformation 

People are often the most critical component of transformation success. You’ll need to pull top talent from their current roles to lead transformation full-time. These leaders should be visionary, technology-savvy, and credible enough to evangelize change across the organization. 

Key talent considerations include: 

Organizational design 

What delivery model and structure best support your north star vision? Can improved technology enable centralization opportunities like shared service centers or centers of excellence? 

Skill development 

What capabilities need to be developed or acquired? Focus particularly on shifting from transactional accounting to analytics, data management, automation, and business insights. 

Change management 

How will you engage, communicate with, train, and build support for transformation within your global controllership function? Effective change management often determines transformation success or failure. 

Diversity and inclusion 

How can transformation accelerate progress on your controllership function’s diversity, equity, and inclusion goals? Use this opportunity to reassess role requirements and career development paths. 

Moving forward with your transformation strategy 

Finance transformation represents a significant opportunity to elevate your controllership function’s strategic impact. By taking ownership of the transformation strategy and leveraging your unique position within the organization, you can drive meaningful change that benefits not just finance, but the entire business. 

Remember that transformation is a journey, not a destination. Your strategy should be flexible enough to evolve as business needs change while maintaining focus on your core vision and objectives. 

The most successful transformations happen when controllership leaders step up as champions of change, bringing together business acumen, process knowledge, and strategic thinking to create lasting value for their organizations. 

Ready to transform your finance function? BPM’s experienced team can help you develop and execute a finance transformation strategy tailored to your organization’s unique needs.  

“Finance transformation touches every aspect of your organization—processes, technology, and people. Getting an outside perspective brings industry best practices and an objective view that’s not tied to existing systems or internal politics. You need someone who can look across all these dimensions holistically and see what you might be missing from the inside.” – Thomas White, Finance Transformation Leader   

Contact us today to discuss how we can support your journey toward a more strategic, efficient, and impactful controllership function. 

Finance teams face mounting pressure to do more than just compile data and report on what happened. The modern finance function must transform from backward-looking information providers into forward-thinking strategic partners who drive business decisions and create value. 

A well-designed finance transformation roadmap is essential to successfully evolve your finance team from information processors to business impact drivers. Let’s explore how to create and implement an effective roadmap that aligns with your organization’s strategic goals. 

Understanding the finance transformation journey 

Finance transformation isn’t a single project — it’s a multi-phase journey that fundamentally changes how your finance function operates and provides ongoing value to the organization. 

Think of finance transformation as a strategic initiative that requires breaking down larger goals into manageable components. We’ve found this journey typically progresses through four key phases: 

1. Strategize – Building a solid foundation by assessing your current state and developing a future-state vision 

2. Plan – Creating an executable roadmap with a business case and resource allocation 

3. Build – Executing the transformation through program management and change management 

4. Run – Transitioning to continuous improvement in your new operating model 

The evolution from information to impact 

The finance function encompasses four fundamental activities that create increasing levels of value: 

• Information: Cleaning, compiling, and assembling relevant data 
• Insight: Analyzing information and relating it to objectives 
• Influence: Becoming a strategic partner to influence decisions 
• Impact: Providing strategic leadership to guide the organization forward 

Most finance teams find themselves trapped in information and insight activities when they’d prefer to focus on influence and impact. A successful transformation helps teams make this crucial shift. 

6 steps to build your finance transformation roadmap 

Creating a comprehensive roadmap gives your transformation effort direction and purpose. Here are six essential steps to develop an effective finance transformation roadmap: 

1. Assess your current state and define your vision 

Start by taking an honest look at where your finance function stands today. This assessment should include: 

• Reviewing your existing processes and identifying pain points 
• Talking to stakeholders across the organization about their finance needs 
• Benchmarking against industry standards and leading practices 
• Developing a clear vision of your future finance operating model 

This assessment phase is the foundation for everything that follows. We’ve observed across numerous client engagements that taking time upfront pays significant dividends later in the process. 

A comprehensive assessment helps you: 

• Reexamine existing strategy or define a new one 
• Identify technology gaps and skillset requirements
• Gain buy-in at all levels to foster the necessary mindset shift 
• Create short and mid-term objectives based on your vision 

2. Evaluate technology systems and solutions 

Technology is the engine that powers finance transformation. Look beyond simply automating existing processes and consider how technology can fundamentally change how your team operates. 

Modern finance functions leverage: 

• Robotic Process Automation (RPA) to streamline repetitive tasks at the information level 
• Machine learning to augment capabilities at the insight level 
• Predictive analytics to enable strategic planning at the influence level 

When evaluating technology, consider: 

• How well potential solutions align with your business goals 
• Integration capabilities with existing systems 
• Total cost of ownership and expected ROI 
• User experience and adoption requirements 

3. Redesign processes with governance in mind 

As you transform, document new processes and consider governance requirements upfront. This includes: 

• Aligning new implementations with relevant laws and regulations 
• Documenting new processes thoroughly for training and audit purposes
• Building controls directly into your processes 
• Implementing a process ownership model to maintain consistency 

4. Prioritize data security and integrity 

With increased automation and digital processes comes greater responsibility for data security. Your roadmap should address: 

• Conducting cybersecurity risk assessments 
• Implementing appropriate security measures
• Establishing data governance policies 
• Creating protocols for responding to potential breaches 

5. Develop a change management strategy 

Even the best-designed transformation will fail without proper change management. Your roadmap should include plans for: 

• Communicating the vision and benefits to all stakeholders 
• Providing comprehensive training for new systems and processes 
• Identifying and supporting change champions across the organization 
• Measuring and celebrating early wins to build momentum 

6. Plan for continuous improvement 

Your transformation doesn’t end at implementation. Include measures in your roadmap for: 

• Testing new configurations before full deployment 
• Monitoring performance against established KPIs 
• Gathering feedback from users and stakeholders 
• Regularly reassessing and optimizing your new processes and systems 

Building the right team for transformation success 

Finance transformation requires a diverse set of skills. Consider assembling a core team with specialties in: 

• Finance operations and strategy 
• Process design and optimization
• Technology implementation and integration
• Change management and communication 
• Project management 

In our experience, transformation success depends on quality rather than quantity when it comes to team composition. A small team of high performers with cross-functional knowledge can often accomplish more than a larger team of specialists. 

Upskilling for the future of finance 

As technology automates routine tasks, finance professionals need new skills to deliver strategic value. Focus on developing three key skill areas: 

Technical skills 

• Data analysis and interpretation 
• Digital literacy and technology proficiency 
• Process design and improvement 

Business skills 

• Strategic thinking and business partnering 
• Decision support and scenario planning 
• Performance management 

People skills 

• Storytelling and communication 
• Change leadership 
• Collaboration across functions 

Most importantly, foster a growth mindset within your team. The motivation to embrace change has been identified as the most critical factor for successful finance transformation. 

Common pitfalls to avoid 

As you embark on your finance transformation journey, be aware of these common pitfalls: 

• Starting with technology rather than strategy – Technology should enable your strategy, not define it 
• Tailoring platforms to fit current processes – This prevents you from adopting leading practices 
• Failing to gain executive sponsorship – Transformation requires top-down support 
• Underestimating the importance of change management – People issues, not technical issues, derail most transformations 
• Trying to do too much at once – Break your transformation into manageable phases 

Ready to start your finance transformation journey? 

At BPM, we help organizations navigate the complex process of finance transformation. Our team can support you in assessing your current state, developing a clear vision, and creating a roadmap tailored to your organization’s unique needs. 

“Building a finance function that can scale with your growth requires orchestrated changes across people, process, and technology. When you bring in professional support for that transformation, it frees up your leadership bandwidth to focus on what you do best – growing the business. And as you scale and look to attract investors, they want to see a finance operation that’s ready to handle their capital efficiently, not one that’s still figuring out basic reporting.” – Thomas White, Finance Transformation Leader   

We understand that each organization’s transformation journey is different. That’s why we take the time to understand your specific challenges and goals before recommending a path forward. 

Contact us today to discuss how we can help you transform your finance function from a data processor to a strategic business partner driving growth and value for your organization. 

New IRS regulations expand executive compensation deduction limits 

The IRS has proposed significant new regulations that will expand the reach of Section 162(m)’s executive compensation deduction limitations starting in 2027. If your publicly held corporation hasn’t started planning for these changes, now is the time to act. 

On January 14, 2025, the IRS released proposed regulations (REG-118988-22) implementing amendments made by the American Rescue Plan Act of 2021 (ARPA) to Section 162(m). These changes will substantially increase the number of employees whose compensation above $1 million becomes non-deductible for tax purposes. 

Understanding the current landscape 

Section 162(m) has been limiting public companies’ tax deductions since 1993, but its scope has expanded significantly over time. Currently, the law disallows deductions for compensation exceeding $1 million paid to “covered employees” during the taxable year. 

The Tax Cuts and Jobs Act of 2017 introduced the “once covered, always covered” rule, meaning that anyone who was identified as a covered employee in 2017 or later remains a covered employee forever, even if they no longer hold their original position. This has already caused the number of covered employees at many companies to grow steadily over time. 

Who are covered employees today? 

Under current rules, covered employees include: 

• Chief executive officer (CEO) 
• Chief financial officer (CFO) 
• The three highest paid executive officers (other than the CEO and CFO) 
• Anyone who was previously identified as a covered employee since January 1, 2017 

The ARPA expansion: Five additional employees 

Starting with tax years beginning after December 31, 2026, ARPA adds a new category to the covered employee definition: the five highest compensated employees for each taxable year. 

This expansion represents a significant broadening of Section 162(m)’s reach, potentially affecting mid-level executives and high-earning employees who were previously outside the law’s scope. 

Key differences in the new category 

The proposed regulations clarify several important distinctions about these additional five employees: 

• Annual determination: Unlike the “once covered, always covered” rule that applies to traditional covered employees, the five highest compensated employees are determined fresh each year. An employee who qualifies one year doesn’t automatically remain a covered employee in subsequent years unless they continue to rank among the top five. 
• Broader definition of “employee”: The regulations define “employee” under Section 3401(c), which includes both common law employees and corporate officers. This means the five additional spots aren’t limited to executive officers—they can include any highly compensated employee. 
• Different compensation measurement: For identifying the five highest compensated employees, companies will use compensation that would be deductible for the tax year (generally Form W-2 box 1 wages). This differs from the current approach for identifying the three highest paid officers, which uses total compensation disclosed under Securities and Exchange Commission rules. 

Navigating affiliated group complexities 

The proposed regulations extend existing affiliated group rules to the new five highest compensated employee category. These rules prevent companies from circumventing the law’s intent by shifting highly paid employees to related entities. 

Single publicly held corporation in group 

If your affiliated group has one publicly held corporation, any employee of any group member can qualify as one of the five highest compensated employees, regardless of which entity employs them or pays their compensation. 

Multiple publicly held corporations 

When an affiliated group includes multiple public corporations, each determines its own set of five highest compensated employees separately. The regulations provide specific guidance on which group members each public corporation should consider in making these determinations. 

Planning considerations for your organization 

These changes will have meaningful implications for tax planning, financial reporting, and compensation design. Consider these key areas: 

Immediate assessment needs 

• Identify potential new covered employees: Review your current compensation structure to determine which employees might fall into the new five highest compensated category 
• Evaluate deferred tax positions: Existing deferred tax assets related to employee compensation may need adjustment, potentially affecting interim financial statements 
• Review compensation arrangements: Analyze current and planned compensation structures for employees who may become covered employees 

Strategic planning opportunities 

• Compensation restructuring: Consider whether modifications to compensation arrangements could minimize the impact of the new rules 
• Timing considerations: Evaluate whether accelerating or deferring certain compensation payments before the 2027 effective date makes sense
• Documentation review: Assess existing employment agreements and compensation plans for potential modifications 

Implementation timeline and next steps with BPM 

The proposed regulations generally apply to compensation that is otherwise deductible for tax years beginning after the later of December 31, 2026, or the date final regulations are published. 

Moving forward with confidence 

The expansion of Section 162(m) represents a significant change in the tax treatment of executive compensation. While the rules don’t take effect until 2027, the time to start planning is now. 

Understanding these new requirements and their potential impact on your organization will help you make informed decisions about compensation planning and tax strategy. Early preparation can help minimize surprises and position your company to adapt effectively to the new regulatory environment. 

Ready to assess how these changes might affect your organization? Contact BPM’s tax professionals to discuss your specific situation and develop a strategic approach to the new Section 162(m) requirements. Our team can help you navigate these complex regulations and identify planning opportunities tailored to your company’s needs. 

Construction companies face unique financial management challenges that require specialized accounting approaches. Unlike standard accounting practices, construction accounting must address project-based operations, decentralized production, fluctuating costs, and complex revenue recognition methods.  

At BPM, we understand these industry-specific needs and can help you implement effective accounting systems to keep your projects profitable and your business thriving. 

What makes construction accounting different? 

Construction accounting differs significantly from standard accounting practices in several important ways: 

• Project-based operations: Each construction project functions as its own temporary profit center, requiring detailed tracking and allocation of costs and revenue for every job, or job phase. 
• Decentralized production: With work occurring across multiple job sites rather than in fixed locations, accounting must track mobile workforces and equipment. 
• Long-term contracts: Projects often span multiple accounting periods, requiring specialized billing and revenue recognition methods. 
• Fluctuating costs: Material and labor costs can change significantly during a project’s lifetime, making cost management challenging. 
• Change orders: Projects frequently evolve through change orders, which must be properly documented and priced to maintain profitability. 

Understanding these differences is key to maintaining accurate financial records and making informed business decisions. 

Essential construction accounting concepts 

Job costing 

At the heart of construction accounting is job costing—the process of tracking all expenses associated with each project. Accurate job costing helps you estimate future projects, monitor ongoing work, and analyze completed jobs for profitability. 

Key components of job costing include: 

• Labor costs (including wages, benefits, and taxes) 
• Material costs (including delivery and storage) 
• Equipment costs (purchases, rentals, maintenance)
• Subcontractor expenses 
• Overhead allocation 
• Change orders 

Modern construction ERP software can streamline this process, allowing you to track costs in real-time and take corrective action when projects exceed budgeted amounts. 

Revenue recognition methods 

Construction companies typically use one of several methods to recognize revenue: 

• Cash basis method: Revenue is recorded when payment is received, and expenses are recorded when paid. While simple, this method is generally only suitable for smaller contractors with average gross receipts under $25 million. 
• Percentage of completion method (PCM): Revenue is recognized based on the percentage of work completed during each accounting period. This method provides a more accurate view of a company’s financial position for long-term projects and is required for larger contractors working on projects lasting more than two years. 
• Completed contract method (CCM): All revenue and expenses are recognized only when the project is finished. While this can defer tax liability, it’s generally limited to home construction projects and isn’t GAAP-compliant. 

Contract retainage 

Retainage is the portion of the contract price (typically 5-10%) withheld until project completion to promote satisfactory work. Since this can represent a significant portion of your profit, tracking retainage properly is crucial for cash flow management and financial planning. 

3 financial statements specific to construction 

Construction companies rely on specialized financial reports that address industry-specific needs: 

Work-in-progress (WIP) schedule 

The WIP schedule provides a snapshot of all ongoing projects, showing: 

• Contract amounts 
• Costs incurred to date
• Estimated costs to complete 
• Billings to date 
• Estimated gross profit 

This crucial document helps identify potential cost overruns early and serves as an early warning system for project profitability issues. 

Job cost reports 

These detailed reports track actual costs against estimated costs for each project, breaking down expenses by category (labor, materials, subcontractors, etc.). Regular review of these reports helps catch budget variances before they become serious problems. 

Construction-in-progress (CIP) report 

The CIP report tracks the financial status of uncompleted projects, including costs incurred and recognized revenue based on your chosen revenue recognition method. 

Construction accounting best practices 

To maximize the effectiveness of your construction accounting system: 

1. Focus on accurate job costing: Make job costing a priority across your organization, with clear coding systems for each job and cost category. 

2. Choose the right revenue recognition method: Select the method that best fits your business size and project types, considering both financial reporting and tax implications. 

3. Implement proper change order management: Document, price, and approve all change orders before beginning work to maintain project profitability. 

4. Review contracts carefully: Avoid accepting unreasonable contract terms that could lead to disputes or financial losses. 

5. Invest in construction-specific accounting software: Choose a solution that is trusted by the AICPA and CFMA, and is designed for the unique needs of construction businesses. 

Choosing the right construction ERP software 

Selecting the right construction ERP software is essential for managing these specialized accounting needs. When evaluating solutions, look for: 

Project management capabilities 

Your construction ERP should offer robust tools for: 

• Real-time data and analytics 
• Work-in-progress reporting 
• Resource allocation 
• Inventory management 
• Progress tracking 
• Task scheduling 

These features help you keep projects on budget and on schedule. 

Accounting and financial management tools 

Construction accounting comes with unique complexities—staggered payment schedules, multiple funding sources, and project-specific budgets, to name a few. That’s why your ERP system should deliver real-time visibility across all entities, helping you track budgets, flag risks early, and stay in control. 

To truly support growth, your system also needs to scale with you—leveraging modern, human-centric technologies like agentic AI to automate both routine tasks and advanced analytics. 

Mobile accessibility 

With workers in the field and on the move, mobile access to project data is essential. Look for solutions that allow team members to access information and collaborate from anywhere, at any time. 

Why Sage Intacct excels for construction accounting 

Among the many construction ERP options available, Sage Intacct for Construction stands out as a particularly strong solution. With over twenty years of industry experience and the largest market share of construction ERP systems, Sage Intacct is the preferred accounting solution of the AICPA and Sage has as a trusted partnership with the Construction Financial Management Association (CFMA). Sage Intacct offers several advantages: 

• Cloud-native approach: Access your financial information anytime, anywhere, without complex upgrades or maintenance. 
• Powerful integrations: Seamlessly connect with over 200 applications commonly used in construction, including Procore and Autodesk Navisworks. Sage also has a full construction suite of their own integrated solutions for extended capabilities to manage field services, estimating, construction management, construction payroll, real estate development, and AP automation.  
• Scalability: As your business grows by adding regional offices or new divisions, Sage Intacct grows with you, offering centralized management of multiple entities. 
• Robust project management: From document management to change order tracking, Sage Intacct provides the tools you need to manage complex projects effectively. 
• Automated project billing: Improve cash flow with automated invoicing based on project milestones or specific billing terms. 

Partner with BPM for your construction accounting needs 

With 20 years of experience working with contractors, subcontractors, developers, and builders, BPM’s Construction team understands the unique challenges your business faces. Our professionals can help you implement effective accounting systems, optimize your processes, and make informed financial decisions. 

We’re committed to delivering customized solutions focused on your specific business requirements, whether you need help with advisory services, tax planning, accounting systems, or assurance needs. 

Ready to take your construction accounting to the next level? Contact BPM today to discuss how we can help streamline your financial management and position your business for scalable growth. 

Finance teams face mounting pressure to do more with less while simultaneously providing deeper strategic insights. If your organization is still relying on manual processes and disconnected systems, you’re likely experiencing the frustration of data silos, time-consuming reconciliations, and limited reporting capabilities that hinder rather than help your business decisions. 

Finance transformation offers a pathway to elevate your finance function from a reactive reporting center to a proactive strategic partner within your organization. Let’s explore how this approach can revolutionize your financial operations and help create meaningful business outcomes. 

“Finance has traditionally been viewed as a cost center—a necessary function for managing transactions and ensuring compliance. Through finance transformation, we’re changing that dynamic entirely, evolving finance into the source of strategic insights that drive real business change. That shift from cost center to value creator is what delivers the true return on finance transformation.” – Thomas White, Finance Transformation Leader 

What finance transformation means for your business 

Finance transformation represents a comprehensive strategic overhaul of your financial processes, systems, and operations. It’s not merely about implementing new technology—it’s about reimagining how your finance team operates to better support your broader business objectives. 

This transformation encompasses several key elements: 

• Strategic realignment of finance with company-wide goals 
• Process reengineering to reduce inefficiencies 
• Technology implementation to automate manual tasks 
• Organizational change management and talent development
• Data integration for improved analytics and decision-making 

The goal is to create a more agile, efficient finance function that provides greater value while reducing operational costs and risks. 

Why finance transformation matters now more than ever 

With a marketplace defined by constant change and disruption, a conventional finance model simply can’t keep pace. Consider these reasons to prioritize finance transformation: 

Maintaining competitive advantage 

Your competitors are likely already modernizing their finance functions. Those who successfully transform gain the ability to make faster, more informed decisions based on real-time data and predictive analytics. 

Meeting evolving stakeholder expectations 

Investors, board members, and executives increasingly expect finance to provide forward-looking insights rather than just historical reporting. Finance transformation equips your team to meet these elevated expectations. 

Navigating economic uncertainty 

Economic volatility requires finance teams to model scenarios quickly and pivot strategies as conditions change. Transformed finance functions can respond with agility to market shifts and emerging opportunities. 

Addressing talent challenges 

Top finance professionals seek roles where they can add strategic value rather than spending their days on manual data entry and reconciliations. Transformation helps attract and retain high-caliber talent. 

The journey to finance transformation 

Finance transformation typically unfolds across three distinct phases: 

Phase 1: The reactive state 

Many organizations begin their journey here, characterized by: 

• Manual, spreadsheet-driven processes 
• Siloed data across multiple systems 
• Backward-looking reporting focused on compliance 
• Limited capacity for analysis due to time-consuming transactional work 

If this describes your current state, you’re not alone. But staying here puts your organization at a disadvantage. 

Phase 2: The proactive transition 

In this intermediate phase, finance teams begin implementing: 

• Standardized processes across functions 
• Automation of routine transactions 
• Integrated financial and operational data 
• More frequent forecasting and scenario planning
• Improved governance and controls 

This phase delivers notable efficiency gains while building capabilities for the next level. 

Phase 3: The optimized function 

The fully transformed finance function features: 

• End-to-end process automation 
• Real-time analytics and reporting
• Predictive modeling capabilities 
• Finance business partners embedded in operational teams 
• Strategic insights driving business decisions 

At this stage, finance becomes a true value creator for the organization, influencing strategy and identifying new growth opportunities. 

Key benefits of finance transformation 

A well-executed finance transformation yields numerous advantages: 

Operational improvements 

• Reduced processing times for key finance activities like month-end close 
• Lower error rates through automation and standardization 
• Decreased costs through elimination of redundant processes 
• Greater scalability to support business growth 

Enhanced decision support 

• Real-time visibility into financial performance 
• Data-driven insights across business dimensions 
• More accurate forecasting and planning 
• Scenario modeling to evaluate strategic options 

Risk and compliance benefits 

• Stronger internal controls and audit trails 
• Improved data quality and governance 
• More efficient regulatory reporting 
• Better visibility into potential risks 

Strategic advantages 

• Finance team members freed from transactional work to focus on value-added analysis 
• Closer partnership between finance and operations 
• More agile response to market changes 
• Enhanced ability to evaluate investment opportunities 

Creating your finance transformation roadmap 

A successful transformation requires thoughtful planning: 

1. Assess your current state: Document existing processes, systems, and pain points 

2. Define your future vision: Determine what capabilities your finance function needs to deliver 

3. Identify gaps: Analyze the differences between current and desired states 

4. Prioritize initiatives: Focus on changes that will deliver the greatest strategic value 

5. Develop a phased implementation plan: Create a realistic timeline with clear milestones 

6. Establish success metrics: Define how you’ll measure progress and outcomes 

Remember that transformation is a journey, not an overnight change. The most successful programs deliver incremental improvements while working toward longer-term goals. 

How BPM can help guide your finance transformation 

At BPM, we partner with organizations across industries to navigate finance transformation successfully. Our approach is tailored to your specific needs and challenges, combining technical knowledge with practical implementation experience. 

We can help you: 

• Assess your current finance function against leading practices 
• Develop a transformation strategy aligned with your business goals
• Select and implement appropriate technology solutions 
• Redesign processes for maximum efficiency and control 
• Manage change and develop your team’s capabilities 
• Measure and optimize results 

Our team brings deep experience in finance operations, technology implementation, and change management — all essential elements for successful transformation. 

Taking the next step 

Finance transformation represents a significant opportunity to elevate your finance function’s contribution to organizational success. By embracing modern technologies, streamlining processes, and developing your team’s capabilities, you can create a finance operation that truly drives strategic value. 

Ready to explore how finance transformation could benefit your organization? Contact BPM today to discuss your challenges and objectives. Our team can help you develop a pragmatic approach tailored to your specific needs and guide you through each step of your transformation journey. 

Unable to pay your business taxes? You’re not alone. Many successful businesses face this challenge, especially during economic downturns or periods of rapid growth. What sets these businesses apart is how they handle the situation – taking action early and understanding all available options is key to protecting your company’s future. 

Immediate Steps to Take 

When you realize you can’t pay your business taxes, time becomes your most valuable asset. The actions you take in the first 30 days can significantly impact your options and outcomes. During this critical window, you have the best opportunity to prevent federal penalties from compounding and maintain more flexible payment options with the IRS. Note that state tax authorities have their own distinct processes, deadlines and payment arrangements that may differ from federal requirements, and you may need to address any state tax obligations separately. 

Every day of delay can limit your choices and increase your total tax burden. Here’s your immediate action plan: 

1. File Your Returns on Time 

Even if you cannot pay the full amount, it is usually beneficial to file your tax returns by the deadline. Here’s why: 

• On a $50,000 tax bill, filing on time saves you $2,250 in penalties per month 
• Filing opens up payment options that aren’t available otherwise 

2. Assess Your Financial Situation 

Take a comprehensive look at your business finances: 

• Review current cash flow and projected income for the next 6 months 
• Create a detailed list of all assets and liabilities 
• Identify potential areas for immediate cost reduction 
• Evaluate assets that could be liquidated quickly if needed 
• Analyze accounts receivable for potential acceleration 
• Document your monthly income and expenses for negotiation purposes 

3. Keep Communication Open 

Don’t ignore IRS notices. Each type of notice has specific response deadlines and requirements. Missing these deadlines can result in: 

• Automatic escalation to more aggressive collection actions 
• Fewer available payment options 
• Additional penalties and enforcement actions 

Long-Term Prevention Strategies 

While resolving your current tax situation is the immediate priority, implementing strategies to prevent future tax issues is equally important. A proactive approach to tax management can help ensure you don’t face similar challenges in the future. 

Preventing future tax problems requires a systematic approach to tax management. Here’s a practical framework: 

Financial Management 

• Establish separate tax savings accounts with automatic transfers 
• Set aside 25-35% of revenue for taxes (percentage varies by business type) 
• Conduct weekly cash flow monitoring with tax obligations as a priority 
• Maintain a tax emergency fund equal to one quarter’s obligations 
• Review accounting systems quarterly for accuracy and compliance 

Tax Planning 

Regular engagement with tax professionals should focus on: 

• Quarterly tax planning meetings to review estimated payments 
• Monthly review of tax accruals versus actual liabilities 
• Strategic timing of income and expenses 
• Industry-specific tax credit opportunities 
• State and local tax compliance review 

Take Action with BPM Today 

With so many factors to consider – from immediate actions to long-term strategies – navigating tax challenges can seem daunting. However, you don’t have to face these challenges alone. 

At BPM, we specialize in helping businesses navigate complex tax situations with solutions that protect both your immediate and long-term interests. Our experienced team can: 

• Evaluate your specific situation and identify immediate savings opportunities 
• Negotiate with tax authorities to reduce penalties 
• Develop customized payment strategies that fit your cash flow 
• Implement preventive measures to avoid future issues 
• Create long-term compliance plans 
• Optimize your tax position for future growth 

Contact BPM today to discuss your situation with our tax professionals. We’ll help you understand your options and develop a plan to address your business tax obligations while protecting your company’s future. 

This article is for informational purposes only and does not constitute legal or tax advice. Please consult with a qualified tax professional regarding your specific situation. 

Businesses face a critical decision when outsourcing their technology needs: should they partner with a Managed Service Provider (MSP) or a Managed Security Service Provider (MSSP)? While these acronyms sound similar, they serve distinctly different roles in supporting your organization’s technology infrastructure and security posture. 

Understanding the fundamental differences between MSPs and MSSPs will help you make an informed decision that aligns with your business objectives, budget and risk tolerance.  

This article will explore the core functions of each provider type, examine their key differences and provide guidance on selecting the right solution for your organization’s unique needs.  

What MSPs bring to your business 

MSPs function as your outsourced IT department, delivering comprehensive technology services that keep your business operations running smoothly. They manage your entire IT infrastructure, from network administration and server maintenance to help desk support and software updates. MSPs focus on optimizing your technology environment to enhance productivity, reduce downtime and support business growth. 

These providers typically operate from Network Operations Centers (NOCs) where they monitor your systems around the clock. They handle routine maintenance tasks, resolve technical issues and ensure your technology scales with your business demands. Small and medium-sized businesses particularly benefit from MSP partnerships, as they gain access to enterprise-level IT capabilities without the overhead of maintaining an internal IT department. 

MSPs commonly provide services including network management, cloud migration support, endpoint management, help desk services and backup solutions. They also offer basic security services such as antivirus management and patch deployment, though security typically represents just one component of their broader service portfolio. 

How MSSPs protect your digital assets 

MSSPs specialize exclusively in cybersecurity, dedicating their resources to protecting businesses from evolving digital threats. Operating from Security Operations Centers (SOCs), these providers maintain 24/7 vigilance over your security infrastructure, monitoring for suspicious activities, investigating potential breaches and responding to security incidents.  

The cybersecurity talent shortage has made it increasingly difficult for businesses to build internal security teams. MSSPs solve this challenge by providing immediate access to security professionals who stay current with threat landscapes, compliance requirements and security best practices. They bring sophisticated tools and processes that would be cost-prohibitive for most organizations to implement independently. 

MSSP services encompass threat detection and response, vulnerability assessments, security awareness training, compliance management and incident response planning. They deploy advanced technologies like Security Information and Event Management (SIEM) systems, endpoint detection and response tools and threat intelligence platforms to provide comprehensive protection. 

Key differences that matter for your decision 

The primary distinction between MSPs and MSSPs lies in their scope and depth of focus. MSPs deliver broad IT services with the goal of optimizing business operations and supporting growth initiatives. They prioritize system availability, performance and user productivity across your entire technology stack. 

MSSPs concentrate solely on cybersecurity, aiming to prevent breaches, ensure compliance and minimize security risks. While MSPs typically provide baseline security services as part of their comprehensive offerings, MSSPs deliver advanced, specialized security capabilities that go far beyond basic protection measures. 

Consider your organization’s current IT capabilities when evaluating these options. Companies with limited IT resources often benefit from MSP partnerships that provide comprehensive technology support. Organizations with existing IT teams but insufficient security capabilities may find MSSPs more valuable for addressing their specific cybersecurity gaps. 

Making the right choice for your organization 

Your decision between an MSP and MSSP should align with your business priorities, existing capabilities and risk profile. Companies in highly regulated industries or those handling sensitive customer data typically require the specialized security focus that MSSPs provide. Organizations seeking to establish or expand their IT infrastructure often find MSPs better suited to their comprehensive technology needs. 

Budget considerations also play a significant role in this decision. MSPs often provide more predictable costs across multiple IT services, while MSSPs represent a focused investment in advanced security capabilities. Many businesses ultimately choose to work with both provider types, leveraging MSPs for general IT management and MSSPs for specialized security services. 

Evaluate your industry’s threat landscape, regulatory requirements and internal capabilities when making this decision. The right choice will depend on whether your primary need involves comprehensive IT support or specialized cybersecurity protection. 

Working with BPM for strategic technology guidance 

Selecting between an MSP and MSSP requires careful consideration of your organization’s unique requirements, risk tolerance and growth objectives. BPM understands that this decision significantly impacts your operational efficiency, security posture and long-term business success. Our technology advisors work closely with clients to evaluate their current capabilities, identify gaps and recommend solutions that align with their strategic goals.   

We help organizations navigate the complex landscape of managed service providers, ensuring they select partners who deliver measurable value and support their business objectives. Whether you need comprehensive IT management, specialized security services or a hybrid approach, BPM provides the strategic guidance necessary to make informed decisions about your technology partnerships. To discuss how we can help you evaluate and select the right managed service provider for your organization’s needs, contact us.