Outsourcing Finance: Risks, Benefits, and Useful Tips
Finance and accounting outsourcing can give a lot of benefits to your company. Let’s check how to organise everything properly!
Outsourcing Finance Services: Everything You Need to Know
The popularity of financial outsourcing is growing every day, as it enables medium-sized businesses and large companies to improve their financial functions cost-effectively. In this article, we will cover the following points:
- What is Outsourcing & Accounting Outsourcing?
- Risks Related to Outsourcing Finance Operations
- Reasons Why Organisations Should Outsource Finance and Accounting
- Outsourcing Finance: Find a Reliable Vendor
What is Outsourcing & Accounting Outsourcing?
First, you need to know that outsourcing is a company’s refusal to independently perform a number of non-critical business functions or parts of business processes and transfer them to a third-party contractor who professionally specialises in the provision of such finance and accounting services.
Consequently, financial outsourcing is the transfer of the functions of accounting and tax accounting and reporting to specialised organisations.
Company’s Operations to Outsource
Of course, financial and accounting outsourcing is not all. Companies can outsource the following functions:
- human resource management;
- facilities management;
- supply chain management;
- customer support, etc.
For example, if you are looking for software development outsourcing, it would be a good idea to look into the web development services of a company that develops custom software from a distance.
Finance Services for Outsourcing
If you want to outsource crypto or financial tasks, this does not mean at all that you need to give the intermediary all the available financial information.
Outsourcing can be used for the following assignments:
- Bookkeeping and Back-Office Support
- Controller Services
- Financial Planning and Analysis (FP&A)
3 Types of Outsourcing
Now you already roughly understand what functions in the company you can outsource. Now is the time to choose the type of outsourcing.
There are three different types of outsourcing:
- Local Outsourcing
- Nearshore Outsourcing
- Offshore Outsourcing
So you will need to deal with each type separately and decide which one suits best.
Risks Related to Outsourcing Finance Operations
Any modern innovation, like accounting outsourcing or day trading crypto, has its own risks. They should not scare and stop you, you just need to take them into account and think over in advance what you will do in case of an unfortunate situation.
Possible Hidden Costs
Due to the fact that you, shall we say, start working with new people, there is a possibility of misunderstanding, which can lead to the fact that in one task there will be more details, the implementation of which you did not initially take into account, and this will increase your expenses.
Therefore, try to immediately discuss everything in detail and draw up a specific plan of tasks.
When you delegate tasks to someone who is not on your team, it will be difficult for you to control the process. You will no longer be able to ask daily how the process is going.
Therefore, it is very important to initially establish a high level of trust so that you do not constantly feel that the person will do something wrong.
Distance, no Local Presence
We have already talked about this above. When you transfer some functions to outsourcers, you will be ready for the fact that you will receive answers to questions, let’s say, with a delay.
To make it easier to communicate, you can set a specific schedule so that the outsourcer knows exactly when you will contact him.
Reasons Why Organisations Should Outsource Finance and Accounting
Of course, the reasons why it is very profitable for companies to outsource certain functions clearly outweigh the above risks. Let’s take a closer look at all the benefits.
According to statistics, the use of outsourcing for a number of functions of company employees reduces costs by 30-45%. This is because there are employees who receive a lot, but for some reason their performance may decrease, which harms the result.
2. Focus on Strategic Tasks
When you outsource a percentage of your work, it automatically creates more time and energy that can be spent on important tasks for the company. Everything is simple here – the less your employees are employed, the better they will perform important work.
3. Access to Specialised Talents
Outsourcing finance and accounting, since it is not tied to a specific territory, gives you access to all the people in the world who are looking for outsourcing accounting work. Thus, you have increased opportunities to find a talented and experienced person in their field.
4. Hiring Costs Elimination
When you hire a new employee, very often they need to be taught, trained, sent to some courses, and so on. With outsourcing finance, all these costs disappear, since you hire a professional in your business who just needs to be given a task.
5. Advanced Technologies and Systems
This is one of the biggest benefits, as outsourcing companies usually use cutting edge technologies that help increase work speed and avoid mistakes as much as possible.
6. Enhanced Business Operations & Accuracy
Again, outsourcing is convenient in terms of the quality of work. Your regular employees, who do the same tasks every day, do everything automatically and do not try to change or improve something. By outsourcing finance tasks, you can get not only fresh solutions, but also, possibly, change something in your company.
Outsourcing Finance: Find a Reliable Vendor
We have already talked about what benefits a properly chosen outsourcing company can bring to you. The main thing remains – to choose this company.
Therefore, now we will talk about how to choose the right outsourcing company.
1. Search for Proven, Streamlined Processes
Experienced outsourcers always have an established process and structure. You need to look for those who will not only promise a good result, but also clearly show how they will achieve this result.
Also, keep in mind that the team you hire must ensure risk control and data security.
2. Check Team’s Experience
It is clear that you are not going to hire a person from the street, but it will not be superfluous to check the experience of the team, what projects they worked on, and ask for recommendations, and so on.
3. Evaluate Methods and Metrics for Success Measuring
Ideally, your prospective provider should have methods that will provide assessment and improvement of the company’s financial condition, as well as show errors.
In Conclusion: Is Outsourcing Financial Services Right For Your Company?
Finance and accounting outsourcing services will help you not only decrease the tasks of your employees, but also reduce costs, improve results, improve some activities in the company, and so on.
The main thing remains to find an experienced provider who will meet all the necessary conditions.
A high-quality and well-thought-out process will bring great benefits to your company!