Farwah Jafri | October 6 2022
The concept of outsourcing is very straightforward. According to the dictionary, it means “contracting a segment of work that a company needs to perform on a daily basis to anyone who doesn’t belong to the company”.
Outsourcing is a very vast subject and it comes in all kinds of shapes and sizes.
More and more businesses are inclining towards outsourcing their finance departments instead of hiring an on-site team. Would your business be benefiting from accounting and finance department outsourcing? Let’s find out.
It has been noticed that many companies outsource the finance department completely along with their accounting operations. This is known as “business process outsourcing.” This is becoming very common rapidly as it helps in managing business processes on a daily basis.
Accounting and finance department outsourcing makes up a significant chunk of a .
If a company has decided to outsource its finance department, it requires a critical analysis of which operation must be outsourced and which can be conducted in-house.
When a company decides to outsource its finance department, it starts with thorough tasks that are highly repetitive and transactional in order to clearly assess the challenges and benefits associated with the outsourced business operations.
The same situation also turns out to be true for chief financial officers, bookkeepers, analysts, etc.
If you are planning to outsource the finance department but are still perplexed about your decision then read out these strategic reasons and seal the deal!
It has been noticed that when the finance department is in-house, it gets less attention compared to the other business departments. Even though it is one of the most sought-after departments of an enterprise.
When you outsource your financial department, your finances are handled by a third-party company bound to give utmost attention to this department and manage all the operations diligently.
Outsourcing the financial department helps the company focus on ideologies to generate more revenue instead of getting worried about the complexities and issues arising while running the finance operations.
The companies can leave the details of the accounting operations to the experts who primarily focus on the financial processes.
When the accounting and finance departments are outsourced, it automatically reduces the manpower of the company. This means that there is less need of recruiting employees.
The finance department hits various valleys and peaks during the year in order to meet its deadlines and filing of taxes.
This makes the scalability of the staff difficult if the finance department is in-house. So, to avoid that, you can outsource and take advantage of bearing the minimum cost of hiring temporary staff.
It can be extremely time-consuming and expensive to resolve an error made by the in-house finance department. Once this department is outsourced, you get the advantage of the multi-layered process in which there is a built-in review that allows you to catch errors timely.
After outsourcing the finance, you have more funds available to be utilized on other prioritized operations.
For instance, if you want to expand your business in a new vertical or territory, you have capital available to invest in the new project as well as in its marketing, etc.
Outsourcing companies usually comprise more experienced individuals than you can afford to have in your budget. The outsourced financial experts have experience working in different industries regarding accounting, taxation, or any other dimension. Therefore, by outsourcing the finance department you get direct access to these experts to serve your business.
When the finance department is outsourced, the associated risks automatically shift to the outsourcer. You do not have to worry about the risks such as the system crashing, dealing with the employees, or completing tasks before a deadline.
Sometimes it becomes difficult for business owners to keep up with the compliance regulations which are forever changing. The reason is that some more priority-based tasks require attention.
Any outsourcing company for the financial or accounting department is well aware of the regulations and the procedures to follow. Therefore, once you have outsourced your finance department you can be tension free of the regulation compliances as this will be handled by the outsourcing company.
Once you have decided to outsource your accounting and finance department, the next step is to strategize a plan and look up potential outsourcing companies. You have to decide on the one that fits perfectly with your workflow, values, and goals.
Here are some considerations that you need to address before opting for an outsourcing partner for your company:
Any company would want to outsource its accounting and finance department to somebody with a successful track record. Look up how long they have been in business and the testimonials from their clients to have a better understanding of their dynamics of workflow.
If an outsourcing company has maintained to serve the same clients for many years, this is a clear sign that they know what they are doing!
Make sure that the outsource company is well-equipped with the latest technology such as cloud computing and other similar software.
If an accounting company does not offer you software solutions that means that they are not prepared to provide you with scaling up your business effectively.
Cloud accounting is the latest technology that largely depends on a cloud-based accounting system and is well integrated with your banking accounts and other accounting profiles such as payroll system, billings, etc.
The main purpose of outsourcing the finance department is to be relieved from the painstaking finance tasks. The company should be equipped with the right kind of software preferably powered by AI so that the tools can automate those mundane tasks on their own.
A security breach can be very catastrophic; therefore, it is always one of the top priorities of any company regarding financial data. If a company decided to outsource its finance department then it’s a major concern to know whether the outsource service provider will be maintaining security protocols or not. After getting affirmative about the protocols only then opt for the said service provider.
When you decide to outsource your finance department, opt for an outsourcing service provider that has an in-depth understanding of the industry you operate in. It must be practicing modern software solutions and knowing how to fill the accounting and finance gaps.
Outsource your finance and accounting department to increase your financial visibility and bridge the gap between your organization’s performance and projected goals!
Farwah is the Product Owner of Monily. She has an MBA from Alliance Manchester Business School, UK. She is passionate about helping businesses overcome challenges that hamper their growth, which is why she is working at Monily to facilitate entrepreneurs to efficiently manage business finances and stay focused on growth.