Traditionally seen as a cost-cutting tool, finance and accounting outsourcing has now evolved into a strategic alternative to address talent shortages and deal with increasing client demands.
But is outsourcing also ideal for your company? To answer this question, let's go back to the basics and find out what it means when you outsource your finance and accounting operations.
Finance and accounting outsourcing is the practice of hiring another entity to handle specific finance and accounting functions.
Depending on your needs and preferences, an outsourced team can either be a part of your back-office operations or work on your core accounting activities. Some of the accounting services you can outsource are:
You can utilize outsourced services on an hourly, part-time, full-time, or contractual basis.
Contrary to an in-house employee, working with outsourced professional accountants does not tie you up to any employer obligations. As a result, you’re not responsible for their payroll, taxes, leaves, equipment, and other law-governed employer responsibilities. It’s one of the reasons why outsourcing costs less than hiring an in-house employee. Plus, you can expect higher cost savings if you decide to outsource to an offshore location.
Aside from its lower price tag, the notable benefits of outsourcing finance and accounting services include:
Tapping on the talent pool of other countries, especially if your recruitment efforts are going nowhere because of the worsening accounting talent shortage;
Getting reliable service delivery, considering that many finance and accounting business process outsourcing companies (BPO) have a well-outlined business continuity plan (BCP).
How does the process of outsourcing finance and accounting services go? Here’s what to expect.
Let's say you’ve already laid the groundwork — that is, you’ve identified your needs, considered your budget, and decided to try outsourcing.
This is your preliminary process, and it’s necessary for building a strong outsourcing foundation because it tells you exactly why you need to outsource and what you need to do to make it work.
Countless BPO companies offer finance and accounting services. While having a wide selection is a good thing, choosing which one to work with can be challenging.
To make this process easier, start by identifying an ideal location. Consider the country’s economy, labor market, English fluency rate, and infrastructure.
The next step is to narrow down your options by identifying potential service providers that meet your budget, offer the service you plan to outsource, and fit your work culture.
You can also check online directories or outsourcing aggregator sites. Of course, it’s even better if you can ask your network for referrals.
Contact the service providers you’ve shortlisted. In most cases, you can get a quote for the services you need through their websites. You can also send a request for proposal (RFP) or schedule an online meeting if you want to get a more thorough look at how their solutions can address your concerns.
At D&V Philippines, we do discovery calls with our prospective clients to have a more extensive discussion about their business, the accounting tasks they plan to outsource, the potential cost of our service based on their requirements, and the ins and outs of our corporate culture.
This is often facilitated by our Sales and Marketing Communications Department and representatives (who are all professional accountants) from the Client Service Department.
If you can, we also recommend doing an ocular visit. Going to where your potential outsourced team performs their tasks can allow you to observe firsthand their actual work conditions.
Although tedious, doing these steps can help you pinpoint the most suitable candidate.
Make sure to do your due diligence once you’ve identified a suitable service provider. This will help you minimize potential risks associated with accounting outsourcing. It also assures you that your outsourcing partnership is built on mutual trust, accountability, and transparency.
For more information, check out this article: Due Diligence in Outsourcing Accounting Services
Legal documents, such as contracts, are powerful tools in business. Before signing anything, you must see to it that you read and understand all terms and conditions.
If you can, have a legal professional go through everything to ensure that all is fair between both parties before onboarding.
Want to receive excellent performance from your outsourced team? The idea to achieve it is a basic one — Treat your outsourced team the same way you treat your in-house accountants.
The moment they start working with you is also the same time they start to contribute to achieving your goals. To maximize their potential, you must maintain regular communication, give clear instructions, train your team whenever necessary, and provide timely feedback.
Take some time to assess the quality and performance of your service provider. Do they meet your expectations? Has the partnership been beneficial so far? Can they function with minimal supervision?
Conducting periodic audits is important to determine areas of improvement and if it’s still worth it to continue the engagement.
If you believe outsourcing is a suitable solution for addressing your company’s concerns, consider working with D&V Philippines. We’re a business process outsourcing company specializing in delivering finance and accounting services.
With over 1,000 accounting professionals who are experts in using cloud-based accounting systems, we can guarantee you high-quality accounting support.
Contact us today to learn more about our accounting outsourcing solutions.
You can also download our whitepaper, Outsourcing: How to Make It Work, to find out how you can maximize your accounting outsourcing engagement with your chosen outsourcing partner.
This article was first published on 13 March 2019 and updated on 3 September 2024.
Edited and updated by: Mary Milorrie Campos