These days, more and more companies are outsourcing their core functions for various reasons—they either want to cut costs, shift time or focus on other strategic business activities. One of the fastest-growing outsourcing areas is finance and accounting.
There are organizations, however, that decide to do it on their own and commonly, they do it for tactical reasons. However, in the long run, outsourcing an organization’s financial functions is more practical.
Here are the top reasons why most companies are outsourcing their accounting functions to a reliable partner:
They want to lessen and control costs
Small to medium-sized companies need to think from a global perspective to grow. They need to identify their strengths and find a firm that can address their growing accounting needs. This does not only save time, but it is more practical. However, all data concerning the financial accounting costs should be properly documented in order to eliminate hidden charges. Set mutual agreements before any project is launched so that you’ll have the same and clear expectations.
The company want to focus on their strengths
This is in conjunction with the above reason—outsourcing your financial functions gives you the time to focus on the bigger picture. By outsourcing non-core functions, the organization can focus on growing the company; as well as identifying processes and systems that will add value to the goal of the company.
Read Here: Behind the Engagement: The Accounting Outsourcing Process
Tapping world-class expertise
Small to medium-sized companies are keen to have investors and if they want to attract more, having their financial functions outsourced to a well-respected and secure provider will help them gain their confidence as it is a good sign that the business is doing well.
However, there are SMEs that don’t have the capabilities to purchase the latest software or tools; and outsourcing to a secure accounting or auditing firm will provide it for them.
Accessing internal resources for other purposes
The fact is that there are businessmen who are great at running their business, but are weak in keeping the company's finances in order. If you are planning to outsource your financial functions, you don't only get the services that you paid for, but you also have other tools at your disposal to help you in other aspects of your business; in essence, you are hitting two birds with one stone.
The organization has limited resources
This is not just about the financial capability of the organization. It also includes manpower and tools. An outsourcing company provides a team of specialists in a respective field and knowing that you have unlimited resources at your disposal will help the organization in the decision-making process.
Outsourced finance and accounting services
When you are fully decided that your business needs to outsource your accounting process, the next thing to know is what particular functions you're going to unload. Are you going to outsource your basic accounting tasks or complex ones?
Some of the accounting functions you can consider outsourcing are:
- Accounts Receivable and Payable
- Data entry
- Compliance and tax preparations
- Tax planning
- Bank reconciliations
- Management reporting
- Financial planning
- Payroll preparation
Learn about their processes and outsourcing strategies. How do they work internally? How does your partner firm manage your offshore staff? What are the security measures in place to protect your data? It would also be wise to align your expectations with your outsourced team so that you're both on the same page.
Finance and accounting outsourcing is definitely one of the strategies that have a big leverage on expertise, best practices and management style which allows the management to focus on their strengths, customers and business growth. So if you are a small-to-medium business owner, why not consider outsourcing your company's accounting matters?
D&V Philippines can be your ideal F&A partner. We have a suite of outsourcing solutions and services that can cater the growing needs of your practice. Our in-house accountants are regularly trained to be at par with the dynamic trends in the industry as well. You can grab a copy of our guide Outsourcing: How to Make it Work to know how we can make the partnership work for you or contact us today for a free consultation.
This post was first published 7 August 2014 and edited 23 February 2022.
Edited by: Maria Katrina dela Cruz