Post Written By: Shubham Sharma
Outsourcing is a proven strategy in business to cut down project costs and boost productivity. The process of outsourcing is not new but decades old. It is developed to procure services when a business organization does not have sufficient resources to get the job done. The benefits of finance outsourcing are mainly either for operations or strategy enhancement. Depending on the kind of work outsourced, the benefits can be for the short-term or long-term. Outsourcing tends to be beneficial when done with complicated tasks like finance and accounting.
Modern outsourcing rules
Outsourcing of finance saves time and money for an organization that otherwise falls on the shoulders of employees and their management. There come to a few rules to follow before you think of outsourcing your financial responsibilities. Outsourcing sounds like a wonderful opportunity for any firm given the reduction in costs but a cheaper alternative is not always better. Spread out all the options available for finance outsourcing and partner with someone that can fulfill your business goals even if you have to shed a penny more.
Cheaper options often end up as costly mistakes when other factors of the outsourced team are not taken into careful consideration. Often business firms partner with outsourced teams based on reviews and popularity. References are beneficial and should not be overlooked as it builds trust knowing that your project is in safe hands. The quality of the outsourced work depends on the relationship between the outsourced firm and the business organization.
The golden rule to be followed in finance outsourcing is to get as many quotes as possible from different firms and not to hire the first outsourced agency that contacts you. Choosing an outsourced partner should be done without hurry as there are different factors like timeline for project completion, communication timelines, report discussions and monitoring that need to be talked in detail
Reasons for finance outsourcing
The need for finance outsourcing began with a lack of competency among employees, lack of time and higher cost of operations. Outsourcing solved each of these challenges effectively. The decision to outsource finance depends on the type of organization, source of its revenue and its size. While outsourcing delicate tasks like accounting and finance, certain precautions should be taken for choosing the outsourced firm for the fear of data security. Finance outsourcing is a business strategy done to reduce overall costs and improve efficiency in the functioning of the business.
The finance processes that are commonly outsourced in business are accounts payable and accounts receivables, payroll processing, and general accounting. It is easy to outsource these finance processes as they do not need an in-depth understanding of business strategies and do not share core business goals. They can be achieved by simply following the rules laid down. Outsourcing such finance processes will free up the time of internal resources to concentrate better on core business functions. The outsourcing service providers are often experts in managing finance operations. They lend their expertise to small and big organizations as it is a crucial factor in making strategic business decisions.
Finance management is the heart of business stability
The financial health of a firm depends on finance and accounting practices. A lot of firms cannot keep up-to-date about the norms and regulations of the finance policy. So they leave the financial matters in the hands of experts. The benefit of an outsourced finance partner is access to a big team dedicated to accounting and finances without any constraints to manpower. The finance outsourcing firm has specialists in the accounting process to complete the tasks accurately. A dedicated financial outsourcing firm keeps track of all changes in finance.
Access to talent pool: The growth of a company should not be limited due to the lack of skilled employees. Outsourcing eliminates this challenge by giving you access to the talent pool of your choice as per your needs.
Advanced technology: With ever-changing technology, it is a costly affair to get updated software and hardware to stay on-trend. Enjoy all the benefits, the latest technology can offer, by simply outsourcing to a dedicated financial firm.
Detailed monitoring of finances: Tracking the constant changes in the finance sector is not an easy job but becomes a costly mistake when ignored. By outsourcing finances, the in-house accountants will have time to oversee or monitor the finance documents. They can handle the communication with the outsourced finance partner. Outsourcing to a professional finance firm will keep your business bright in the eyes of clients.
Stable functioning during the economic crisis: Running a firm smoothly amidst a market crisis is challenging and expensive. But outsourcing the finance duties can take the pressure off from the business from reducing the workforce or layoffs.
Flexibility and ease of scalability: Outsourcing finance and accounting processes give the firm much-needed flexibility in getting projects done on-time and at a certain cost. It is also beneficial to outsource when you are on the verge of scaling up the business without hiring new employees to take on additional duties.
Finance and accounting is complex
A lot of unexplained complexities arise when handling financial transactions and accounting duties. It is a time-consuming job and in-house accountants have pressure to handle all accounts without errors. Small to medium firms cannot afford employees solely for finance as accountants and give them multiple tasks. This will lead to poor financial decisions and affect the growth of the business. Reduce the risks related to tax filing and accounts payable by outsourcing the finance duties.
Outsourcing companies usually sign the contract of confidentiality to keep data secure and private from prying eyes. Outsource or partner with reputable finance firms that maintain work ethics and keep client information confidential. Focus on the core business functions by outsourcing and develop strategies to make a business successful. Outsourced firms offer 24/7 services when dealing with emergencies that normally arise while dealing with new clients. If you are an entrepreneur and are apprehensive about outsourcing, start small by outsourcing non-core functions and build your empire gradually.
Shubham Sharma is the author of this article and currently working as a Charted Accountant with Payroll Outsourcing Company. He has a keen interest in outsourcing payroll processing, outsourcing accounts receivable, BPO outsourcing, outsource finance, outsourcing bookkeeping, offshore Back office services, etc.