What Are The Advantages Of Outsourcing A Finance?

Are you wondering if your finance department has inefficient processes, low-performing staff, or outdated systems? These issues can impede progress and slow down your business' growth.

For companies like yours to make informed decisions, they need accurate data as well as knowledgeable insight into the business performance.

Being a business owner means being flexible and open to change. It also requires having reliable, forward-looking reports and the right tools. These solutions can be found by outsourcing your finance work without breaking the bank.

This article will discuss how outsourcing finance can be used to help companies meet their specific growth needs.

Finance Process Problems and How Outsourcing Helps

Businesses face many tactical challenges from changing business landscapes, emerging market trends, advanced technologies, and rising customer demand. Firms that manage their finance internally are more familiar with certain problems.

BPO (Business Process Outsourcing) is a way to solve the problems of companies. A firm can subcontract finance and accounting functions, which reduces the risk of problems. Let's look at some of the most common problems that outsourcing solves.

Hiring and Finding the Best Employees for Your Team

It can be difficult to ensure that your company has enough employees who can manage its finances. There could be inefficiencies in recruitment, training, onboarding, or retention.

How can outsourcing be of benefit?

Outsourcing gives companies the support they need to hire and retain skilled accountants. BPO providers manage the training and recruitment of employees for you, so that you don't have to do the tedious tasks.

Always-changing Technology

Finance technology, like many other industries, is rapidly evolving. It is difficult for companies to keep up with the changing tech landscape. However, having the right infrastructure can give you a competitive edge, especially for startups and small- and medium-sized businesses (SMEs). Smaller businesses can benefit from enterprise-level technology.

How can outsourcing be of benefit?

BPO providers are able to maintain their competitiveness by constantly upgrading their equipment and tools. Companies can also outsource to keep pace with changing technologies, as they can use the existing technology of the service provider. SME can access enterprise-level resources with minimal technology expenditures.

Unable to Locate the Right Tools

Companies spend a lot of time choosing the right technology and then how to properly implement it. It takes a lot of time and effort to find and deploy the right tools, which companies could spend on more important activities.

How can outsourcing be of benefit?

The third-party provider manages all finance tools. This means that the hiring company doesn't have to maintain, update, or deploy system software. BPO providers also find the best financial software and tools for hiring companies.

Different Tools to Perform Different Processes

One tool may be used for general ledger, one for electronic payment processing and another for processing receivables, forecasting, budgeting, and so on. Because these tools work independently, the data for each process is in different formats and locations. When data is not in the same format or location, financial report generation can be a problem.

How can outsourcing be of benefit?

Outsourcing allows you to have a single source for truth (SSOT), by consolidating all the critical information in one place. This allows you to easily create a financial report whenever needed. To generate financial summaries or reviews, you don't have to use multiple software programs. You can just rely on the reporting solution provided by your provider.

Complex Accounting Information

Accounting experts are the ones who created most financial tools. Finance employees and leaders might struggle to understand accounting data. This could lead to friction between finance and other areas of business management.

How can outsourcing be of benefit?

Many outsourcing companies also offer regular report generation. To meet the needs of its clients, a good BPO agency offers many reporting services. BPO agencies may provide reporting services such as monthly income statements, bank reconciliation, statements of cashflow, statements of cash flow and operations analysis reports.

These services provide a complete picture of your company's financial situation. These services allow employees who are not in finance to gain valuable insight into the company's health and financial status.

Other Benefits to Finance Process Outsourcing

Third-party financial services are often used by companies that have multiple objectives.

  • Focus on the most important areas of your business such as growth or development.
  • To assist companies in achieving their short-term as well as long-term goals
  • To reduce overheads and to focus on diversifying business operations
  • To increase confidence in the financial processes of the business and to ensure quality
  • To ensure compliance with all industry regulations

When done correctly, outsourcing finance process can offer many benefits. This section explains how outsourcing can be beneficial to businesses.

Time and Cost Savings

Management of finance can be time-consuming and costly. According to Indeed, the average U.S. salary for an accountant is about $53,000 per year at the time of writing. This money can be better allocated elsewhere.

Financial processes can also be labor-intensive. It is a great way for your company to focus on its core activities by outsourcing them. Outsourcing allows you to outsource non-core business activities.

Get professional advice

Many organizations find it difficult to find a professional accountant or chartered bookkeeper, especially if they have a limited budget. This is where outsourcing financing can be a great solution.

Expert advice is available at a fraction the cost of outsourcing. Professional assistance is provided to help them navigate the latest accounting practices, rules, and streamline their internal processes.

Get Updates on Financial Regulations

It can be difficult to keep up with financial laws. Outsourcing finance process ensures you are informed about any changes to accounting rules that may affect your company.

Providers often provide clients with timely updates about the applicable rules and how they are applied. Providers can also provide financial information that is not available to business owners, which allows them to make informed business decisions and assist with finance-related functions.

Improve Adaptability

Outsourcing helps your company adapt to changing compliance requirements easily. BPO providers make it easy to manage finance and accounting and can help you find the best strategies.

Finance outsourcing allows your company to be more flexible and adaptable to changing trends. You can downscale or upscale your finance department depending on your needs. This will put your organization in a better place to achieve your desired goals.

Lower Security Risks

Client and financial information is sensitive information. Several laws protect this data. If your company handles data from European Union customers, you need to comply with the EU General Data Protection Regulations.

Companies can work with reliable financial service providers to protect their confidential data.

For back-office outsourcing , a good tip is to make sure that your provider has strong security protocols to prevent data breaches. This includes ensuring compliance with applicable cybersecurity and data protection laws.

Monitor Financial Processes

Finance process outsourcing can improve a company's monitoring abilities. BPO providers have constant access to financial operations of the company and can take immediate action if required.

This integration results in a seamless integration of monitoring systems. Monitoring your company's financial processing will ensure compliance with all applicable regulations. The BPO provider will also inform you if there are any irregularities in your operations.

Avoid Turnover and Time-off Issues

Outsourcing services can also lower turnover and staff time. Your success is dependent on each staff member, especially small businesses. Staff members who are sick or on vacation can create additional stress for your company and cause you extra stress.

This problem will be solved if you outsource your accounting and finance services to another provider. Your service provider will manage the recruitment process and find a replacement contractor if a contractor leaves suddenly.

Employee turnover can also be costly. It can affect morale, continuity, as well as institutional memory. You might also need to employ a recruiter to replace the service provider. It can be difficult to train new employees. Finance outsourcing takes away these responsibilities so you can focus on increasing revenue.

Get Better Processes and More Tools

A benefit of accounting and outsourcing finance is the ability to access better organizational tools. If you are a small business, it is possible to try to keep overheads down. Smaller companies may struggle to keep up with larger companies that have access to great tools and information.

Outsourcing companies already have sophisticated tools in their repositories. These resources can be used by outsourcing finance functions to a BPO. Third-party accountants, as well as finance experts, can streamline your company's processes. This is a great way for efficiency to increase.

CFO Support

Your outsourcing provider may be able to provide one if your company doesn't have a chief finance officer (CFO). Outsourcing providers often offer CFO support. This is a financial expert who joins your team and offers accounting guidance. Many businesses also consider outsourcing finance because it's similar to having CFO insurance.

Outsourcing reduces time and effort required to manage tactical administration. This allows your leadership team to spend more time analyzing the numbers. This allows your business to grow with the help of the fractional CFO.

Businesses that Benefit the Most from Finance Process Outsourcing

Outsourcing finance processes can be a benefit to many companies, including:

  • Start-ups for small and medium-sized companies

Outsourcing finance is a great option for companies with specific accounting requirements and low transaction traffic, but also those looking to scale. Outsourcing companies offer expert support in managing daily bookkeeping and help with organizational issues.

  • Emerging growth companies

Companies with high transaction volumes and complex accounting requirements can also benefit from outsourcing. Outsourced bookkeeping offers a variety of transaction processing and controller services.

To ensure accurate tax planning and compliance, these tasks are closely coordinated with the tax advisor or CPA of the hiring company. This is an alternative to setting up a bookkeeping department in house.

  • Scaled and emerging growth. Startups (private equity firms or venture capital companies)

Outsourcing companies offer CFO services and access to leadership for greater financial management. Some providers even offer remote CFO services that can be used to collaborate with investors, your board, and executive team to provide expert financial advice, reporting, and capital transactions and reporting.

Financial Processes Companies Can Outsource

Outsourcing companies can manage multiple finance functions simultaneously. You can choose to outsource all or part of your finance department as a hiring company.

A reputable BPO agency is capable of handling any or all of the following functions:

  • Bookkeeping Services

Accounting requires bookkeeping. This includes keeping track of loan information and data on receipts. It also involves data on invoices provided by suppliers. Financial outsourcing providers will manage your bookkeeping, such as the monitoring of staff payment accounts and the disbursement loans.

  • Year-end Accounting Procedures

Every company must prepare for financial compliance at the end of each year. The Federal Reserve, Securities and Exchange Commission (SEC), Federal Deposit Insurance Corporation(FDIC), and others monitor financial compliance across different industries. BPO agencies are responsible for preparing financial reports and other year-end accounting activities, such as checking ledger balances and preparing annual financial statements.

  • IFRS Advisory Services

Many BPO providers provide global advisory and compliance services in the areas of accounting and finance. Companies get practical advice about the International Financial Reporting Standards. Outsourcing providers can assist you if your company or subsidiary must comply with these standards.

  • Account Management

Reliable BPO providers have certified accountants, finance professionals, and company secretaries who can oversee account management tasks. Outsourced account management includes identifying risks and providing ways to reduce them.

  • Audit Reporting

To comply with certain laws, audits must be performed regularly. The U.S. requires public entities to conduct audits within certain periods to verify that financial records are correct. BPO companies can submit the required documentation on your behalf to make sure you are compliant when reporting audits.

  • Quarterly, Annual Preparation and Accounting of Taxes

Many businesses fear the task of tax preparation, but it is vital to their business survival. This function can be outsourced to an experienced third party, which will save you time and help you avoid the yearly tax preparation.

  • Ledger Management

Ledger management refers to the process of managing credit and debits in an account. This function is managed by an outsourcing provider. They handle tasks like managing receivables and tracking customer payments.

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  • Payroll Data Entry

Payroll Data Entry Outsourcing is a subset that provides payroll services. It handles employee schedules and records hours worked.

  • Budget Preparation

Your company's budget is a way to estimate the resources required to manage different processes. BPO companies can help you manage your budget by providing solutions like budget estimation, management, and implementation.

These are non-finance services that you may also wish to outsource to BPOs. They include offshore IT and inventory management.

The Bottom Line

Outsourcing your finance process can help you grow your business. Expert financial services can help you reduce overheads and redirect resources to your profit centers. Outsourced financial professionals can perform bookkeeping and accounting tasks for you. This ensures that you are compliant and won't have to miss deadlines or pay expensive fines.

A reliable outsourcing company will use the latest technology to provide you with valuable insights and analysis of your business. Outsourcing can be a cost-effective, innovative way to grow your business and achieve long-term success.

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