Twenty years ago, some traditional companies would have been unreceptive to the idea of outsourcing any critical functions offshore, especially not a proprietary accounting process. Their rationale was that it was not only unfamiliar territory but also because it could disrupt an established system of finance.
Add to that mix a fear of losing control and potential employee resistance, it is easy to understand how the cons, seemingly, far outweighed the pros.
Over time, businesses faced new and unfamiliar challenges that greatly affected how operations were carried out. However, in the wake of a volatile economy, business owners had to fully adapt and embrace new disruptive strategies that would help them get over the slump and drive growth or run the risk of losing relevance. With the slow but steady reinvigoration of the economy, outsourcing accounting services is steadily growing stronger and proving to be a popular business solution and strategy for many businesses looking to increase market share, reduce risk, and improve value proposition.
Why Outsource Accounting Services?
Most businesses are capable of outsourcing their finance functions. With new players and stronger outsourcing institutions, businesses in every industry can find the perfect solution to tailor-fit their needs so that they can focus on other functional areas of their business. Fundamentally, cost-effectiveness, flexibility, and efficiency are some of the primary factors why companies outsource.
What You Should Consider Before Outsourcing Accounting Services
Before deciding if outsourcing accounting services is right for your business, ask yourself what your company needs are, what it’s lacking, and where it can improve. Weighing the pros and cons first before making a decision is always the right thing to do.
To assist you with your evaluation, we will present some benefits and drawbacks.
Benefits of Outsourcing
One of the main benefits of outsourcing accounting services is cost effectiveness. Outsourcing accounting services to a third-party provider can save businesses money in a number of ways. For example, outsourcing can reduce the need for a full-time accounting staff, eliminating the need to pay salaries, benefits, and additional expenses associated with hiring a more experienced, high-level in-house position.
An additional benefit is saving on operational expenses such as office equipment, office space, internet fees, and other payables.
When your company grows, so will the different departments in your business including Accounting. Sudden growth of transactions and unfamiliarity of new challenges might take a toll on your staff and operations. With outsourcing, scaling up on manpower wouldn’t be an issue as outsourcing companies can do the screening, hiring and training of talent based on your requirements. The same can be said in scaling down operations.
Outsourcing can provide access to specialized expertise and skills that may not be present within the organization, which can save money on training and development. You can also get insights and expert advice from competent professionals to support your initiatives.
Another benefit of outsourcing accounting services is improved efficiency. Performance score cards, among other metrics, are in place to ensure turn around on specific financial processes are, in fact, efficient. It can also provide businesses with access to the latest technology and best practices in accounting, which can help them to improve their processes and stay competitive in the marketplace.
Drawbacks of Outsourcing
There are also some drawbacks to outsourcing accounting services with varying effects depending on your business’ structure.
Potential for Miscommunication
Fear of Loss of Control
Conclusion - Outsourcing Accounting Services: Is It Worth The Effort and Cost?
Outsourcing Accounting Services: FAQs
Are You Considering Outsourcing Accounting Services? IQ BackOffice Can Help
Here at IQ BackOffice, we provide financial business process outsourcing for large and mid-sized enterprises. We serve a range of diverse industries, including manufacturing and distribution, healthcare and dental, restaurant and hospitality, energy, retail, and technology. Our solutions enable companies around the globe to automate and streamline the complex financial processes they manage.
IQ BackOffice reengineers financial processes to take advantage of best practices and leverage state-of-the-art automation. This allows us to remove manual or inefficient steps, delivering improved controls and up to 70% cost savings for our clients.
To find out more about how IQ BackOffice can reduce costs and streamline your Accounts Payable function, get in touch with us.
Read More about IQ BackOffice offerings:
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What is AP Automation and Does It Work On It’s Own?
Outsourcing Accounting Processes – Does It Actually Save Money?