Modern outsourcing is about more than cost savings. Today, businesses partner with a variety of specialized providers to access skilled talent, gain flexibility, and streamline efficiency. And according to a PwC survey of 226 companies and 66 outsourcing providers–it’s working.
The majority, 87% of respondents, indicate that outsourcing is a vital component in achieving operational goals. An increasing number of businesses are outsourcing both core and support services with notable returns on their investments.
The Value of Outsourcing Accounting Functions
Saving money has always been a key driver of outsourcing. But today, it’s no longer the only reason that companies consider partnering with third-party providers.
The top reasons for outsourcing include:
- Lower Operational Costs
- Gain Access to Specialized Talent
- Add Flexibility
- Improve Customer Relationships
- Expand into New Markets
- Improve Efficiency
This change is part of a bigger shift in how businesses are utilizing partnerships with specialized providers. According to the Future of Outsourcing Report by KPMG Advisory, outsourcing contracts are trending toward strategic partnerships.
This means that your accounting services provider can be more than a solution to augment your in-house staff or a managed services provider that takes work off your plate. Your accounting outsourcing provider can be a transformation partner that supports your growth through strategic business outcomes.
Discover Your Options for Outsourcing in Accounting & Finance
The landscape for outsourced services continues to change. About half (55%) of outsourcing providers still use traditional service models. One-quarter of providers use a managed services model that offers hyper-efficiency through targeted expertise in a limited service area. And the remaining 20% of service providers have adopted a ‘value partner’ model that operates like an extension of your in-house team.
Here is a look at what this means for accounting functions.
A financial controller primarily oversees financial and accounting operations to ensure accuracy and timeliness. This role is operational in nature, working closely with the chief financial officer or senior operating executive (e.g. the CEO) to provide fundamental financial data that will be used to inform business strategy and key decision making, either on its own or as used in financial analysis.
Controllers are responsible for:
- Systems & Accounting Structure Configuration
- Lease Accounting
- Revenue Recognition
- Oversight of Bookkeeping Activities
- Opening Balance Validation
- Audit Support
- R&D Tracking (Maximize Tax Credits)
- Complex schedule creation & maintenance (e.g. ASC 606-compliant Schedule of Deferred Revenue)
- Complex Job Costing Recording or Validation
Outsourcing the various tasks involved in recording and tracking financial data is a common first step for many businesses. A 2019 survey by Clutch found that 37% of businesses were outsourcing at least one business process, like bookkeeping.
That number was projected to increase, with more than half (52%) of respondents expressing interest in exploring operational outsourcing. Bookkeeping tasks include:
- Recording Transactions
- Sending Invoices
- Reconciling Bank and Credit Card Accounts
- Accounts Payable and Vendor Management
- Accounts Receivable and Collections
- Simple schedule maintenance (e.g. Schedule of Prepaid Expenses)
- 1099 Processing
- Payroll Recording and Validation
Outsourcing bookkeeping tasks can be a smart choice for businesses of all sizes–and in all stages. For startups, especially, outsourcing bookkeeping tasks from the right provider can provide reassurance that your finances are done correctly from the beginning.
Payroll offers another easy-to-outsource opportunity in finance. In fact, some managed services providers specialize specifically in outsourced payroll. According to Deloitte’s Global Payroll Outsourcing Survey, 73% of organizations outsource some aspect of their payroll process.
Payroll tasks include:
- Timekeeping Tracking
- Payroll Processing
- Payroll Tax Compliance
- Payroll Reporting
Payroll providers can help companies of all sizes. For small companies, outsourcing is a great way to access skilled payroll talent and new technology on a budget. And for larger companies, outsourcing payroll is a cost-effective way to free up time and focus on core services or products.
Finance is directly involved in all aspects of running a business. This means your company needs accessible financial data for almost any business decision that is made. Externally, you need clear, credible financial reports for investors, lenders, and regulatory agencies.
These reports serve different purposes ranging from accountability to obtaining new funding. Internally, senior management uses financial reports to inform business strategies ranging from product development to operations to sales and marketing strategies.
Common financial reporting tasks might include:
- Produce Balance Sheets
- Produce Income or Cash Flow Statements
- Calculate Periodic Depreciation or Amortization
- Calculate Liquidity or Other Key Ratios
- KPI reporting
Outsourcing financial reporting capabilities can improve operational efficiency for many small and medium-sized businesses with limited resources to prepare detailed reports. Additionally, larger companies looking to streamline operational efficiency can choose to co-source some or all of their financial reporting tasks to fit their specific needs.
Financial Planning & Management
Some firms, like kept.pro and its partners, offer a full-stack approach to outsourcing solutions for your entire accounting and finance department. Instead of specializing in one task or area of accounting, these providers offer flexible services that span from data-entry to executive-level support.
These services can support, enhance, or bridge your Chief Financial Officer (CFO) role, depending on the needs of your organization. Through fractional CFO services, outsourcing providers can extend the capabilities of any finance department with flexible commitments.
- Strategic Financial Planning
- Budgeting & Forecasting
- Financial Analysis (e.g. ROI/ROE analysis)
- Risk Management
- Growth Projections
- M&A Planning
- 13 Week Cash Projections
- KPI Development
- Stakeholder relationship management (e.g. investors, creditors, directors)
Fractional CFO services are a great way to gain access to high-quality financial talent without long-term commitments. Startups and growth-stage companies with variable needs, as well as those that are in between full-time placements, can benefit from outsourcing some or all of their finance needs.
If the idea of lower costs and better talent isn’t enough to pique your interest, consider how outsourcing your accounting needs can foster growth in your company.
One multinational company sought out fractional CFO services as part of its overall growth strategy. The partnership provided assistance in consolidation, reporting, forecasting, and budget-to-actual reviews that put the company in a strong position to leverage new opportunities. Over a two-year engagement, this outsourcing decision helped the organization achieve 2.5x growth and facilitate a strategic sale.
Here are a few ways that outsourcing can support growth:
- Allows You to Focus on Core Products/Services
- Scalable, Flexible Access to Skilled Talent
- Consistent, Detailed Reporting Capabilities
- Proactive Compliance Risk Management
- Save Time & Money to Boost Operational Efficiency
- Compile Quality Data for Better, Faster Decision Making
- Attract Funding from, or Comply with Requirements from, Investors & Lenders
Companies of all sizes need to achieve sustainable growth–a goal that is becoming increasingly more difficult in modern times filled with economic volatility. The buzzwords that float around the business world elevate the importance of data-driven decisions but often gloss over key facilitators in the pursuit of that data.
The right accounting outsourcing provider can be a driver of growth by providing the right data at the right time.
Outsourcing Accounting & Finance Functions Can Propel Your Business Forward
It's easy to find value in outsourcing. Business leaders are actualizing notable returns on investments from cost-savings, more time to focus on the right priorities, and access to top-tier talent. It’s no longer a question of if–but what services you should be outsourcing in 2023. When it comes to accounting and finance functions, you have a range of options, including bookkeeping, payroll, finance management, reporting, and informed growth strategy.