Definitive Guide on Outsourcing Finance & Accounting Services

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Nowadays, most businesses choose to outsource their organization’s operations that aren’t related to revenue generation. It saves not only time but also money. So, you may ask what exactly outsourcing is? In simple words, it is a long-term agreement between your business and a service provider to lower the costs of your non-core operations.

Outsourcing is not something that got introduced recently. This is an act of conducting business that has been used for ages. SEVERAL BUSINESS PROCESSES CAN BE OUTSOURCED TODAY, from IT services and advertising to printing work and legal obligations. Apart from the expertise of these service providers, you get the advantage of reduced burden at your workplace. 

Over the last couple of years, the outsourcing industry has witnessed an emerging trend and growing demand for outsourced Finance and Accounting services. And today we’ll talk about that. 

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Outsourcing Finance and Accounting: Reasons Why Businesses Opt For It?

  • Spending Excessive Time On Accounting: Businesses tend to spend a significant amount of time on in-house finance and accounting management, especially small and medium-sized businesses. It becomes challenging for the company to focus on its fundamental concerns that need optimum attentiveness for sustainable growth in such circumstances. 
  • Challenges in Compliance: Every business needs to comply and adhere to the laws imposed on them by the central and state government. Lacking a proper understanding of those laws and making errors while bookkeeping is something your business can’t afford, as it will result in legal obligations and penalties. Thus, it becomes beneficial to outsource your finance and accounting services to a provider that knows everything about the old, existing, and latest regulations.
  • Expensive In-House Accounting: Several businesses don’t realize that their accounting department is more costly than it should be. Thus, it becomes easier to cut down costs and save money in this aspect by outsourcing Accounting and Bookkeeping Services

Importance of Outsourcing Finance and Accounting Services

  • Get Rid of Resource Crunch

Due to the ever-increasing demand for accounting professionals, recruiting and retaining the most efficient and talented professionals in your accounting department has become challenging. However, by outsourcing your accounting services, your business gets access to and benefits from the industry’s best talent for this job. 

  • Enhanced Focus on Core Business Operations

With expert assistance and steadfast support in overall financial services, your management team can shift its focus on core business operations. 

  • Access To Advanced Technology and Low Infrastructure Expense

Your financial accounting team requires the latest upgraded technology and software. The regularly updated software becomes essential for ensuring compliance with the changed or modified guidelines by the central and state governments. 

So, it becomes costly to update your system frequently. However, outsourcing your finance and accounting services will help you control infrastructure expenses and give you control over the latest technology software. 

  • Chances of Worldwide Reach 

If your business wants to spread its horizon and access new markets, you’ll need control over offshore financial accounting services that can be significantly costly. 

However, suppose you decide on outsourcing your accounts to a service provider that focuses on local as well as offshore financing and accounting services. In that case, you’ll enjoy enhanced compliance in all the markets. 

Outsourced Finance & Accounting Services: All The Types 

Bookkeeping

Bookkeeping is an essential part of finance & accounting services that can be outsourced for better efficiency. In bookkeeping, you’ll have to keep and maintain every record associated with your business’s overall income and expenditure. 

It resembles the financial condition of your business depending on your earnings. In addition, the outsourced bookkeeping services provide quick, easy, and better access to data that helps you make empirical business decisions. 

Management Accounting

Management accounting is nothing but the effective management of reports of the company’s profit and loss, internal business processes related to the clients, business assets, cash insights including cash in hand and forecasts, reports on KPIs adopted by the business, revenue projections, and more. 

Tax Accounting

Tax accounting is simply the tax revenue returns and requisite tax payments depending on your location-specific laws and industry. Your outsourced service provider should be the one who keeps track of all your tax payments and keeps your company updated, and complies with the latest tax laws. They must be capable of identifying any missing or excess payment of taxes. 

Accounting Audit

An accounting audit is essential to ensure transparency within the firm and ensure the organization complies with all the modified laws. You can enjoy the expert’s assistance in keeping your financial records, company receipts, and financial statements by outsourcing your accounting audit services. It will help your business control, identify, and alleviate malpractice, fraud, and corruption in the organization. 

Forensic Accounting

If there’s any gap in your business’s financial records, you can determine the root cause of the issue with the help of forensic accounting. Also, it will act as an information source for the law enforcement department to take the necessary steps on any dirty deed against your firm. 

Financial Analysis

This aspect of finance & accounting covers all sorts of calculations related to the product like a review of re-bills and credits, profitability, and more. Outsourcing the financial analysis services will also cover the review of sales contracts for controlling the consequences of such agreements. 

Payroll Services

Almost any company that ensures finance and accounting services will provide payroll services. The outsourced company will help you carry out end-of-month services, tally the pay cycle of the business, and end-of-year services. They will also look after the payroll compliance as stated by the central and state regulations. 

Outsourcing Finance & Accounting Services: All The Benefits

There are several advantages of outsourcing finance and accounting services, including: 

  • Businesses that hold specialization and expertise in handling outsourced finance and accounting services always stay updated about the modified financial regulations, compliance policies, and accounting rules. They keep track of the changing regulations and policies, but they also make sure each policy is implemented in the client’s workplace. 
  • As finance and accounting service providers, these firms must keep their technology, software, and hardware updated according to the latest regulations and trends. It can be expensive to do so for a single business. However, these service providers deal with multiple companies’ finance & accounting services, enabling them to upgrade the systems much lower cost. It means your business will also gain access to the best-in-class technologies at a reasonable price. 
  • Most outsourcing companies for financial accounting services are associated with the best talents. Hiring them would help your business leverage a much higher quality of bookkeeping and accounting services than what you’ll yield from your in-house team. 
  • Outsourcing finance & accounting firms are concerned about the security, quality, and privacy of their client’s data. They’re highly professional and will keep your data safe and protected. Also, these service providers ensure a dashboard that gives you access to financial data anywhere and anytime. It enables you to make quick and efficient business decisions. 
  • By outsourcing, you significantly lower the likelihood of any tax and payroll filing liabilities. A professional and expert finance and accounting firm ensure never to let those issues happen again. 

Factors To Consider Before Outsourcing Your Finance & Accounting Services

Cost

The first and foremost factor you need to consider before outsourcing is the cost. No matter your business size, outsourcing your financial accounting services comes with many benefits, including the cost. When hiring an outsourcing finance & accounting company, ensure that their cost of hiring is less than what you’re paying to the in-house team. 

Much-Needed Expertise

Outsourcing your accounting operations gives you access to highly-qualified and experienced professionals and the best technology needed for smooth and unblemished operations. In addition, you have complete authority to ask the outsourcing accounting companies about their employees and expertise in this business aspect.  

Check The Conditions Mentioned In The Agreement 

After listing all your terms and accepting their conditions and payment plan, check the terms and conditions and some crucial points in the agreement once more before signing them up. You must ensure that there are no additional clauses you have not given any consent. Also, ensure that no services listed on the agreement are of no use to your business. 

Flexibility 

The requisite work in unpredicted situations like an economic crisis depends on what you have signed for in the agreement or contract. In such circumstances, the outsourcing company must have the option to adapt to it and should have some clause to keep up with the work without creating any havoc or issue. 

Things You Need To Ask The Outsourcing Service Provider 

  • You must ask them how long they have been in the business of managing finance and accounting services. Also, ask them about their business model to determine what makes them unique from the competitors
  • Ask the outsourcing company to give reference to their top three clients. Ask whether you could contact those clients and get more valued insight about them
  • Ask the outsourcing accounting company about their industry. Ask how many types of accounting services they can handle simultaneously for your business
  • Ask and learn how the company upgrades its software and system. Ask how frequently they make changes in their infrastructure 
  • Ask them what approach they seek to ensure data compliance and security. Ask them about their certifications and the encryption they use 
  • You must ask questions related to their staff management. Ask whether they can always provide highly-qualified and expert professionals or not 

Make The Right Outsourcing Decision By Choosing Invensis 

Outsourcing financial accounting services bring a plethora of benefits and opportunities to your business, especially when the experts do it at Invensis. Not only do our expert professionals save you money, resources, and time, which could be further used as investment, but we also give you access to the latest accounting software and technologies. In addition, our years of experience in the industry are all you need to enjoy easier access to the international market during business expansion. From payroll management to bookkeeping, we take care of all types of finance & accounting services for our clients. So, pay less to avail of a multitude of benefits for accounting services with Invensis. 

Frequently Asked Questions – 

1. Can I outsource the financial and accounting services to a firm?

Currently, more and more businesses realize that outsourcing their financial accounting operations is a more cost-effective, efficient, and seamless financial solution that significantly helps in boosting business growth and success. 

2. Is it expensive to outsource finance & accounting services?

Generally, outsourcing financing and accounting services to a firm comparatively costs less than what you pay to the in-house team. The cost can range between $500 and $5000 every month for any small business. 

3. What is the sole purpose of outsourcing any accounting operation? 

The sole reason why businesses outsource their accounting operations is to save money by eliminating the need for a complete in-house team (where you need to train the new joiners) and leveraging the expert’s knowledge at a low cost. 

4. Which type of finance and accounting process is in high demand for outsourcing? 

Forensic accounting and bookkeeping are the two most highly demanded finance and accounting processes businesses are looking to outsource. 

5. Which is the best way to choose an outsourcing partner for financial accounting needs?

The best way to choose an outsourcing partner for your financial accounting needs is by looking at their work samples, past client testimonials, and expertise. 

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