Outsourcing is one of the most common words that is being used in almost every field today. Especially the grand multinational corporations are dependent on the outsourcing works. And outsourcing is no more territorial work. They are being provided all over the world. Outsourced Accounting Services India, is a booming sector. A company in the USA outsourcing IT work to a company in India; it is a common thing now. But there have been some significant changes observed in the last few years. Outsourcing for accounting practices has grown even in mid-size companies. As you already know that outsourcing is not confined to a single field, so this article is picking one field that is finance and accounting and will explain how the outsourcing work in this arena.
Now, deciding to outsource your work especially in the area of finances has always been a difficult decision as there are a plethora of decisions that you would need to take into consideration. When one takes into consideration to switch from in-house to virtual bookkeeping, there are tonnes of questions in your mind like how will things work out? Will we be on the same page or not? Will it be cost-effective as compared to the in-housing staff that you have trust in? How will the communication work and what are the risks and is it worth the investment or merely a waste of time?
For businessmen, handing over their finances is like being out on the limb all the time, and it also feels quite daunting. You would want to know all the benefits and risks involved in outsourcing. And the article has brought you all the answers to your questions and much more. So let’s starts with it.
Benefits of outsourcing accounting services:
When comparing the in-house employment with outsourcing the latter seems to save you at least 50% of what you invest in in-house. Thus the cost of outsourcing accounting services is pretty less. When you save money in accounting you can consider investing in other crucial aspects of a business.
2. Good processes:
It is usually observed that mid-market companies have limited process of documentation. This leads to serious inefficiency and lots of reworking. When outsourced, you can believe in the best processing of your documents.
Outsourcing leads you to concentrate the scarce resources on the crucial part of the business that will help to flourish the work. This will eventually lead to profits, which is the whole point of any business. The businessmen can spend more time with the customers and provide them with the best of services, and focus on his strengths.
4. Better Decision making:
You will outsource the work to professional accountants which means you will provide the best quality of accounting information. The more the information is reliable, it will improve your decision making. You no more need to spend money to keep up with the amendments and new policies because this is the work of the professional and they are good at it, which gives you, time to work on other matters.
5. Minimize the risks:
So when you outsource the work of finances, you outsource the obligations that come with them. An in-house accounting, if there are any reporting errors it can lead to some really big-time penalties that are capable to kick you out of the competition once and for all. So when you place the responsibility on the professionals, it minimizes the risks for the organizations.
How to choose the right service provider
Now that you have decided to outsource the accounting processes, the next step is to choose the right service provider for the same.
Few things to do while looking for the service provider:
- Search vendor’s name on all the major search engines like Google, Yahoo, Bing, etc. The list will provide with all the names, capabilities and experiences. Prepare the list of a name you find most useful for your work.
- Now that you have a list, search for their websites and get a clear understanding of the services they provide. Study the profile of clients and testimonials. Do a thorough research of all vendors.
- Shortlist at least 6-8 names for answering the questions mentioned below:
A) Since when the service provider is in this business?
Whether our decision to outsource the finance will be answered upon the experience that the said vendor has, ensure that don’t give the work to an amateur. The person must have minimum experience of 5 years. Reliability is the key to successful outsourcing. If the firm is new, research about the investors that are backing it up and talk to the senior management.
B) What measures to be implemented while monitoring process performance?
For monitoring the service provider’s performance while doing the work, you can establish certain parameters or KPI (Key Performance Indicators). Now in financial accounting, the KPI will depend on what processes are being outsourced. For instance, if it is just accounts payable processing then the KPI can be error rate or volume of processing documents or the turnaround time, again if the work is of bank reconciliation statements then the parameters can be time taken to reconcile the transaction and the rate of error, the level of accuracy, etc.
These were some fundamental steps that will help you to outsource the work to the best service provider that will save the business time, minimize the risk and eventually increase the profit, which is the very reason anyone invests in a business. Outsourcing work is a very common thing and is being done by everyone. It reduces the risk and helps you focus on client communication and other aspects of a business.