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Accounting Outsourcing FAQ
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Accounting Outsourcing: Your Questions Answered

July 17, 2024

Today there is great potential in the field of finance and accounting business process outsourcing (BPO) as a service segment. This particular market is expected to have a compounded average growth rate (CAGR) of 15.3% from 2024-2031.

The reason for this rapid development in this sector lies in newer AI and cloud technologies which have led to increased demand for offshoring. Highly reliable manpower availability for the Business Process Outsourcing sector in popular outsourcing locations like India is also one other reason.

The goal of this FAQ page is to provide answers to your queries on Accounting Outsourcing. Whether you seek an understanding of the advantages it holds, want more information on how you can get started with outsourcing or need guidance on selecting a suitable partner for outsourced services, we’ve got you covered. Read on to discover what accounting outsourcing is and how it can streamline your operations, reduce costs, and leverage cutting-edge technology to keep your business competitive, among other benefits.

  • What is accounting outsourcing and how does it work? 

Accounting outsourcing is the practice of contracting third-party service providers to handle the accounting and financial records of a company instead of having an internal department to deal with that.

Outsourcing refers to the strategy of delegating some of your internal processes to other external firms for a certain amount of fee. It operates in a service oriented way by translating your accounting chore to a specialized service company. 

  • When should I consider outsourcing for my accounting practice?

You should consider outsourcing your accounting when:

  • Your in-house team either has little time to perform ordinary tasks that must be fulfilled or does not have enough skills to do it.
  • You are looking to reduce operational costs.
  • You wish to devote more of your time towards strategic business activities.
  • You are looking to make use of advanced accounting tools and techniques into your practice/firm but with minimal investment.
  • Your business is growing fast and requires a reliable and easily scalable accounting team.
  • What are the factors to consider during outsourcing decisions? 

When considering outsourcing, it is important to keep in mind several factors before you make the decision to ensure you derive maximum benefit from the partnership with the service provider. Here are a few factors to consider.

Cost vs Gain: When deciding whether to outsource work, one must weigh the cost against the benefits – lower costs or higher revenue.

Do ample research: Research service providers’ reputations by looking into their histories with past clients and also check out reviews online; don’t forget to check on how popular these companies are. You can also consider talking to existing/past clients.

Secure and confidential: For financial information like this not to be leaked into unauthorized hands, strong security needs to be put in place around all systems where such data is stored or transmitted—does your potential vendor have any provisions for this?

Communication: At the basic level, communication implies talking and listening, but is there a way to gauge if an outsourcing partner will communicate well? Ideally, they should have systems that allow them to update clients automatically about progress made so far without having constant meetings, etc. However, face-to-face contact might sometimes be necessary if things aren’t going according to plan.

Customization and flexibility: Ensure the services can be tailored to your specific needs and can adapt as your business evolves.

  • What are the pros and cons of in-house accounting and outsourced accounting?

In-house accounting offers you direct control of data and the processes. The staff are employed directly by your organization. You have immediate access to the accountants (right across the desk) for quick queries. 

However, in-house accounting can give you higher expenses in the form of salaries, overheads, and employee benefits. Scalability can be limited as also the expertise/skill of your staff. You will need to ensure your in-house staff are trained regularly to stay updated with current trends causing you additional expenditure. 

In the case of outsourced accounting, you will incur lower costs as the need to dispense salaries and employee benefits, office space rent etc is ruled out. You can pick and choose the skillset required from the service providers you enlist. Training to stay updated with current trends will be taken care of by the service provider themselves. Scalability is easily achievable when it comes to outsourcing. 

The cons for outsourced accounting include lesser oversight over accounting processes. There can be communication issues in case of remote collaboration. Security is another area of concern. However, these can be easily taken care of by choosing the right service provider.

  • What are the top 5 benefits of outsourcing accounting? 

Outsourcing accounting services offers a wide range of benefits. Here are five of them:

Cost savings: Outsourcing can be more economical than keeping an in-house accounting team. It helps you save on salaries, benefits, and overhead expenses.

Expertise: Outsourced providers have specialized knowledge and experience in accounting, ensuring high-quality and accurate financial management.

Focus on core business: By outsourcing accounting tasks, you can focus more on your core business activities and strategic growth.

Scalability: Outsourced services can easily scale with your business needs, providing flexibility as your company grows.

Access to advanced technologies: Outsourcing firms use the latest accounting software and technologies, giving you access to cutting-edge tools without additional investment.

  • How much do outsourced accounting services typically cost? 

The price for outsourced accounting services varies based on the services offered, the service provider’s location, and business complexity. You’ll either be charged on a monthly basis or hourly rate, ranging from a few hundred dollars to thousands of dollars per month.

  • How do I choose the right outsourcing partner for finance and accounting services? 

Here are some pointers that can help you find the right outsourcing partner for finance and accounting services efficiently: 

Assess your requirements: Determine what accounting tasks or obligations should be delegated. 

Research service providers: Identify popular service providers and companies with good reputation and relevant industry experience. You can also ask for recommendations from people within your network. You can also ask for recommendations from your network.  

Request proposals: Obtain proposals from multiple service providers to compare services and costs.

Evaluate and select: Assess the proposals based on cost, services, and reputation, then select which company would be the most suitable for you.

Transition and onboard: Once selected, discuss in depth with the service provider your needs and requirements and work with them to transition your accounting tasks smoothly.

Monitor and review: Regularly evaluate the provider’s performance to ensure they meet your expectations.

  • How do I choose the right outsourced accounting service provider? 

While selecting the best outsourced accounting service provider, one can consider the following factors: experience, expertise, the type of service they offer, reputation, fees, level of data security, and other users’ feedback. They should also be in a position to demonstrate that they have adequate knowledge of your industry and be in a position to meet your needs.

  • How to ensure data security when working with outsourcing partners?

After narrowing down on the preferred outsourcing partner, it is imperative to vet their security protocols and practices to ensure that robust data handling agreements are in place. Make sure they also have other strict data security measures such as stringent access controls, data encryption, and secured communication channels. It is also essential to audit the service provider’s procedures regularly and have an incident response plan in place. 

  • Does outsourcing reduce control over my business?

No, it doesn’t. Outsourcing your accounting work doesn’t mean you lose control of your financial processes. The outsourced accounting service provider will work as your virtual in-house accounting department, ensuring you get regular updates and reports. You can also set policies, guidelines, and approval processes to ensure proper control and governance.

  • What quality levels can I expect from my offshore outsourcing service provider?

Reputed outsourcing providers, in general, have high-quality standards and have in place the best practices of their industry. They usually follow strict protocols and implement them at their offices. 

Additionally, many outsourcing providers are ISO-certified and undergo regular audits to ensure compliance with quality and security standards.

  • How safe is my data when I outsource accounting? 

Data security is a top priority for reputable outsourcing service providers. They implement robust security measures, such as data encryption, secure file-sharing protocols, access controls, and regular backups, to protect your financial data. Additionally, they typically follow industry standards and best practices, such as ISO 27001 and SOC 2 compliance, to ensure the safety and confidentiality of your data. However, it’s important to conduct due diligence and review the provider’s security policies and certifications before outsourcing your accounting functions.

  • What level of expertise can I expect from an outsourcing service provider?

In general, a reputed outsourcing service provider employs experienced and highly skilled professionals with the necessary qualifications. Commonly, the outsourcing provider will ensure their staff fits all your criteria and have the necessary certifications for the specializations that clients may require. Outsourcing service providers usually offer industry-specific expertise, making sure that their staff and teams working for the client are well-versed with the various challenges they may encounter during the job. 

  • How does outsourcing impact my client relationships?

Outsourcing specific functions can free up your time to make your client relationships stronger. While some clients may cast aspersions about outsourcing stating reasons such as data security and confidentiality, these points can be worked upon and make your expectations crystal clear with the outsourcing partner. Communication, confidentiality, and security protocols must be for problems not to arise. 

  • Is it necessary for an outsourcing partner to specialize in an industry?

An outsourcing service provider with specialization in a given industry can meet your demands and requirements better because they will be able to understand the finer points better. They also can make better sense of the various regulations and reporting requirements specific to that industry. Additionally, they will be able to give you better advice and recommendations to suit your requirements. However, in the case of outsourcing general accounting and bookkeeping tasks, a service provider with broad expertise may suffice.

Conclusion

Accounting outsourcing is a viable and practical solution for accounting firms big and small. By partnering with an outsourcing provider, you can achieve success – monetary, business expansion, client satisfaction and much more. Integra Global Solutions offers you the best in terms of outsourced accounting services – having over 2 decades of experience in the accounting industry, we cater to accounting firms of all sizes. Whether you want a few staff or an entire team, or you want to outsource only a few functions, we can have it all worked out. 

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