Outsourcing Accounting Benefits: By Forbes
Finance and accounting (F&A) was one of the first processes that companies outsourced, and the practice continues to boom: Ed Thomas, an analyst for Ovum research, found the number of F&A outsourcing projects valued at $1 million or more increased in 2012 compared to the year before.
As the market matures, companies contracting for outcomes are exploring fresh ideas and seeking new answers to streamline F&A processes. They are expanding outsourcing to new areas of finance and accounting, new industries, and new sizes of companies than in the past.
“This is a wider trend in outsourcing as a whole,” Thomas explains. “Cost reductions are the table stakes, and companies want to know what else their outsourcers can do to make their processes and technology run more efficiently.”
The most commonly outsourced services within accounting are payroll accounting, accounts payable, and accounts receivable. The Ovum study found companies are “moving up the value chain” in the types of F&A functions they outsource.
“They are looking to move from relatively basic transactional processes, such as accounts payable to more strategic functions, like budgets, forecasts and internal audits,” Thomas says. “More than a third of respondents had outsourced internal auditing, which is a high-level function.”
Simplifying and standardizing F&A processes is a key characteristic of well-run companies, and by instilling good F&A processes these companies can achieve a variety of good outcomes—such as more information, more service and more cash. By simplifying their F&A processes, companies have found they can reduce the cycle it takes to close books, and they can develop better benchmark and baseline financial processes to help them meet regulatory requirements.
Expanding the scope of outsourcing can multiply such benefits, some experts say. “One simple example is accounts payable and receivables,” says Jag Dalal, managing director of thought leadership at the International Association of Outsourcing Professionals (IAOP). “If you outsource only one function, you limit your benefits. If you outsource both, you get a value beyond improving the transactional component because the outsourcer can see when cash comes in and goes out. That can help the company take best advantage of the cash on-hand and optimize internal processes.”
As companies look to leverage the power of their data, they are turning to outsourcers with greater expertise and technology resources than they have in-house.
Finance and accounting (F&A) was one of the first processes that companies outsourced, and the practice continues to boom: Ed Thomas, an analyst for Ovum research, found the number of F&A outsourcing projects valued at $1 million or more increased in 2012 compared to the year before.
As the market matures, companies contracting for outcomes are exploring fresh ideas and seeking new answers to streamline F&A processes. They are expanding outsourcing to new areas of finance and accounting, new industries, and new sizes of companies than in the past.
“This is a wider trend in outsourcing as a whole,” Thomas explains. “Cost reductions are the table stakes, and companies want to know what else their outsourcers can do to make their processes and technology run more efficiently.”
The most commonly outsourced services within accounting are payroll accounting, accounts payable, and accounts receivable. The Ovum study found companies are “moving up the value chain” in the types of F&A functions they outsource.
“They are looking to move from relatively basic transactional processes, such as accounts payable to more strategic functions, like budgets, forecasts and internal audits,” Thomas says. “More than a third of respondents had outsourced internal auditing, which is a high-level function.”
Simplifying and standardizing F&A processes is a key characteristic of well-run companies, and by instilling good F&A processes these companies can achieve a variety of good outcomes—such as more information, more service and more cash. By simplifying their F&A processes, companies have found they can reduce the cycle it takes to close books, and they can develop better benchmark and baseline financial processes to help them meet regulatory requirements.
Expanding the scope of outsourcing can multiply such benefits, some experts say. “One simple example is accounts payable and receivables,” says Jag Dalal, managing director of thought leadership at the International Association of Outsourcing Professionals (IAOP). “If you outsource only one function, you limit your benefits. If you outsource both, you get a value beyond improving the transactional component because the outsourcer can see when cash comes in and goes out. That can help the company take best advantage of the cash on-hand and optimize internal processes.”
As companies look to leverage the power of their data, they are turning to outsourcers with greater expertise and technology resources than they have in-house.
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