Finance And Accounting Outsourcing Trends

Outsourcing business operations is one of the new trends followed today by most of the companies. The Finance and Accounting outsourcing industry too has grown to a large extent today. Big, medium and small businesses resort to outsourcing accounting operations, because it saves them a lot of time and money. This is a process when a business hands over its finance operations to an external agency (team or individual). This external agency will take care of all the accounting operations, thereby releasing the burden of the businesses. These agencies charge a nominal fee for the finance and accounting services (preparing entries, finalization of accounts, getting audit compliance reports, year-end reporting, etc.) rendered. Some of the recent trends followed in this industry are as follows:

Robotic Process Automation (RPA)

One of the latest trends that are creating waves in the field of outsourced finance & accounting operations is Robotic Process Automation. As the name indicates, this process involves the use of technology to automate processes, improve their quality and eliminate all the unnecessary and repetitive processes involved in delivering the final result. Through this process, the agencies that take care of F&A operations of their clients, make use of computer software to bring about the speed, efficiency and accuracy in the way accounts are managed and presented.

Predictive & Prescriptive analytics

This is one of the most successful trends employed in the finance and accounting industry today. This method involves in providing a descriptive analysis, predictive analysis on how the future model would turn out to be and prescribing an optimum solution that suits the nature and operations of a particular business. When this trend is adopted by agencies who handle the F&A activities, businesses get an idea of their current situation, forecasts for future and apt F& A model to be adopted. The finance and accounting outsourcing agencies give a detailed report about this to the business for reasonable charges.

Hybrid pricing models

In the finance and accounting outsourcing industry, many agencies charge rates based on the hybrid pricing model. In this model, business owners need to pay the agencies that take care of their F&A activities, only for the exact services that have an impact on the business earnings. If you are a business owner, you can choose this model, because it is tailor-made for you with flexible pricing structure. Delegate only particular tasks to finance and accounting outsourcing companies and pay exactly for that.

Finance and Accounting Outsourcing – Keeps Budget From Overflowing

Do you know what finance and accounting outsourcing stands for? As the years have gone by, the developed countries have started outsourcing there business to cut down on their operational cost. These jobs are mainly outsourced to low cost regions in order to get the job done at a much lower cost. So in many of the cases what happens for these companies in the west is that they are relieved from the task of hiring as well as they get their jobs done on time by making contracts with the client to whom they are sending the job.

In the initial stages, it used to be that the companies in the west used to send mainly those jobs which involved selling of their products by calling the customers and also jobs that involved customer service. But now they are sending expert jobs like accounting and finance related jobs to the low cost zones to attain more cost effectiveness. Most of these jobs are sent to the places that have excellent human resources and also a sound knowledge about the job that they are sending. The first choice for most of these foreign countries is India which has both of them.

The low cost countries are also very much interested in doing these jobs as they get paid in foreign currency which adds more value to their assets because of the exchange rates being much higher. In this respect as far as finance and accounting outsourcing is concerned the primary thing that one needs to keep in mind is proper knowledge about how the entire process should be carried on. In most of the cases this is taught by the company which is outsourcing the job.

The work is mainly based on the trust of the people as they have to protect the data of the foreign company in utmost secrecy. Any leakage of data can lead to fatal consequences for both the companies. In most of the cases the company outsources part of the job and do the main part on their own. This is called partial outsourcing with a contract for the job. In other cases the whole job of the parent company is outsourced and that is conducted through processing centre in the low cost zones. This processing centre is run by the foreign company itself and it is called captive outsourcing.

These days the term BPO is extensively used for outsourcing business. This stands for business process outsourcing. But in case of finance and accounting outsourcing related process the perfect term will be KPO which stands for knowledge process outsourcing. It is basically the procedure of the foreign company allied with the knowledge of the low cost zone workers that one achieves work objectives.

This is not the typical outsourcing job but it involves brainstorming of both the parties in order to attain work objectives in this case. In most of the cases multinational companies that has its operations in multiple countries has outsourced these kinds of jobs to the low cost zones to get maximum return on their capital invested.

Trends of Outsourcing Finance and Accounting Services

Organizations are looking for effective finance and accounting trends, ways to reduce the operational costs and gain a competitive edge in the market today by outsourcing their processes.

2014 is expecting a growth of 56% in BPO service sales in the first three months of the financial year.

As per the research carried out by a self-regulating research firm, strong development is estimated in business process outsourcing. The global market shows an approximate opportunity rate of US $150 to $200 billion in the field of finance and accounting.

Back in 2010, the industries that largely shifted to finance and accounting outsourcing were retail, manufacturing, travel, financial services and logistics. These sectors accounted for roughly 70 to 75 percent of the total spending. Other industries exploring the scope since then include real estate/ property buying & selling firms, medical, banking and IT firms.

The finance & accounting solutions also takes into account payroll, accounts receivable and accounts payable outsourcing processes. Evolving development trends in this sector are financial planning and business analysis.

Reducing cost and enhancing business productivity has always been the focus of organizations operating in this field. Today, looking beyond mere cost reduction the emphasis is shifting on to create new revenue streams. Potential BPOs must make noteworthy advancements of performance metrics while dealing with large accounts of inefficiencies. Subsequently, this moderates financial risks and ensures compliance with the developing regulatory norms.

The outsourcing organisations who are up to elevate the finance function and meet client challenges, propose the best ever finance & accounting solutions to the industry. In the virtue of accelerating financial growth without putting an organisation into much of a risk, BPOs plan to give a sustainable development while enduring to capitalize on manpower and innovation.

Obtaining a better insight on business performance and maintenance, the shared service providers can lend a great support for preparing revenue growth plans. These outsourcing firms operate as a comprehensive partner supporting, managing and executing finance related functions covering the following:

General ledger
Accounts receivable
Accounts payable
Reporting & compliance
Budgeting & forecasting

Financial service providers drive a robust implementation of process enhancement mechanism that manages the monetary and regulatory risks, contributes in business growth while maintain the cost.

Such refined economic methodology not only helps businesses improve efficiency but, also drives value through upgraded key performance indicators such as profit recovery, DSO, etc.

Adding on to the business value, the service providers work towards bringing process improvement to an organisation leading to profits that are greater than their yearly convention value. Organisations benefit as enhancement in the map of accounts leading to decline in the month-end closing cycle by 10%. Firms gain up to 30% more business efficiency during their work tenure of outsourcing processes.