Perfecting the art between managing and running a business is what makes or breaks a business. In the present market scenario where competition is tough and technologies are many, generating revenue automatically becomes a key priority. This takes precedence over any function, which is although essential but not directly related to generating revenue. For instance, managing finance and accounts. In such a scenario, outsourcing these functions to an external agency is a smart business decision that can prove beneficial in the long run.
According to a 2018 Client Accounting Services (CAS) survey, organizations that outsourced their finance and accounting services witnessed a 28% increase in their profits and a 23% increase in their revenue as compared to companies that did not outsource. There are more benefits that extend beyond earning dollars. The survey also found that 80% of respondents had more time to focus on business, 68% found their accounting process was made easier and more efficient and 53% worried less about errors. Clearly, finance and accounting outsourcing (FAO) is more relevant in today’s complex business structures.
A solid understanding of FAO will enable businesses to reap the many benefits of this service. Let’s take a look at a few of them:
In business, time is equal to money. Finance and accounting procedures require a great deal of investment in time; something which could be more rewarding if utilized in business generation activities. Outsourcing finance and accounting activities can reduce the burden and energy required.
A client-vendor relationship holds paramount importance in terms of business alignment and building trust. Oftentimes, businesses are nervous about relinquishing control of finances and putting their financial records out there in the open. However, a solution to that could be a hybrid FAO model, wherein finance and accounting services are co-managed by the vendor and the client. This gives businesses a sense of control.
When it comes to finance and accounting procedures, not all businesses are equipped with the knowledge of industry best practices. This is where FAO can prove beneficial. Onboarding a good finance and accounting service provider can provide businesses with a reliable course of action for any procedure in a timely fashion. Additionally, they also bring a competitive advantage by bringing in their value-added services such as knowledge exchange and process improvement, which can bring you in step with your competition.
Penny saved is a penny earned. FAO services effectively reduce the overhead costs (insurance, training, PTO, etc.) that are often neglected when hiring an internal team. This money saved can be optimized and redirected towards efforts on business expansion.
With advanced technology like data analytics, Robotics Process Automation (RPA), cloud computing, etc. coming into the picture, these functions are ever-evolving. External agencies are adept with such technologies which could become beneficial for businesses. Additionally, outsourcing finance and accounting services provide businesses direct access to the most innovative technologies without actually purchasing them while giving real-time visibility into their businesses.
We are living in a new era of business. While cost reduction is still the most important objective, FAO provides a cost-effective way for organizations to improve their finance and accounting functions. In the end, it all really boils down to your perspective. Your decision will depend on which way you look.