Many companies choose to outsource business operations, these days, to ensure, primarily, cost-saving and high-quality outputs. To be precise, outsourcing is the practice of contracting out a business operation to an external agency or company, which is specialized in the particular outsourced function. The concept of outsourcing has been there for decades, but due to the lack of efficient communication and tracking tools, many companies used to abstain from contracting out to outsourcing companies. However, today, the presence of various communication(video and audio) platforms, availability of adept tracking tools and easy access to the latest technologies, have made outsourcing a popular practice in the global business environment. The most commonly outsourced business functions are marketing, accounting, HR, customer service and lead generation and software development.
Essential to every organization, accounting methodically records the financial data of a company, while keeping a track of the cash in-flow and out-flow, ensuring statutory compliance and using the financial data in the decision-making process. Hence, it is very crucial for any company to make sure the accounting functions are being meticulously taken care of, so that its income and expenses get correctly tracked, using consistent and accurate records. Also, precise accounting prevents a company from overspending, underspending and plateauing.
However, due to lack of resources(money and workforce) or inefficiency of the in-house accountant/s, companies look to outsource accounting functions to accounts outsourcing companies that often provide a wide range of services ranging from general accounting and bookkeeping, preparation and management of annual accounts with reports for the annual audit, sales tax, periodic tax, and returns, payroll services, cash forecasting solutions, cash needs analysis to debt collection. But, to ensure considerable improvements in the accounting process, an entrepreneur needs to choose the right outsourcing firm by considering a few metrics.
6 Things To Consider Before Selecting An Accounts Outsourcing Company:
- The track record of the outsourcing firm.
Before choosing an outsourcing firm, one must always make sure it has a wide portfolio along with a reputable track record, stretched over a considerable period. This helps the outsourcer to understand the company’s market reputation and work experience.
- The outsourcing firm’s workflow and efficiency.
The outsourcer needs to get a clear idea about the working process and team strength of the outsourcing company. This will not only help the outsourcer to understand the outsourcing company’s capacity to deliver timely outputs but also figure out if any modification is required in the workflow to ensure desired results. A competent outsourced team, comprising experienced and skilled accountants, can perform an error-free financial analysis and scale up a business.
- Data Security measures, followed by the outsourcing firm.
Data security is one of the major concerns when it comes to outsourcing accounting operations. This is because handling accounts often expose the outsourced team to sensitive and non-disclosable information. Therefore, an outsourcer must make sure the outsourcing company he/she is planning to select, operates over secure information technology systems and is capable of handling the accounts without leaking any confidential data. Also, today, accounts outsourcing companies are required to conform to the ISO 27001 standards, which lay stringent security-maintaining guidelines, to prove their authenticity and efficiency.
- The charges of the outsourcing firm.
When it comes to contracting out accounting or any other business operations, the charges of the outsourcing company play an important role in the outsourcer’s decision-making process. Hence, a company looking to outsource accounting functions needs to compare the charges of multiple outsourcing companies and pick the one that promises to provide high-quality accounting services at a price, comparatively lower than others.
- The flexibility of the solutions, offered by the outsourcing firm.
One of the primary reasons companies outsource their business operations is cost-saving, as hiring in-house accountants and providing them with all employee benefits often turns out to be expensive. Hence, an outsourcer needs to make sure the outsourcing of accounts operations saves substantial money. For the same, one must find out if the outsourcing company offers flexibility in their provided solutions. Every company’s required financial projections and strategies are unique and hence need regular re-evaluation and multiple adaptations. Hence, one must choose a service provider that agrees to make necessary revisions as the company’s financial circumstances develop.
- The accounting technology the outsourcing firm uses.
Technology is evolving at a lightning speed. Hence, before selecting an accounting service provider, one must check if it has access to the latest accounting technology, which can help it minimize overhead by reducing hardware and physical storage space. Cloud-based storage model is one of the revolutionary data recovery methods that safely stores all financial records that can be accessed from anywhere in the world and on any device that is connected to the internet. Therefore, one should look for account outsourcing companies that are backed with all the latest technologies.
- The track record of the outsourcing firm.
There are many accounting outsourcing companies that make more promises but deliver less. Hence, conducting a thorough background check is a must for entrepreneurs, eager to outsource their companies’ accounting operations, to avoid future complications and inconveniences.