The value of finance and accounting outsourcing compared to insourcing
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Finance and accounting outsourcing is a growing trend among small and midsized businesses, representing a cost-effective way to improve the finance and accounting function. It enables fractional use of finance and accounting professionals, as well as enhanced processes, technologies and compliance measures. Companies can easily scale resources up or down as needed without the burden of hiring, training and maintaining accounting staff.
Finance and accounting outsourcing began with highly transactional processes, and has now shifted toward higher-level strategic functions. Outsourcing was first popularized with accounts receivable, followed by bookkeeping, accounts payable and payroll, and it has now evolved into budgeting, forecasting and procurement. The mindset toward outsourcing is changing, as it continues to prove its value as a key component of business strategy.
In addition to the overall benefits, outsourcing provides reliable and flexible resources when many companies experience difficulty finding and retaining qualified personnel. Outsourcing also enables more use of technology platforms, leading to improved reporting, workflow, security and controls. Finally, in a competitive business environment, another key benefit of outsourcing is cost savings, with the potential to significantly reduce software and personnel expenses.
Even if companies choose not to outsource, it’s healthy to evaluate outsourcing strategies to determine if they can benefit from what service providers can offer. It’s also important to remember that finance and accounting outsourcing is not an all-or-nothing proposition. Emerging technology and cloud-based applications provide a high level of flexibility, and can enable an outsourced provider to perform some functions, while others are maintained in-house.