How to better manage your 'back office' needs and capitalize on talent
With today's economic volatility, most organizations are looking to get an edge by reducing costs, retaining market share and conquering their competition. The business reality, however, is that organizations that reduce spending without substantial efficiency gains often find themselves defending their turf in a shrinking market, as opposed to expanding and growing their market share. Now more than ever, it is time for businesses that want to survive today and thrive tomorrow to focus on their core – leaving the back office and administrative functions to someone else.
Finance and accounting outsourcing (FAO) is worthy of consideration for those small businesses looking to make a transformational shift in their organization and how they view the back office. FAO has matured exponentially since the last economic downturn and many of the pains previously experienced by businesses moving back office functions offshore have found viable near or local options. Local outsourcers offer a broad range of services including accounting, billing, AP and payroll and often allow companies to take a bit of an a la carte approach selecting only those pieces required to address their business needs.
Selecting a local outsourcer can also provide the added benefit of working with someone who knows your market and how to interact with your staff, customers and suppliers. Local outsourcers are able to tailor their services to small businesses as opposed to offshore solutions whose return only seems measurable for large enterprises. In addition to customization, small businesses obtain the greatest benefits of FAO by gaining access to expertise and standardized processes, while leaving the day to day management responsibilities to those familiar with managing such functions.
FAO can result in significant cost reductions depending on your current back office support model and investments. Once you factor in employee expenses associated with hiring and terminating (including recruiting fees, training, vacation and holidays), the cost of hiring someone else to do these back office functions more efficiently or on a part time basis can often be lower. A prime example is when an outsourcer has a single experienced controller who splits his or her time across multiple client businesses versus a small business looking for the same level of expertise and assurance and paying for a full time controller who fills his or her time performing functions that could be performed by a lower cost employee.
In addition to being able to focus on your core and potential cost reduction, outsourcing back office functions will provide you with flexibility in your workforce, allowing you to pay for only the services you need while providing greater capabilities to meet peak demands. As you scale your business, it is much easier for an outsourcer to incrementally add a fraction of an employee's time towards your account. Without an outsourcing service provider in place, organizations often add a full time individual to meet their growth needs, resulting in too much or too little support for each business function. Outsourcers tend to have access to more skilled individuals per function, allowing for greater depth of knowledge and breadth of ideas. Businesses benefit by gaining access to greater tools and technology, such as electronic workflow and imaging solutions – solutions previously available only to larger companies due to consolidated spending and centralized operations of the outsourcer.