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Top Ten Accounting Outsourcing Tips

January 21, 2009

Businesses of all sizes need to ensure that accounting is paid due attention, accounting is at the core of any business process. In recent times more and more small and medium size businesses are considering accounting outsourcing. The decision to outsource accounting and bookkeeping allows a company to concentrate in their area of specialization and not worry about the accounting aspect of the business. Accounting outsourcing has several advantages and these include the following

  • The services of experts are available at a fraction of what would have been paid to hire them on a full time or part-time basis.
  • Accounting outsource companies typically offer various services like bookkeeping, Account Reconciliation, accounts payable, accounts receivable, payroll management, benefit administration, financial research, Billing & Collections, Vendor Management, etc. You can pick the accounting services you want and keep the remaining within your company. This eliminates hiring accounting professionals for specific purposes.
  • By outsourcing non-core accounting and financial tasks companies can concentrate higher value tasks

When outsourcing accounting and finance it is important to keep certain tips in mind in order to make informed decisions:

1. Be clear about what you want from the accounting outsource vendor. It is vital that you specify your requirements from the offshore vendor and make sure that the vendor understood your requirements. Several outsource projects failed due to unclear scope, ambiguous requirements, cultural differences, etc.

2. Is the accounting outsourcing company reliable and dependable?
Do not make a decision blindly, but in fact take the time and effort to check on the references provided by the outsourcing company. Accounting needs to be done by certified public accountants and in case of offshore outsourcing, you need to confirm that the accountants are qualified to handle and provide accounting solutions.

3. Don’t shy away from asking the vendor about similar accounting management projects that they have worked on. You do not want a trial and error technique used on your accounting outsource projects. It would be a good idea to ask the accountants to provide material that indicates their skill and knowledge of accounting, auditing and bookkeeping.

acccountingOutsourcing Top Ten Accounting Outsourcing Tips

4. Reviewing previous projects that the vendor has done will give you a fair idea of the level and quality of accounting they can deliver to you. It is also recommended that you initially start with a pilot project that will assure you of the services that you have been promised.

5. While the total cost may be a guiding factor when you are selecting an accounting company, it should not be the only factor. The lowest bidder need not always be the best bet. Accounting and any deficiencies in the process can create serious legal problems for the business and you would not want to risk that. A large percentage of small and medium businesses that have turned to accounting outsourcing have done so not just because of the low cost but also due to the quality of work that they are assured.

6. It is important that you have a contract drawn up that clearly specifies what is expected of the project and how and when it will be completed. Such an understanding facilitates transparency in the dealings with the outsourcing accounting service provider.

7. Start with a small project and take it from there. To begin with provide a small amount of work and allow the outsourcing accounting company to prove its caliber.

8. Creating milestones in the project will help create a smooth flow of work to its completion. In addition, this ensures that both parties are clear on the deadlines and required work. Furthermore, it allows the company to make payments in installments as and when the work is completed.

9. Security issues need to be discussed upfront and you need to be clear on the security measures taken by the accounting outsourcing company to protect crucial accounting data. Accounting information is crucial to the success of every business and any leak of such information can have drastic consequences. You would need to discuss how accounting, auditing and bookkeeping files will be transferred securely to the outsourcing company and issues such as how accountants will have access to these files.

10. Like benefits there are several risks with offshore outsourcing and you need to make sure you understand the risks and rewards before making your decisions. Certain types of accounting tasks cannot be outsourced to offshore locations, in this case you can consider homeshoring.

Accounting outsourcing should ideally be an asset for any small or medium business, keeping these tips in mind could make that a reality.

Related posts:

  1. Why Offshore Outsourcing Fails?
  2. Understanding Security risks in Offshore Outsourcing
  3. What is BTO?
  4. Outsourcing with Solvency II in mind
  5. Benefits of Business Process Standards in BPO


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3 Responses to “Top Ten Accounting Outsourcing Tips”

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  3. Jack on April 17th, 2010 3:13 am

    Outsourcing of accounts is cost effective. Companies who make use of accounting outsourcing can save up to 60 % of the staffing costs as well as overhead costs. Businesses can just pay an outsourcing company a fixed cost in exchange for outsourced accounting services. The business need not have motivation programs or benefits for such services as in the case of permanent accounting employees.

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