What is Financial Process Outsourcing?
Financial Process Outsourcing is the process in which an organization's finance function is outsourced to a third-party service provider. By carrying out this, the organization can concentrate on the core competencies and priorities that help the organization achieve new heights. Financial Process Outsourcing is usually a complicated process and involves a lot of time in the organization. Hence, when organizations are formed, their main priority is to set up the finance function. Managing finances in an organization is a time-consuming process. It is, therefore, critical for an organization to focus on the financial process outsourcing.
What are the objectives of Financial Outsourcing Services?
The following objectives are present when an organization outsources its finance to a third-party provider:
- An organization can concentrate on critical areas such as business development.
- The goals and objectives of the business can be achieved through outsourcing.
- Through financial process outsourcing, the organization can reduce costs and concentrate on diversifying the business processes.
- Financial process outsourcing services are carried out by expert professionals; hence the organization can have confidence in its quality.
- Through financial process outsourcing, compliance can be maintained by the organization.
Benefits of Financial Process Outsourcing
Handling finance is an expensive and time-consuming task. Such a crucial time of the business can be showcased in other areas. Therefore, it is essential not to spend too much time managing the finance of the business. Moreover, recruiting a financial professional to manage finances is costly. Hence, financial process outsourcing can help your organization concentrate on core activities. The non-core activities of the business, such as managing finance, can be transferred and handled by the outsourcing provider.
Hiring a chartered accountant or professional finance individual would be costly for your organization. This would be especially when your organization is starting its operations. Hence you can outsource your financial functions to a third-party organization. Through this process, your organization can benefit from professional help at a low cost. Therefore, financial process outsourcing provides you with the benefits of professional advice.
Provides Update on Financial Laws
Financial process outsourcing provides your organization with the required updates on financial laws. By using this, your organization can make essential decisions on financial functions. At Enterslice, we provide you with regular and relevant updates on the applicable laws such as Indian Accounting Standards and the applicability of standards issued by the Institute of Chartered Accountants of India (ICAI).
An organization can adapt to the changing circumstances of compliance. The financial process outsourcing provider will streamline the entire process of the accounting strategies and will opt for the best strategy which can be utilized by your organization. Through this process, your organization can go ahead with the best strategy and achieve desired outcomes. Through outsourcing, your organization can achieve the desired results by being both scalable and flexible.
Increases the Amount of Security
As accounting and finance processes have a lot to do with secure data and confidentiality, the third-party service provider must ensure proper systems are in place to provide optimum security. Customers and financial information form a part of sensitive data. The outsourcing provider must make sure that there is no form of information breach in the data use. To achieve this, the financial process outsourcing provider must ensure that compliance is maintained under the relevant data protection and cybersecurity laws. If the third-party organization is processing European Union customers' information, it must ensure that compliance is maintained under the General Data Protection Rules, 2018. In India, compliance must be maintained as per the requirements of the ICAI and the Personal Data Protection Bill, 2018.
Constant Monitoring of Operations
Through financial process outsourcing, the monitoring capability of finance in an organization is improved. The third-party provider has constant access to the financial functions of the organization. Due to this, the outsourcing provider can achieve effective integration. Monitoring of financial policies of the organization will ensure that there is adherence to different rules and regulations.
Problems of Financial Process Outsourcing
Lack of IT Infrastructure
IT infrastructure is crucial for the successful development of an organization. Some financial outsourcing providers have not updated their IT systems with the latest technologies, such as cloud interfaces, AI, Machine Learning, and Big Data. Due to this, seamless integration cannot be realized by the outsourcing provider. The use of effective IT infrastructure in an organization ensures their specific cybersecurity protocols are in place. Through this, cybersecurity threats can be reduced. Organizations using third-party service providers must ensure that sufficient IT infrastructure is present in the third-party service provider.
Lack of Management
Financial process outsourcing providers sometimes lack management skills to carry out the responsibilities under financial outsourcing. Due to this, there are issues when it comes to providing advice to the organization on the outcomes used for financial management.
This is one of the main problems in financial process outsourcing. Every human is bound to make errors. Human error in financial outsoaring is critical as it is interlinked with other processes. Hence, errors in financial processing cannot occur, as it will affect the organization's status and reputation.
Elements of Financial Process Outsourcing
Book Keeping Services
Book Keeping is a process in which financial processes and accounts are maintained and recorded. Booking is required to be carried out for accounting. Bookkeeping consists of the following:
- Bills for the services provided to a different form of customers and clients.
- Information on the number of receipts.
- Information on invoices provided by the suppliers.
- Payment related information to the suppliers.
- Monitor the details of payment-related accounts for employees.
- Loan Disbursements.
A financial process outsourcing provider will carry out the following bookkeeping services.
Year-End Accounting Processes
Every organization has to prepare year-end accounting compliances. These compliances are required per the provisions of the Income Tax Act, 1961, and the Institute of Chartered Accountants of India (ICAI). The following processes are carried out by a financial process outsourcing provider when it comes to year-end accounting:
- Preparation of Annual Financial Report of the Company.
- Compliance with the requirement of the Companies Act, 2013 and the Income Tax Act, 1961.
- Verification of Ledger Balances and whether they tally.
- Preparation of Profits and Loss Accounts for the end of the year.
- Preparation of Management Accounts for the company.
- Analysis of Analytics.
- Advisory and Support in the preparation of financial statements.
Ind AS Advisory
Ind AS is known as Indian Accounting Standards. These standards have been prepared following the International Finance Reporting Standards (IFRS). Through effective implementation, these standards are required for all forms of organizations to carry out business. Compliance must be adhered to by an organization following such standards. As expert financial process outsourcing providers, Enterslice can provide the following:
- Advisory services on the adoption of IND AS.
- Analyzing the difference between the Ind AS and the GAAP (Generally Accepted Accounting Principles).
- Training requirements on the key concepts which are adopted by different organizations.
- Implementation protocols of Ind AS.
- Compiling Financial Statements and Records as per the requirements of the Ind AS.
IFRS Advisory Services
We also provide advice for your business when it comes to Global Accounting and Finance Complaisance. With Ind AS advisory services, we also provide practical advice on the IFRS principles of accounting. If your business or subsidiary has to comply with the above principles, then Enterslice can provide you with seamless advice in adhering to the above principles. We provide the following advice:
- IFRS principles.
- IFRS application.
- Different between GAAP, Ind AS and IFRS.
- Applicability of IFRS principles in different countries.
At Enterslice, we have skilled professionals who are qualified Chartered Accountants, Company Secretaries, and Financial Professionals to carry out account management activities. Account Management Consists of the following:
- Producing half-yearly and full yearly management.
- Providing management with the report on the operation of such accounts.
- Identifying the areas where risks and present and mitigating the happening of such risks.
Audits have to be carried out regularly in compliance with specific laws. As per the requirements of the ICAI, an organization must compulsorily submit audit within a particular period. An audit is carried out to understand whether the records of financial information are accurate. At Enterslice, we carry out the following audits:
- Reviewing the Profit and Loss Statement of the company.
- Ensuring that there is a reconciliation of assets and liabilities of the business.
- Submitting requisite documentation to ensure that compliance is maintained as per the requirements of law.
- Assessing the amount of risk in carrying out the audit for the organization.
- Checking the balances in the business.
Annual Preparation of Accounts and Taxes
Experts at Enterslice have immense experience in handling returns under Accounts and taxes. We provide the following services:
- Individual Returns.
- Corporate Tax Returns.
- Partnership Tax Filing and Returns.
- Property Tax Returns.
- Capital Gains Tax and Returns.
Management of debits and credits from an account is considered as ledger management. We provide the following ledger management services:
- Customer Payments.
- Managing of Receivables.
- Managing Different forms of cash flow cycles.
- Managing the supply chain in a company.
Preparation of Budget
A budget provides an estimate for your business on the amount of value required for managing different functions. We provide the following services to manage your budget:
- Budget Estimation.
- Budget Management.
- Implementation of Budget.
- Enterslice is a recognized consultant in carrying out outsourcing services.
- Experts at Enterslice have worked on outsourcing projects with the primary objective of adding value to your organization.
- We have multifaceted teams of professionals comprising Chartered Accountants, Business, and regulatory experts.
- We have extensive experience in transaction and business-related matters