CFO Service Finance & Accounting

How to Select a Finance and Accounting Outsourcing Services Partner

Are you looking for Finance and Accounting Outsourcing services? These services have been growing in popularity since FAO services started several decades ago in the early 1990s. Companies that outsourced such work were originally from the US. However, as other companies around the world started to figure out the benefits so work started originating from other world regions including Europe, Africa, and the Middle East.

Several types of processes can be outsourced including Accounts Payable/Receivable services, Record to Report, pricing administration, bookkeeping, supply chain accounting, financial analysis reporting, joint venture accounting, payroll processing, travel expense management, and payment processing.

Today’s Chief Finance Officers (CFOs) are also prepared to provide more complex work to FAO partners including tax strategy, treasury, and financial planning. A 2013 HFS Research/KPMG report shared that about 45% of high-end companies among survey respondents had plans to boost their FAO score during that year.

FAO contracts are long-term ones. During that time both parties must communicate a lot with each other, complete projects through tech upgrades, transition accounting roles, and manage a relationship that can sometimes be tough. Due to several services provides in the sector the big question is about how a company’s CFO should pick an FAO partner for their company.

Top Factors for Picking an FAO Partner

In the case a company makes the decision to outsource finance/accounting work it’s important to take the following steps to the company structure:

Step #1:  Define the Strategy

When outsourcing F&A work it’s important to identify the particular strategy that’s driving the decision to outsource the work. All stakeholders should be informed about this info so their views can be considered. The stakeholders should be involved in any big decisions the company makes due to the financial investment in the company. As a result, they should be informed about any major decisions like outsourcing F&A work.

Step #2: Evaluate all Options

This is the next step to take in the process of outsourcing & FA work. For example, should the company launch a captive unit, pick a shared services option, or pick near/offshore. These are some of the main options your company has and it’s important to consider all the major options for selecting one. This will help to produce the best results.

The capabilities of the division of the company whose work is getting outsource should evaluate. There’s also the question of whether the team possesses the skills to transfer/manage the outsourcing. This is another important issue to take up when outsourcing F&A work.

Step #3: Finalize Scope/Logic of Business Line to be Sourced

This is another important step to take. It’s another of the key steps to take when outsourcing F&A work.

Picking the Best F&A Service Provider

After weighing each of these options the company should then weigh the pros/cons of each option. This will allow it to pick the best one based on the situation. This is critical because the company should always end up making the decision about F&A outsourcing that will provide the most benefits. If that’s done then the company will be on the right track.

On the other hand, if all of the options aren’t weighed carefully it can result in unwanted results and possibly make the wrong choice. That’s definitely any company will want to avoid whenever possible. Here are some of the key issues to weigh in order to pick the best outsourcing company:

• Size

The size of the outsourcing company is an important issue to take up There are some companies that pick big service provides since there’s the belief the sale/experience will provide them the superior quality of service. However, that’s not always the case. There are other companies that think they’ll get ignored if they pick large outsourcing companies. They’d rather pick a small company that will provide them personalized/customized service.

Which option is the best? There are various factors including your company’s coals. There’s no right or wrong answer involving this issue. What’s important is to consider your particular company’s needs and priorities. That will help to select the right F&A outsourcing company in terms of its scale of operations.

• Cost/Efficiency

In the majority of F&A outsourcing cases, the main motive is to save money. However, it’s also critical to consider the efficiency of the various services the company provides.  Why is it important? In some situations, the company might lack certain capability so they pick a particular service provider that has particular skill sets. This is critical to make sure the outsourcing company can handle the work effectively. If that’s the case then your company won’t lose a step in its F&A processes.

• Stability

There are some concerns that outsourcing companies might experience changes in management. As a result, it’s important to look for service providers that provide stability in terms of ownership. It’s also helpful if there’s one point of contact during the contract’s entire duration. This will help to provide peace of mind and better results when outsourcing F&A work.

• Resources

It’s important to consider the skill sets of a particular outsourcing company. This will help to determine if your business will access better talent/tech if it decides to outsource to the company. There are various specific issues to take up. That includes ones like time differences, efficiency, staffing/labor, etc. These are all important matters that must be addressed when weighing different options. If your company wants to outsource Finance/Accounting work it’s critical to make sure you’re handing the work to a company that can handle it effectively. This can help to give your company peace of mind.

• Agility

There’s no question that changes are part of the world of accounting/finance. There are various components that change including accounting rules, accounting, etc. So, it’s important to pick an FAO partner that’s able to know and adjust to these changes. Not only that but they should able to make the changes quickly and still provide a high level of service. This will help to provide you with the finance/accounting services you want and deserve.

Read our article:6 Top Benefits of Outsourcing Your Company’s Finance & Accounting