The Complete Guide to Choosing a BPO Finance and Accounting Provider

Did you know that the finance and accounting BPO industry is expected to reach $10 billion by 2030? It’s no surprise that BPO provider popularity is rapidly growing. After all, the right outsourced provider can unlock cost savings of at least 50%, while giving organizations the time to prioritize core functions. Whether you are exploring whether using a finance and accounting BPO provider is right for your business or you are ready to get started right away, this guide will cover everything you need to know about selecting the perfect provider.

We’ll start by covering the fundamentals of finance and accounting BPO outsourcing, like common tasks that can be outsourced and the pros and cons. Then, we’ll dive into what to look for in a provider, including how to evaluate potential candidates, the typical cost, and mistakes to avoid when starting the BPO process.

What is a Finance and Accounting BPO Provider?

Business Process Outsourcing, BPO for short, is the process of hiring external third-party providers to handle tasks in your business. Accounting and finance BPO providers specialize in maintaining your finance and accounting functions. Unlike a freelancer or in-house employee, a BPO provider is a company with numerous finance and accounting professionals, giving you flexibility in operations and services.

Why Use a BPO Provider for Finance and Accounting?

BPO finance and accounting providers are great for businesses of all sizes. In fact, they can provide strategic advantages outside of what an in-house employee offers, including:

• Access to specialized services, such as finance forecasts and tax return preparation

• Elimination of staff shortages due to turnover or talent shortages

• Reduced costs due to flexibility in hours worked, automation, and no employer payroll tax obligations

• Enhanced financial processes and business operations due to extensive industry knowledge

• Improved risk management and compliance

• Time to focus on other core operations

The bottom line is that BPO finance and accounting providers can equip you with the tools and resources needed to revamp your finance operations, infusing efficiency, profitability, and growth into your business. We’ll expand on these benefits and more in a later section.

Ready to dive deeper into the fundamentals of FAO? Check out our complete guide: Finance & Accounting Outsourcing (FAO) 101.

When Should You Hire a BPO Provider for Finance and Accounting?

Knowing when it’s time to pursue finance and accounting outsourcing from a BPO provider isn’t always clear-cut. There’s no set revenue threshold, employee count, or growth outlook that dictates when professional help is needed. However, there are a few indicators that your company can benefit from outsourcing solutions, including:

Growth is Expected — Time to Consider an Accounting BPO Provider

If you have rapid growth on the horizon or lofty scaling plans, using a BPO provider can keep your finance and accounting functions organized.

Hiring In-House Isn’t Ideal

Whether you live in an area with a poor talent pool or simply don’t want the burden of managing another employee, BPO partners can handle all of your finance and accounting tasks, from manual data entry to complex financial forecasting.

You Can Benefit from Expert Advice from a Finance & Accounting BPO Provider

Making business decisions often requires up-to-date financial data and expert insights. The industry knowledge, expertise, and accuracy in your financial reporting from a BPO finance and accounting provider are indispensable.

Cost Savings are a Priority

The latest technology offerings, like CRM software, can be a financial burden. Not to mention the costs associated with hiring a vetted, in-house professional. Outsourcing financial operations can eliminate these costs and more, especially when efficiency is maximized with automation and expert oversight.

Experiencing operational bottlenecks outside the finance department? Read: When Should a Company Outsource? 5 Signs It’s Time for a Change.

Finance and Accounting Functions You Can Outsource to a BPO Provider

BPO partners handle a variety of finance and accounting services. Let’s go through the main tasks that you can pass off to your BPO provider.

• AP and AR Management – Maintaining your accounts payable and accounts receivable functions, including recording payments, invoicing customers, and tracking ledgers

• General Ledger Management – Recording transactions, making adjusting entries, and tracking ledger balances for accuracy

• Financial Reporting – Creating internal financial statements, such as the profit and loss statement, the balance sheet, and the statement of cash flows

• Payroll Processing – Processing payroll for your employees and complying with reporting requirements, such as year-end W-2 issuance and quarterly reports

• Tax Preparation and Planning – Projecting taxable income, finding applicable tax planning strategies, submitting tax returns, and corresponding with the IRS and regulatory agencies

• Financial Planning and Analysis – Using financial data to forecast growth, reducing costs through strategic planning, and analyzing areas of improvement in operations

• Cash Flow Management – Optimizing cash flow management for operational efficiency, including timing payments, pursuing external funding and financing, and improving vendor relationships

Finance and accounting BPO services are designed to alleviate pain points in your financial operations. To find the services that best fit your business, start by defining your needs.

Key Benefits and Disadvantages of BPO Partners

Finance and accounting BPO outsourcing has both pros and cons. Let’s take a look at what you can expect.

Pros of Using a Finance and Accounting BPO Provider

BPO finance and accounting providers can handle every aspect of your F&A functions, from tedious data entry to high-level planning and projections. Here are some more strategic advantages of onboarding a professional team:

• Cost Savings – Elimination of employee overhead, only paying for the services you truly need

• Greater Accuracy – Industry knowledge, experience, and credentials ensure your finance operations are free of errors

• Scalability – Elimination of costly turnover, allowing you to seamlessly scale by bringing on more outsourced professionals

• Independent Oversight – BPO partners have no financial interest in your company, giving you access to independent insights and services

• Time to Focus on Core Operations – Without the need to manage your finance and accounting, you can focus on other core operations

The strategic advantages don't stop here. Discover more in our blog: Beyond the Obvious: 3 Unexpected Accounting Outsourcing Benefits.

Cons of Using a Finance and Accounting BPO Provider

Many of the disadvantages of working with a BPO provider can be alleviated with the proper due diligence in selecting your partner.

• Security Concerns – BPO providers have access to the sensitive information of your company, which can cause potential security concerns

• Cultural Differences – Sourcing talent from a country that isn’t comparable with Western culture can result in cultural differences that can impact workflows

• Loss of Control – Loss of control over your operations can be a potential disadvantage, but it’s essential to free up time for other core operations, like reaching growth goals

In-House vs Outsourcing Finance and Accounting

An in-house finance and accounting employee can be a great option if your business needs hands-on, in-person help. For example, if you need inventory counts performed weekly, an in-house employee might be the right solution. However, in-house employees do have a few drawbacks, including:

• Your business is required to pay employer payroll taxes on wages, which can increase the overall cost.

• If there is downtime or no work, your in-house accountant will still expect to be paid.

• It can be difficult to scale an in-house team due to talent shortages and cost.

• In-house accountants and finance professionals may have limited experience and service offerings, which isn’t ideal for businesses looking for complete solutions.

A Quick Note on AI

Artificial Intelligence (AI) has become integrated into fundamental finance and accounting practices. In fact, it would be almost impossible to complete accounting tasks without the use of AI. This leads some business owners to the conclusion that human oversight is not needed. This is far from true.

Human oversight from a BPO provider ensures accuracy in all areas of your finance and accounting functions. They are able to process the information in ways that AI can’t. For example, AI can’t adjust an employee expense reimbursement for personal expenses listed in an email, but a human professional can. While AI will certainly be integrated into your finance and accounting functions, it can’t replace the value of human oversight.

Types of Businesses and Industries that Benefit the Most from BPO

While all businesses can benefit from the expertise and flexibility that a BPO partner provides, there are a few specific types of companies that see the most advantages.

Diverse Industries

BPO finance and accounting providers can provide an array of benefits to businesses in diverse industries, such as healthcare, IT, retail, manufacturing, e-commerce, and construction. This is because businesses in these industries often have unique F&A requirements and needs. For example, a company in the construction sector might use the completed contract method of accounting. Properly maintaining financial records using this method is complex, often outside the scope of a standard accountant or bookkeeper.

Growing Companies

The second type of business that benefits from a BPO partner is growing companies. Companies that are currently or will be experiencing rapid growth can leverage the expertise, flexibility, and cost-effectiveness of BPO providers. For example, if your business is planning a new product launch, you may need to onboard additional accounting and finance experts. Taking the time to find, hire, and train in-house employees is tedious. BPO providers have a dozen team members ready to jump in at a moment’s notice.

What to Look for in a Finance and Accounting BPO Partner

Finding the right BPO partner is one of the most important steps to set your business up for success. Let’s go through everything you need to look for in a BPO finance and accounting provider.

Compliance and Security Protocols

One of the first criteria you want to evaluate when vetting a BPO partner is their compliance and security protocols. What steps and processes do they have in place to protect the sensitive information of your business? Most BPO partners source talent throughout the world, meaning remote connections and cloud-based programs are a part of daily workflows. Ensuring security when using these programs is critical. Also, inquire about any formal security certifications, like SOC compliance.

Certifications and Education

Next, ask about the certifications and education of the individuals on the BPO provider’s team. If using overseas labor, do the credentials compare to US criteria? For example, in the Philippines, they have a CPA license issued by the Professional Regulation Commission that is similar to the CPA requirements in the US.

Experience

What experience does the BPO partner have in your industry, with businesses of your size, and with the services you need? You want to choose a finance and accounting BPO provider that has the relevant experience to meet your needs. For example, if you need financial forecasts and projections, does your BPO provider have a team member who is well-versed in that service?

Transition Plan

Understanding how your BPO provider will transition your company to outsourced accounting tasks is essential. After all, a poor transition process can derail your finance and accounting functions, causing lasting problems. Your BPO partner should have a clear transition plan that results in a seamless experience.

References

References can give you insight into the track record of your BPO partner. What have past customers said about the company? Were they happy with the outsourcing solutions provided, or did they need to find a new provider for accounting BPO services? It’s important to look outside of the company’s website. After all, a BPO provider likely wouldn’t put negative reviews directly on their website. Check Yelp, Google, and other review pages for honest feedback.

Integration Capabilities

How will your BPO partner complete work? Will they work directly in your accounting system through a remote connection, or will they transition you to a new program? Integration capabilities need to be secure and work for everyone on your team.

Scalability Options

Does the BPO provider have the ability to add team members during busy times? Business operations can change at a moment’s notice. Without the proper finance and accounting support, your financial processes can get backed up due to staffing shortages. Inquire about the depth of your BPO partner’s team.

Financial Reporting Processes

How will you review your financial data each month? Can your BPO partner provide you with the reports needed to make informed decisions? Ask about the turnaround time for reports and the type of outputs you can expect.

Technology Offerings

One of the advantages of outsourcing finance and accounting is access to cutting-edge technology, like the latest automation tool or CRM software. Purchasing these programs outright isn’t always cost-effective. Your BPO provider should have a list of software that they use to complete finance and accounting tasks. While the software your BPO partner uses isn’t as important as the final output, it can be a good aspect to understand.

Need a comprehensive checklist for vetting candidates? Read: Choosing an Outsourcing Provider: Top Five Things to Look for in a Partner.

Mistakes to Avoid When Choosing a Finance and Accounting BPO Provider

Hiring a BPO provider can feel overwhelming. Here are three common mistakes to avoid when going through the hiring process:

1. Only Considering Cost – Cost can be an important factor in the hiring process; however, it’s important that you look at the overall value the BPO partner brings instead of just the cost.

2. Ignoring Cultural Fit – Choosing a provider with a similar culture can help facilitate effective communication between your in-house team and outsourced team. Working with a provider that sources talent from comparable countries is important.

3. Assuming All BPOs are the Same – Not all BPOs are the same. Failing to vet industry experience and credentials can result in an ineffective provider.

Cost of Outsourcing Finance and Accounting (BPO)

Each BPO provider will have a different fee structure and rate. In fact, factors like geographic location, services selected, business size, and number of professionals needed can all influence the final price. Small companies average around $500 - $1,000 per month, while growing companies can expect to pay $3,000+ per month. Getting quotes from reputable BPO providers is the best way to gauge your costs.

Countries to Consider for Outsourcing Finance and Accounting

Unlike hiring an in-house employee, outsourced BPO providers can source talent from around the world. This gives you access to a wider range of professionals, most of whom come at an affordable cost compared to domestic employees. Here are the top five countries to consider for outsourcing finance and accounting, starting with the best.

1. Philippines

   The Philippines is often the go-to country for finance and accounting outsourcing. For one, their culture is comparable to that of the US, with individuals aligning with Western business practices. Additionally, the government supports BPO, making it an ideal location for finance and accounting services. Highly skilled talent proficient in English also makes working with the Philippines a seamless experience.

   Learn more about this global hub: How the Philippines Is Shaping the Future of Outsourcing.

2. India

   Next up is India. India is another great location for outsourcing finance and accounting functions. Their talent pool often comes with vast experience, with degrees and certifications in accounting and finance similar to those in the US. This means they can offer specialized services and expertise in a variety of F&A areas.

   Dive into the advantages of this market: Why Outsource to India.

3. Latin America

   Latin America is an up-and-coming location for outsourcing solutions. One of the benefits of working with Latin American talent is having time zones similar to the US. Similarly, Latin American talent has a high level of English proficiency, minimizing communication challenges.

4. Malaysia

   Malaysia excels at security and IT, offering secure and efficient operations. The country also encourages BPO with different incentives and legal frameworks, making conducting business simple.

5. Mexico

   Mexico also makes the list because of its proximity to the US. Real-time collaboration and English proficiency make partnering with Mexican outsourced finance and accounting professionals easy.

It’s important to note that time zone differences aren’t generally a problem for stateside businesses. BPO finance and accounting providers work according to your normal business schedule to avoid communication delays.

Is Outsourcing Finance and Accounting to a BPO Provider Right For Me?

Does it seem like your business can benefit from working with a finance and accounting BPO provider?  If your business is experiencing rapid growth, breaking free from manual data entry and leveraging expert financial insights is critical to maintaining your momentum. The 1st step to transforming your financial operations is finding a provider that aligns with your specific industry complexities and security requirements.

We specialize in building highly qualified, dedicated offshore finance teams that act as a seamless extension of your own. We handle the heavy lifting of compliance, talent sourcing, and operational efficiency so you can focus on the big picture. Contact our team today to schedule your free consultation and discover how a custom BPO solution can elevate your financial reporting.