The Complete Guide to FP&A Outsourcing for Finance Leaders

As a CFO, you make dozens of decisions on a daily basis, from what costs to cut to finding ways to scale efficiently. Another lingering consideration might be if it's time to outsource your FP&A function. In this complete guide, we’ll explore everything you need to know about FP&A outsourcing for finance leaders.

What is FP&A Outsourcing?

FP&A outsourcing involves working with an independent third party to manage financial planning, forecasting, and analysis. Outsourcing FP&A services gives your business access to high-level, specialized insights without the overhead cost of an in-house employee.

Financial planning and analysis, known as FP&A, is a core component of a company’s finance function. FP&A is responsible for planning and budgeting, forecasting, analysis and reporting, and decision-making. Outsourcing includes all of these roles, but instead of an in-house team handling FP&A, an outsourced provider takes on the responsibilities.

Why Are CFOs Outsourcing FP&A?

FP&A is being outsourced by CFOs. Talent shortages, rising wages, and stagnant ERP initiatives are among the list of reasons why CFOs are outsourcing FP&A. Finance leaders who outsource FP&A are able to infuse flexibility and scalability into operations. Finance teams no longer need to focus on generating accurate financial data. Instead, they can take the information provided by outsourced FP&A teams and make informed decisions.

Not to mention the financial advantages of using outsourcing services. Payments made to outsourced providers aren’t subject to payroll taxes, and you aren’t required to offer benefits, like paid time off, health insurance, and retirement matches. Outsourced providers also supply their own FP&A software, eliminating the need to invest in costly programs.

Want to streamline your operations before handing them off? Read our guide on: Making Your Mark: Improving Accounting Processes Without Breaking What Works.

When to Outsource FP&A?

There’s no one-size-fits-all answer on when it’s time to outsource FP&A; however, there are a few indicators, including:

• Your business has outgrown basic bookkeeping and accounting services

• Your business is becoming complex

• You are planning on rapidly growing

• You need expert insights without the overhead

• You have a specialized project, such as an upcoming fundraising round

• Your financial data lacks forward-looking insights and projections

If these indicators resonate with your current operational hurdles, it might be time to make a shift. Learn more about the 5 Signs It’s Time for a Change in When Should a Company Outsource.

What FP&A Functions Can be Outsourced?

Every aspect of FP&A can be outsourced, including:

• Budgeting – Creating and maintaining monthly, quarterly, and annual budgets

• Forecasting – Projecting growth and resource allocation

• Cash Flow Projections – Creating cash flow projections to optimize payment timing

• Performance Reporting – Reporting on current and past performance to evaluate goals, objectives, and profitability

• KPI Dashboards – Reviewing and compiling historical information into digestible conclusions to guide future decision making

• Financial Modeling – Testing different scenarios and assumptions to make informed decisions

• Board Reporting – Putting together charts, graphs, and information for board members to review

FP&A Outsourcing vs In-House

While the decision to use FP&A outsourcing versus hiring an in-house employee often starts with the bottom line, finance leaders must weigh several operational factors. Beyond just comparing base salaries, here is a comprehensive breakdown of how an outsourced provider compares to an internal hire across software requirements, training, and long-term scalability:

• Rate – Outsourced financial planning and analysis services often come with a higher hourly rate compared to in-house employees. This is because you are paying for access to experienced professionals without the overhead.

• Payroll Taxes – Outsourced FP&A payments aren’t subject to employer payroll taxes, while an in-house employee’s wages are.

• Benefits – Outsourced FP&A providers are independent contractors, meaning they don’t receive any company benefits.

• Technology – Outsourced FP&A providers use their own technology and resources, while an in-house employee relies on you to provide the necessary equipment and software.

• Training – Outsourced FP&A providers come fully trained and experienced in FP&A, while an in-house employee may have a learning curve.

Will FP&A Get Replaced by AI?

No, AI will not replace FP&A professionals. While artificial intelligence is an incredibly powerful tool for accelerating data processing, running variance analysis, and eliminating mundane spreadsheet work, it can’t replace the insights and decision-making ability of a human.

Curious about practical ways to leverage these new tools? Discover how in our breakdown of The Finance Function & AI: How to Make Your Job Easier.

FP&A is fundamentally about storytelling, taking raw data and translating it into a narrative that the board of directors can understand and act upon. AI lacks the industry nuance, empathy, and communication skills required to advise on major business pivots. The future is not AI replacing FP&A; it is human experts leveraging AI tools to deliver faster and more accurate insights to finance leaders.

The Pros and Cons of FP&A Outsourcing

Deciding to transition your financial planning and analysis requires weighing the benefits against the potential risks. Here are the primary advantages and disadvantages finance leaders experience when pursuing FP&A outsourcing:

Pros

• Lower employment, training, software, and recruitment costs

• Access to experienced, high-quality talent

• Ability to use advanced software systems

• Scalability and flexibility with an outsourced partner

• Consistent, accurate reporting

Cons

• Potential communication and cultural gaps when working with an offshore FP&A service provider

• Loss of control

• Security and data risks from sharing information

• Integration challenges when first transitioning

What to Look for in a FP&A Outsourcing Provider (Guide)

Selecting the right financial planning and analysis partner is one of the most critical decisions a CFO will make. To ensure a seamless integration that protects your data and drives strategic growth, thoroughly evaluate prospective vendors against these core criteria.

Compliance Protocols

Data sharing can open the door to an increased risk of hacks, attacks, and breaches, especially when transmitting sensitive financial information. Ask the provider about their compliance protocols and how they protect your business’s information.

Certifications

FP&A teams work with financial data to make strategic decisions. This means that the work they do can be highly technical. Credentials in finance and accounting are common, such as a CFA, CPA, or CMA license. Degrees in accounting and finance are also standard.

Experience

Experience is a non-negotiable factor to evaluate. How has the provider helped other businesses? Were they able to cut costs by a certain percentage or reach strategic growth goals? Does the provider have experience in your industry? These are all important questions to ask.

Transition Plans

What is the FP&A business process outsourcing provider’s plan for the initial transition? Do they help you each step of the way? How do they communicate with in-house team members to share information? A poor transition plan can cause problems.

References

Talking to references and past clients of the outsourced provider can give you valuable information. Look at online reviews or ask for direct references to gauge what past clients thought about the services they received.

Scalability Potential

Does the provider have a team of FP&A experts? Having a team of outsourced experts on standby gives you the ability to scale at a moment’s notice.

Tech Stack

The technology you gain access to is one of the advantages of outsourced FP&A services. Finance function software is expensive, from forecasting programs to budgeting software. The best FP&A outsourcing companies will have a tech stack that you can leverage.

For a deeper dive into vetting potential FP&A outsourcing partners, check out our comprehensive guide: Choosing an Outsourcing Provider: Top Five Things to Look for in a Partner.

Mistakes to Avoid When Choosing an FP&A Outsourcing Provider

Even if your outsourcing provider checks all of your boxes, mistakes can still happen. Here are three mistakes to avoid when choosing an FP&A provider:

1. Overcomplicating the Process – The goal of outsourced FP&A services is to ease the burden on your finance team. Overcomplicating the process, such as by using too many tools, can lead to inefficiencies.

2. Neglecting Culture – Outsourced FP&A teams work as an extension of your in-house staff. Neglecting to consider the culture fit can lead to employee resistance and poor collaboration.

3. Poor Fee Transparency – Cost can be a determining factor when choosing a FP&A service provider. Be sure you understand all of the fees involved before selecting your partner.

Who Is FP&A Outsourcing For?

FP&A outsourcing can be for all businesses. However, mid-market companies with over $5 million in annual revenue, startups, and businesses expecting rapid growth see the most benefits. Similarly, finance leaders who rely on KPI dashboards and other financial data to make informed decisions can leverage the quick and reliable outputs of outsourced FP&A teams. Even more so if you’re a CFO who is already spread thin and needs time to focus on other core areas of the business.

Companies in specialized industries, such as SaaS, manufacturing, and e-commerce businesses, can also benefit from expert oversight of FP&A. These industries often have more robust planning and forecasting needs.

FP&A Outsourcing Implementation Guide

Implementing offshore FP&A services doesn’t have to be complicated. Here’s a simple five-step FP&A outsourcing implementation guide.

Step 1: Define Goals and Needs

The first step in FP&A business process outsourcing is defining your needs and goals. What gaps do you have in current reporting? Make a list of all the shortcomings in your financial planning and analysis.

Step 2: Select a Provider

Now, it’s time to select a provider. Visit our section on what to look for in an FP&A outsourcing provider for in-depth information on the types of questions to ask. At a minimum, evaluate the experience, cost, services, and scalability potential of the provider.

Step 3: Integrate Technology and Team

Once your provider is selected, create a game plan. What technology will you use? How will the outsourced FP&A provider communicate with your team? When will you receive reports and financial data? The integration process should be clear for both your in-house and outsourced teams.

Step 4: Create Clear Expectations

Clearly defining your expectations is non-negotiable for a successful FP&A outsourcing. For example, if your board wants to review forecasts on the 15th of each month, your outsourced team needs to know this deadline. Similarly, if audit readiness is due one month before the start of the audit, your team should have this deadline marked down. Any expectations need to be laid out upfront.

Step 5: Review and Adjust

Even if the initial implementation went smoothly, there is always room for improvement. Could your finance team use another type of report? Is it possible to move the final issuance of KPIs up by a few days? Reviewing and adjusting keep the entire process efficient.

Countries to Consider for Outsourcing Financial Planning and Analysis

There are countless countries that offer financial planning and analysis outsourcing services. Here are the top three countries:

India

India excels at finance and accounting outsourcing. Its deep talent pool is affordable, and many providers offer around-the-clock operations.

Philippines

The Philippines is known as the BPO capital of the world, including in the FP&A realm. Their workforce is highly proficient in English and shares many of the same Western values.

Mexico

Finance functions that need offshore FP&A services in a similar time zone often source labor from Mexico. Similar time zones lead to more fluid collaboration and communication.

The Personiv Advantage

Building a world-class FP&A function doesn't require draining your budget on recruitment fees and high domestic salaries. We provide finance leaders with highly qualified, experienced FP&A professionals who act as a seamless extension of your in-house team.

With our extensive global network, you gain the agility to scale your finance function up or down on demand, ensuring you always have the right talent at the right time. Ready to transform your financial planning without the overhead? Explore our FP&A outsourcing guide, then contact our team of experts for a custom consultation.