Accounting Outsourcing Process: 6 Steps to Successful Implementation

When considering expanding your finance team, accounting outsourcing services may come to mind. Once you’ve solidified your decision to make the leap towards partnering with a virtual accounting provider, you may have a few questions that keep you up at night. Questions like, “How does it work?”, “How do we transition to an outsourced team?”, or “Where do we start?” Understanding the accounting outsourcing process can help ease those concerns and set you up for a smoother transition.

The entire process can seem overwhelming, which is why we’ve created this quick guide to accounting outsourcing services. We’ll cover the fundamentals you need to know by breaking down the outsourcing process into six key steps. At the end, we’ll also dive into common challenges and how to overcome them.

What is Accounting Outsourcing?

Before we get into the specifics of accounting services outsourcing, you first need to understand the fundamentals of how this process works. Simply put, your provider builds a qualified team of professionals in an offshore delivery center. Then, this provider switches your transactional tasks from your in-house team to your outsourced team.

A credible provider will offer you the chance to be completely flexible, creating a customized solution and not a fixed one. You should be allowed to be as involved as you wish in the development of your team and the transition to an outsourced provider. Your team should notice an increase in efficiency and a lower work burden with effective accounting outsourcing.

The 6-Step Accounting Outsourcing Process

1. Select Your Accounting Outsourcing Services

   If you have employees struggling to meet the demands of their positions, you’re not alone. At times, it can seem like they’re overwhelmed by the sheer amount of work on their plate, or worse, they’re slacking off, and you need to make up for the gaps they’re not fulfilling.

   When reviewing your team’s responsibilities, you’re probably aware that much of their workday is spent on menial tasks that add little value to the organization. And although those projects are essential, they also take away from the big picture. Here are a few accounting roles (and their respective tasks) that you can allocate to your outsourced provider:

   • Accounts Payable Specialist

     • Process invoices and bills

     • Process payments

     • Produce monthly reports

     • Reconcile vendor accounts

   • Accounts Receivable Specialist

     • Prepare and send invoices

     • Customer account reconciliation

     • Track and record payments

     • Process customer disputes

   • General Accountant

     • Maintain bank details

     • Produce cash flow statement

     • Track payments and expenditures

     • Support month-end and yearly-end close

   • Tax Accountant

     • Prepare tax forms

     • Provide audit support

     • Respond to tax authorities

     • Prepare tax payments

   • Payroll Specialist

     • Create payroll sheet

     • Create paychecks

     • Process employee pay

     • File quarterly state income tax returns

   Suggested Reading: 101 Tasks to Delegate to Virtual Accounting Teams

2. Preparing Your In-House Team to Use an Outsourcing Provider

   Outsourcing part of your accounting function doesn’t mean saying sayonara to your current team. As Matt Wood, Global Head, Finance & Accounting Outsourcing (FAO) at Personiv, once said: “We’re an extension, not a replacement, of your accounting team.” Getting your existing employees on board with the idea of outsourcing is crucial. Partnering with an outsourcing provider can be challenging and may require more collaboration with your additional team members.

   However, once you’ve acclimated your outsourced employee (or team) into the fold, introducing them to their coworkers should be the next step. A physical meeting is typically not possible with your offshore team, and in today’s labor economy, remote meetings are standard practice. Find what communication methods work best for your team. For example, this might be a Zoom call once a week for check-ins.

3. Review Existing Processes and Maximize Efficiency

   Once you’ve become acquainted with your new employees, your outsourcing provider will review your current process documentation, such as job descriptions, instruction sheets, Excel-based accounting schedules, and reconciliation sheets. If required, your provider will help to construct process manuals, checklists, and notes covering vendor-specific instructions, expense allocations, and accounts used for different types of expenses. Overhauling inefficient processes helps you unlock increases in productivity and profitability.

4. Train Your Team on Their Roles and Expectations

   All members of your team, including your in-house team, will need to be trained on new expectations. What will be the responsibilities of your in-house team? Do they need to send your outsourced accountant information by a specific date each month? Should they block off an hour every Wednesday to go over questions from the outsourced team? Without clear expectations, operational silos and communication challenges can pop up in your organization.

   Training is also important for your outsourced accounting team. These professionals need to understand which tasks they will be taking on, when you expect them to complete these tasks, and all other relevant information. This training can be done in two ways. One, a member of your provider’s supervisory team can head to the U.S. for a ‘train the trainer’ scenario. The second option is to send your own trainer or team of trainers to the delivery center to train the team, just as if you were training your own in-house staff.

5. Ensure Technology Aligns

   A question that seems to be circling around businesses that are pondering outsourcing is, “Will we still be able to utilize our current accounting software?” The best providers won’t chain you down to a specific tech stack. After all, the last thing you need is to partner with an offshore provider that is married to a specific accounting software that you’re unfamiliar with. Be sure that your provider can align with your technology, whether that’s NetSuite, QuickBooks, or something more traditional.

   The more control you have over the process, the easier the transition will be. Further, by choosing a company that can work well within your system, your end clients will never know that you are outsourcing (a win-win). Ask your provider about any other programs they offer to build on your tech framework. Solving technology issues upfront will be crucial for a smooth transition.

6. Using Accounting Outsourcing Services for the Future

   Once your transition is successful and you are satisfied that services are being delivered as expected, you can begin looking at other transactional areas to outsource. The best providers identify opportunities that can benefit your company down the road. From there, some organizations take their outsourcing relationship one step further and choose to receive support in areas that are more knowledge-based, such as management reporting & analysis, budgeting and forecasting, and regulatory reporting and compliance.

Overcoming Common Accounting Outsourcing Challenges

Outsourcing isn’t always as easy as following the above six steps. In fact, there are countless challenges and roadblocks that can pop up during the process. Here are a few of the top challenges and how you can overcome them.

Communication Barriers

When outsourcing accounting services, it’s not uncommon for your professionals to be located overseas. This can create communication barriers, especially with time zone differences. Working with an outsourced provider is one of the best ways to solve this issue. Your provider will uncover the best communication channels for your team to ensure fluid communication and collaboration.

Quality Control

How do you ensure that the work output of your outsourced team meets your standards? Quality control is an aspect of outsourcing that many businesses struggle with. To alleviate this challenge, set clear, upfront expectations. For example, if you want reports within five days after month-end, communicate this expectation to your outsourced team.

Cybersecurity Concerns

Outsourcing accounting services can come with cybersecurity concerns. How secure is the computer that your outsourced team is using? Do they have the proper protocols in place to protect your company's sensitive information? An outsourced accounting provider ensures that the contractors you use follow all of the same security protocols that your in-house team uses, reducing the threat of cybersecurity hacks and attacks.

Hidden Costs

No one likes to be blindsided by an unexpected bill. Working with individual outsourced professionals often leads to hidden costs. This is why many businesses choose to partner with an accounting outsourcing provider that has clear billing and upfront costs. Before you sign on the dotted line, request a quote or estimate that breaks down the costs you can expect.

Learn more about how hidden costs can impact your accounting operations: The Hidden Costs of Human Capital in Accounting.

Summary

Outsourcing your finance and accounting function can save you around 50% on average while offering you the opportunity to shift your attention towards the growth of your company. If you’re interested in Personiv’s adaptable accounting outsourcing services, reach out to one of our experts and let them show you what to expect when you partner with us. Still unsure if outsourcing is right for your business? Check out our latest eBook, Staffing (But Better), and explore our step-by-step outsourcing process.