Did you know that companies have an average cost savings of at least 20% when they outsource accounting? How about that 65% of businesses agree that outsourcing accounting functions unlocks time to prioritize their core functions, like strategic growth?
Outsourcing is no longer a foreign concept. In fact, one in three small businesses outsource some function in their company. From unlocking cost savings and streamlining reporting to lowering risks and mistakes, outsourcing might be the secret ingredient in reaching your strategic goals.
In this article, we’ll cover the benefits of finance and accounting outsourcing, which tasks can easily be outsourced, and how to craft your CFO outsourcing strategy.
Finance and Accounting Outsourcing Savings & Other Benefits
Each organization will have different benefits from accounting and finance outsourcing, especially depending on the roles and responsibilities shifted to an outsourced team. Let’s go through a few of the main benefits of accounting and finance outsourcing.
Accounting Cost Reduction
One of the most significant advantages of outsourcing your accounting and finance functions with a service provider like Personiv is the substantial cost savings—up to 50% compared to maintaining in-house employees. In-house teams require you to cover employer payroll taxes, benefits, and salaries. With Personiv’s services, you save on these overhead costs and gain the flexibility to scale support as your business needs fluctuate.
Unlike independent contractors, our service model provides dedicated professionals who integrate seamlessly into your operations, ensuring continuity and expertise without the administrative burdens. For instance, if you need additional support at month-end to close your books, an in-house employee might cost your business around $6,000 per month. However, leveraging a cost-effective offshoring model, the same support might cost around $3,000 — delivering immediate savings while maintaining quality and efficiency.
Want to learn more about the cost savings of outsourcing accounting? Check out our in-depth guide: Outsourced Accounting: How Much Does Outsourcing Your Accounting Cost?
Operation Optimization
Outsourced accounting and finance professionals also help your company optimize operations. First, these professionals leverage technology and machine learning to optimize repetitive and mundane tasks. This not only generates further cost savings from reduced time but also helps streamline your processes.
In addition, outsourced accounting and finance professionals develop standardized procedures. For example, you might have an in-house bookkeeper who maintains your general ledger and an outsourced accountant who makes adjusting journal entries and prepares financial reports. Your bookkeeper and outsourced accounting team will work together to issue timely reports and statements, expediting the turnaround time and defining best practices.
Compliance and Risk Reduction
Outsourced finance and accounting professionals have a specialized skillset that allows them to effectively monitor compliance and risks in your organization. For example, an outsourced CPA will have an extensive working knowledge of Generally Accepted Accounting Principles (GAAP). When it comes time to generate financial reports to send to investors and lenders, your outsourced CPA will review them for accuracy and compliance, building trust and credibility with important business partners.
Finance outsourcing benefits also come in the form of risk reduction. Your finance professional can identify prevalent risks in your organization and help you create an action plan to lower potential impacts. For example, maybe you find that customer demand is trending downward for a certain product. As a result, you allocate more of your budget toward research and development to find a new offering.
Strategic Goal Support
Another fundamental benefit of outsourcing finance and accounting roles is strategic goal support. It can be nearly impossible to reach your business goals without the right resources and time. For example, if you spend most of your day handling basic finance and accounting tasks, you will have little to no time to plan for the future and make high-level decisions.
With an outsourced team handling your backend functions, you have more time to steer your company toward its goals. Additionally, outsourced accounting and finance professionals often have decades of experience on different business issues, serving as your trusted expert when making decisions that impact the trajectory of your company.
Accounting and Finance Tasks Available for Outsourcing
Almost every task in your accounting and finance functions can be outsourced. Here’s a short list of commonly outsourced accounting and finance tasks:
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Accounts Receivable – Managing invoices and customer payments.
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Accounts Payable – Managing payables and vendor relationships.
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Payroll – Processing payroll, handling employee benefits, and submitting the necessary payroll filings.
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Data Entry – Ensuring all transactions are input into your general ledger.
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Monthly Reconciliations – Reconciling all credit and bank accounts to the monthly statements.
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Month-End Close – Making adjusting entries and preparing internal financial reports.
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Inventory – Managing inventory levels and uncovering optimal re-ordering times.
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Financial Forecasting – Forecasting sales and growth to properly allocate resources.
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Budgeting – Creating departmental budgets that align with overall organizational goals.
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Financial Analysis – Analyzing financial statements for overspending and irregularities.
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Tax Planning – Forecasting upcoming tax liabilities to make necessary quarterly payments.
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Tax Filings – Filing annual returns in compliance with the IRS and state agencies.
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Sales Tax – Determining nexus in each state, registering in new states, and submitting returns.
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Risk Management – Monitoring and managing prevalent organizational risks.
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Customer Service – Responding to customer and vendor inquiries related to payables and receivables.
Keep this list in mind as you start creating your CFO outsourcing strategy. You might find that your organization can benefit from outsourcing a handful of these tasks.
Developing an Outsourcing Strategy to Achieve Cost Savings in Accounting
Outsourcing is unique to each company. For example, one company might choose to outsource their entire finance department, while another might elect to have only basic bookkeeping outsourced. Uncovering your CFO outsourcing strategy will help you maximize accounting cost reduction and fully leverage the benefits outsourcing has to offer. Here are four steps to identifying your CFO outsourcing strategy.
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Evaluate Your Current Processes
The first step in your CFO outsourcing strategy is to evaluate your current processes. Where do you and your team members spend your time each day? Are you spending half your day completing general business processes? Evaluating how you spend your time will give you insights into what tasks you can outsource. For example, if you are spending two hours each day reviewing financial reports, could your time be better spent elsewhere? Make a list of your daily tasks. This will be helpful in the next step.
Be sure to get input from your in-house employees, too. You might be surprised to find that they are overworked and need a portion of their workload transitioned to an outsourced professional. Maximizing your accounting cost reduction relies on not only alleviating your work burden but also creating an efficient and optimized environment for your employees.
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Solidify Outsourced Services
Now that you have a basic understanding of how your organization can benefit from outsourcing, solidify your outsourced services. Take your list of daily tasks and compare them to the above list of commonly outsourced services. Do you notice any similarities? Make a note of which tasks you plan on outsourcing.
It can also be helpful to order these tasks from highest priority to lowest priority. If you have budgetary constraints, you want to prioritize the most needed outsourced services. For example, if your bookkeeping is constantly falling behind, it would most likely be an outsourced priority.
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Search for the Right Outsourced Provider
With your service list in hand, it’s time to start your search for the right outsourced provider. The right provider will have a few key features. For one, they should have some formal education, such as a bachelor’s degree in accounting or finance. Additionally, they may hold credentials like a CPA or CFA license. Although credentials aren’t necessary, they can be helpful if you need certified statements and financials.
Moreover, when looking for an outsourced provider, be sure they offer the services you need. For example, if you need tax services, your outsourced accountant should be able to prepare and file returns on your behalf. Use your list of tentative outsourced services and be sure your prospective provider has the capabilities to meet your needs.
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Evaluate Cost Savings and Accounting Efficiency
After you’ve found the perfect outsourced finance or accounting professional, your job isn’t done. In fact, one of the most important steps in crafting your CFO outsourcing strategy is evaluating cost savings and efficiency. After a few months, go back and calculate the money you’ve saved by working with an outsourced professional.
Remember, look at both the tangible and intangible benefits. For example, you might notice a 20% or more cost savings in your accounting function, which is a tangible benefit. At the same time, your customer satisfaction score might increase from transparency in billing and collections, which is an intangible benefit. Evaluating both is important to gauge the true impact of leveraging an outsourced finance professional.
Furthermore, look at how efficiency has improved. Do your in-house employees feel less stressed about their roles and responsibilities? Has your entire accounting function been streamlined, resulting in fewer mistakes and quicker report generation? Efficiency is a crucial component of reaching your strategic goals and maximizing your cost savings.
Implementing a new outsourcing strategy often involves significant change. Our guide, Managing Change: Tips For Today's CFOs, offers valuable advice for navigating this transition.
Summary
Does it sound like your organization could leverage accounting cost reduction from outsourcing? The finance outsourcing benefits can be both tangible and intangible, helping your organization reach its long-term goals and objectives. For more help crafting your CFO outsourcing strategy, reach out to one of our team members today to schedule your free consultation.
