Outsourcing Step-by-Step: Taking the Mystery Out of Outsourced Accounting

February 7, 2024 Theresa Rex

Outsourcing Mystery

There's something especially frustrating about a lack of transparency when you're working in a B2B space. There's a long history of vendors holding their cards close to their chest while attempting to sell you on the product or service that they're offering – a substantially different experience than the one you have during a B2C interaction. Luckily, that's changing. It's a change we see as a positive one, and it's why we want to provide you with a transparent look at how outsourcing works in actual practice. We're unwrapping the mystery out of finance & accounting outsourcing.

After all, if you're here you're probably well aware of what makes outsourcing an attractive concept, whether that's in its opportunities for cost savings or increased efficiency. What you want to know is how implementing finance and accounting outsourcing (FAO) will actually look like: what you can expect from start to finish, how to get everything underway, and how much time and money you'll be investing. So, let's take an unobscured look together at the mystery surrounding outsourcing by starting with a step-by-step breakdown.

  1. Should You Consider Outsourcing Your Accounting?

  2. Establishing Efficiency KPIs

  3. Identifying the Right Provider

  4. Getting Buy-in From Your Key Stakeholders

  5. Bringing All Partners to the Table

  6. Planning for a Strong Start

  7. Knowledge Transfer With a Trustworthy Partner

  8. Identifying Trends and Opportunities

Decision Making: Should You Consider Outsourcing Your Accounting? - Unraveling the Mystery

decision maker considering outsourcing

The very first step you need to take if you want to take advantage of outsourced accounting is deciding whether or not it's right for you in the first place. That might seem strange coming from an outsourcing provider: after all, don't we have a vested interest in getting clients to outsource as much as possible, as soon as possible?

Not exactly.

We actually have a vested interest in seeing clients succeed with outsourcing, and that can't happen if we aren't transparent with the details around what accounting processes do– and don't – make good candidates for outsourcing accounting tasks offshore.

More: [PODCAST]: When is Outsourcing Your Accounting Needs The Right Move?

As a rule of thumb, processes that are repetitive and transactional are your best bets if you're exploring finance & accounting outsourcing, whether you're exploring it as a cost-saving measure, an efficiency workaround or even a strategy to keep your in-house team from experiencing burnout.

Our clients have had success outsourcing processes like:

  • Account reconciliation

  • Order-to-cash

  • Procure-to-pay

  • Vendor invoice processing and payments

  • General ledger accounting

  • Audit support

  • Employee expense processing

  • Month-end close

This is by no means a complete list of some of the accounting solutions we've helped our clients with, but it's an illustration of where you can start with outsourced accounting. For some organizations, decision-making represents the shortest step in this process: they've known for a while what areas could use some shoring-up or are simply looking to make a change in providers for processes they already outsource.

For others, it's lengthier: they know that a change is in order but they're starting from square one. If that sounds like where you're at, you could probably benefit from the Finance and Accounting Decision Matrix. We created that to help finance leaders get "unstuck" and start establishing what they'd like to bring out-of-house as they start to consider offshore accounting teams.

Download the F&A Decision Matrix for Free to Get Started

Goal Setting - Establishing Mystery Efficiency KPIs with the Help of an Outsourcing Partner

accounting team setting up accounting software with new KPIs

Once you've decided that outsourced accounting is right for you, it's time to document what you've learned and create a list of goals in the form of key performance indicators (KPIs) that are both clear and actionable. Consider this a rough draft of the service level agreement (SLA) that you'll eventually make with your business process outsourcing (BPO) provider.

These might include:

  • Cost savings in a dollar amount

  • Time to close (monthly, quarterly, or year-end)

  • Accounts payable turnover

  • Accounts receivable turnover

  • Accuracy of operations

Again, this isn't a complete list. But it does give you an idea of what you may wish to measure and help you explain to potential providers what you're hoping to achieve when you partner with them. As always, your goals should be clearly articulated, measurable and above all achievable. Knowing what you want to get out of outsourcing is crucial to finding success with it as a tool, and this step helps you get there.

Research - Identifying the Right Provider

Taking the mystery out of FAO

From there, you'll want to research potential providers. The initial part of this process can certainly be done online. Taking a look at a provider's process, how they treat their employees, where they are located, how much experience they have in the industry and whether or not they offer a solution that is unique to your company will help you narrow down your options to a shortlist of potential vendors. Then, it's time to reach out. This is where those first two steps will come into play and help you make a decision. It helps to have a list of questions to ask when you schedule a one-on-one with the appropriate contact. Some questions you might want to include are:

  • How long have you been offering the service I need?

  • How many people will be assigned to my account?

  • How will I communicate with my offshore team?

  • What's the longest partnership you've had with a client?

  • Are you ISO certified? How will you protect my data?

  • Can I use my own ERP and technology, or do I have to use yours?

  • Is there a minimum contract obligation?

  • What happens if a mistake or error is made on my account and you're responsible?

  • What hours will my offshore team members work?

  • What will this ultimately cost in terms of dollar and hour amounts?

These questions can certainly vary depending on what you need from an outsourcing partnership, but one thing to keep in mind is that an outsourcing provider that's invested in your success will answer transparently and frankly – even if it's clear that you want an answer that's different from the one they can give. If you know you want a team that works the same hours that you do, for instance, it's important to know whether or not that's possible. Asking questions that correspond with the goals you've already set will help you narrow down "finalists" early on.

One more thing: if you're tentative about outsourcing, ask whether or not you can run a pilot program, limited to a single project or length of time. Our process here at Personiv allows for this kind of "test run". That way, if it doesn't work for you, you aren't locked into a lengthy contract at the pilot's completion.

Preparation - Getting Buy-in From Your Key Stakeholders

CEO meeting with stakeholders and shaking their hands to close deal

When you know that you're going to outsource and you have a pretty good idea of who you'd like to partner with to make that happen, you can't skip the internal process of preparation and securing buy-in. Change is going to be a certainty, after all. You should know what that's going to look like and be able to articulate that to key stakeholders, which can include upper management and C-suite executives, shareholders and even front-line employees. They'll want to know:

  • What's going to change and what timeline those changes will occur on

  • The financial break-down of cost and savings that can be expected from the partnership

  • Whether organizational changes will be made and when

  • Who will be responsible for running point when it comes to working with your provider

  • What will be done with the money that's saved with outsourcing

  • What will be done with the time you free up by outsourcing

  • How knowledge transfer, communication and quality analysis will happen

However you relay this information, it's important to be straightforward and anticipate the questions and concerns coming from different corners of your organization so you can answer them. Transparency is becoming a bit of a theme here, isn't it?

We created a workbook designed to help you present outsourced accounting as an option to your leadership team if you need a jumping-off point for securing the buy-in you need for successful onboarding and ultimately, results.

Download the Ready to Outsource? A Workbook for First-time Outsourcing Clients here for free.

Pre-Transition - Bringing All Partners to The Table

Woman writing on post it notes hanging on a window wall

Now you're ready to really get the ball rolling, if you'll pardon the truism. This is where most outsourcing providers shroud the process. Let's pull the curtain back a bit here, shall we? We can't speak for all BPO vendors, of course, but here's what you can expect when you partner with Personiv for an outsourced finance and accounting project:

  • Introduction of key stakeholders on both sides of the partnership

  • Identification of the scope of your projects

  • A discussion of your specifications and potential challenges

  • A complete overview of the project's hiring requirements

  • Alignment of your preliminary project's timeline

  • A call that establishes the scope of the IT requirements for your project at our offshore location

Once the pre-transition part of the process has been completed, expect to reconvene fairly quickly for the next step in the process.

Analysis – Master the Outsourcing Mystery for a Powerful Start

outsourcing company employee analyzing results to uncover a mystery

After these preliminary bases have been covered, it's time to start to really dig into what your BPO setup will look like. This is the midway point between deciding which provider you'll work with and actually pulling the trigger, and here's what you can expect with Personiv as your partner:

  • Mutual validation of all information gathered in the pre-transition phase

  • A demonstration that Personiv has a clear understanding of your business

  • A breakdown of your BPO program's infrastructure and review of any remaining needs

  • The creation of a custom communication plan that best works for you

  • A complete overview of completed IT requirements for your project

  • A mutual agreement on the knowledge transfer timeline

Completing these steps on time and to our client's satisfaction is what makes Personiv's onboarding strategy different from other providers. Because we zero in on your specific needs and are ready to meet them from the very moment you go live with your project, it reduces the chance of unforeseen hurdles to clear. Our robust knowledge-transfer stage, which we'll explore next, is another key component to long term success that starts from day one.

Documentation - Knowledge Transfer with a Trustworthy Partner

ceo meeting with trustworthy outsourcing partner

Here's the part of the outsourcing process that can seem a mystery and the most daunting to a first-timer. There are myths and misconceptions around how much control you'll have to cede to a BPO provider and how safe your organization's processes and information will be in the hands of someone who isn't working in-house with you.

At Personiv, if it's sacred to you, it's sacred to us. We work to learn exactly how you do things, what technology you prefer to do them on, and safeguard every piece of information you hand to us in our knowledge transfer process. Here's what that looks like:

  • Personiv begins to train your offshore team in phases, according to the knowledge-transfer timeline previously agreed upon

  • Preparation for the new working reality is made from provider to client so there are no surprises

  • The creation of desktop procedures takes place, using your process and technology

  • Complete and granular documentation occurs to ensure total universalization between provider and client

  • The provider drafts the KPIs the client wishes to measure directly into the agreed-upon SLA

Can you feel that? It's the electric moment before you actually go live with your BPO plan, and it's pretty exciting. Or it should be – the right provider will make sure all of the training bases are covered and that the transition from "getting ready" to "getting to work" is as smooth as possible. For instance, Personiv has a three-part training process that occurs between this step and the next, and we handle it all – so you don't have to.

For example: imagine that you've decided to outsource a procure-to-pay process within your organization. We learn how to perform it to your specifications. Then, a trainer will explain to your qualified new hire how it's done. From there, the new hire will show that they can perform the process as documented while the trainer supervises them. Finally, the trainee will show that they can perform the process independently. There's no risk of divided or distracted attention here, since the new hire will only be assigned to your account and the process you specify.

That's all before you ever go live with us, and all taken care of while you get on with your daily business. When you're satisfied that your work is in good hands, we go forward, and not a moment before.

Stabilization - Identifying Trends and Opportunities

data & technology trends background

When that day comes, you're ready to start seeing results with an FAO solution, but that hardly means that communication ceases and you'll be flying blind. If onboarding is done correctly the "go-live" step is, well, nearly invisible. You'll know, of course, when your project is live, but the transition should be seamless and complete. From there, you can expect:

  • "Hypercare" calls: in early stages, you're entitled to frequent calls that demonstrate a high level of care to make sure everything is being executed to your specifications

  • Issue logging: If something is missed in the knowledge transfer step, or if an issue crops up, it should be documented immediately and be revisited

  • Recalculation: As your project progresses, there may be new opportunities for increased efficiency or cost savings arises and the number of team members you need may increase or decrease. A reputable provider keeps you informed of both

Is this the most detailed step-by-step teardown of the mystery surrounding outsourcing, or what you'll experience when you're deciding to outsource your accounting?

Absolutely not.

That's not because there's some outsourcing industry mystery secret you can't know until you sign on the dotted line, though. It's because we believe there is no such thing as a "one size fits all" approach to accounting outsourcing. We work to find a solution that's exactly the right fit for you and only you. We build your plan around that instead of asking you to fit yourself into a predetermined process.

Still, outlining these eight steps is part of eliminating the "black-box" mystery mentality around outsourcing. We're proud of what we do for our clients, proud of the talent we hire and proud of the white-glove service we provide, so if you have additional questions about what this process looks like for you, consider us an open book. You can start by dropping one of our dedicated business development team members a note.

We're happy to walk you through it all to "uncover" the mystery in finance & accounting outsourcing (FAO).

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