Accounting Outsourcing: Streamlining Financial Operations for Businesses

Your accounts payable process may be put at risk, and switching to another system can be expensive and time-consuming. Having a skilled eye on your finances at all times will give you peace of mind, as well as the ability to make well-informed financial decisions. Like with a controller, whether or not you’ll need a full accounting service depends on the size of your business. The global business process outsourcing market worth is projected to reach an all-time high of $405.6 billion by 2027. It’s also a good indication that many businesses choose to outsource one or more of their business processes to an outside entity of their own.

Let’s take a look at some common outsourced accounting myths and explore how outsourced accounting service providers like our team at LBMC are addressing them to build a better client experience. The majority of companies that work with an outsourced accounting firm do so on an ongoing basis. At first, there may be a lot of work in building the financial infrastructure and accounting services. But after this initial set-up period, the relationship typically reverts to a stable monthly business cycle. By thoroughly assessing a provider’s capabilities, you can select the best-fit partner for your organization and ensure that your accounts payable processes are effectively managed.

Time Savings

Ask potential providers about their data privacy and security policies and any certifications or audits they may have undergone to demonstrate their commitment to safeguarding your financial information. Make sure you go through your provider’s privacy policy and data protection measures carefully. This lets you determine if the provider matches your security standards before you outsource work. While you have to hire employees and spend time training them, you also need to purchase the tools required to do the job!

Free Course: Understanding Financial Statements

So while implementing an accounts payable automation system in-house can help reduce invoice processing costs and improve efficiency, you will still have to have in-house employees dedicated to AP functions. Therefore it’s unlikely to provide the same level of cost reduction as outsourcing. You might say that areas of accounting and bookkeeping must be done internally due to the job’s sensitivity. But with outsourced accounting, your financial statements and compliance tasks are all safe and secure, as providers are equipped to handle sensitive data and maintain work quality. Selecting the right accounts payable (AP) service provider is a critical decision for any business looking to outsource this key function.

Accounts receivable and accounts payable

By outsourcing accounting tasks, companies can benefit from the expertise of external partners who specialize in financial management. This can lead to more accurate budgeting and forecasting, which are crucial for making informed financial decisions. External partners can efficiently manage and track expenses, as well as analyze trends and patterns, allowing businesses to plan for the future and allocate resources effectively. Outsourcing accounting functions has become a popular approach for businesses to optimize financial management while simultaneously reducing costs and increasing efficiency. In this section, we will discuss how outsourcing can improve strategic financial management through enhanced budgeting, forecasting, and reporting, as well as financial planning and analysis.

1. AP outsourcing usually involves several changes to your accounts payable processes.
2. Even with the best data protection measures in place, there is always some degree of risk in handing over critical financial data.
3. You might say that areas of accounting and bookkeeping must be done internally due to the job’s sensitivity.
4. If you’re outsourcing accounts payable data, you need to share your confidential financial data with the third-party provider.

This can range from invoice receipt and processing to vendor management and payment processing. Hiring an accountant can be a daunting task for several small businesses and startups. double declining balance depreciation No matter the size of your company, you want the best set of hands to handle your financial records. At 1840 & Company, we provide comprehensive accounts payable (AP) outsourcing services that help streamline your financial operations and improve overall efficiency. Outsourcing accounts payable tasks allows businesses to realign their focus towards the heart of their operations – key areas like product development, customer service, and strategic planning.

Working with an external AP service provider, especially one in a different time zone or country, can create communication barriers. Delays in responses or misunderstandings due to language or cultural differences may lead to errors in processing or disrupt the workflow. In-house operations often require substantial investment in technology and infrastructure. A robust AP software suite alone can cost upwards of $10,000, coupled with maintenance and upgrade fees. By transitioning to an outsourced model, businesses can expect to see a reduction in overall AP costs by as much as 70%, a figure drawn from our extensive experience and market analysis in the field. The accounts payable process consists of several key steps to ensure timely and accurate payments to vendors.

Read about the benefits and drawbacks people have faced when hiring a particular provider. Most businesses have a few exceptions and business rules in their accounts payable workflow. Outsourcing accounts payable takes most of this workload off of your AP team supervisor. Even if some employees are absent, the stress of covering up does not land on a sole supervisor. Additionally, since the outsourcing team only works on your accounts payable, they can deliver results much faster.

Most in-house teams have a financial supervisor, such as the CFO, to manage issues when employees aren’t present. This way, companies gain huge cost reductions from saved time and improved productivity. However, this can be mitigated significantly by choosing the right accounting partner and building a positive relationship.