Three Common Misconceptions About Offshore Outsourcing
Offshore AR /AP outsourcing has become a proven strategy for organizations to create efficiencies in costs and time, and deliver better value to their customers. According to a 2021 Report Linker study, the finance and accounting outsourcing market is projected to grow by US$16.7 billion. But even with its impressive track record, accounting outsourcing is viewed through a lens of skepticism by many. Unfortunately, popular misconceptions about outsourcing have persisted in the collective imagination, preventing many businesses from fulfilling their true potential. Let us consider three common myths and then peel back the surface to look at the ground reality.
1. “The outsourcing service provider does not know my organization’s processes or the industry’s nuances”
Accounting outsourcing companies such as Finsmart are comprised of experts who have significant experience across industries, working on AR and AP for organizations of all sizes. The average in-house accountant cannot be expected to have the same exposure. Our resources are trained and experienced in understanding the protocols of clients and following them to the tee. Any time there is a task that requires specialized knowledge, a resource with expertise in that aspect will step in to accelerate the process.
Having Finsmart as your Intelligent FinOps partner means that you will need to conduct training and knowledge transfers on your processes only once. From a training standpoint, your organization can effectively switch to the autopilot mode. On the other hand, in-house AR/AP teams will require you to conduct numerous training/re-training exercises as your company navigates expensive recruiting and attrition cycles.
You can also read more about how outsourcing can save you the hassle of training and retraining employees in our blog here.
2. “Outsourcing isn’t necessary when implementing technology solutions can achieve the same results”
Bill Gates famously said that “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” This point is extremely valid in the ‘outsourcing vs. technology’ debate in the context of AP and AR. 58% of large firms use cloud-based accounting software, according to a 2020 report by Entigrity. However, while tasks can be automated and accelerated by technology, unless they are underpinned with sound business processes, the results are bound to disappoint. Technological capabilities may not be used optimally if a culture of maximizing productivity has not been carefully cultivated over the years.
Outsourcing companies, on the other hand, are incentivized to continually hone and refine processes to achieve maximum efficiency. By onboarding an outsourcing company, you are leveraging their proven processes. When a technology layer is then added on top of this foundation of sound practices, the maximum value can be drawn out of your AR and AP function. With Finsmart as your ‘Intelligent FinOps partner’, you are leveraging optimized processes and cutting-edge technology at the same time.
With Accounting Seat, you need to conduct training processes only once. There will be no need for retraining ever again. Knowledge transfers will happen internally on our end with no support required from you. Our teams are well-versed in a wide range of accounting software platforms which means time required from your organization on software training sessions will most likely be non-existent, or minimal if at all.
3. “Outsourcing means downsizing and layoffs for employees”
While outsourcing can be an effective tool in reducing headcount, it does not necessarily entail downsizing. The flexibility offered to you by outsourcing means that resources can step in to supplement your internal team to better handle seasonal demands and surges in workload. This translates into better work-life balance and satisfaction for your team members during grueling work cycles such as those typical of the tax season.
Employee attrition rates are already high in the accounting field with burnout and long hours frequently cited as reasons. According to AICPA’S Journal of Accountancy, 2020-2021 was one of the most brutal tax seasons for CPAs in recent history. But the problem is exacerbated by the fact that more CPAs are retiring than entering the field. Outsourcing can put an end to the churn and make your employees feel supported. The reduced attrition rates will help you to focus on strategic areas rather than grappling with your talent pipeline and managing deadlines.
Outsourcing is meant to be a tool in empowering your organization to meet its business goals by shifting your attention from operational details to strategic focus areas. In this blog, we have inspected some of the assumptions about outsourcing. However, even many of the benefits of accounting are not understood well enough. Most companies view cost-savings as the sole criterion to measure the impact of outsourcing when in fact, your intelligent FinOps partner can offer you a plethora of hidden benefits such as improvements in vendor relationships, a more satisfied supply chain, better controls and much more.
In an increasingly competitive business landscape, it is vital that you embrace the strengths and efficiencies that outsourcing can impart to your organization.
To know more about Finsmart’s services, click here.