Accounting has always been viewed as a compliance-driven field. Its primary function is to ensure that the financial records are accurate and that firms adhere to the regulatory requirements. In business operations, regulatory compliance presents a significant challenge. The business landscape is changing. It is influenced by technological advancements, globalization, and a shift in business priorities. Maintaining compliance is synonymous with maintaining legal and regulatory requirements that are in sync with global industry standards. When accounting firms fail to do so, they are faced with several consequences, including penalties and loss of reputation. The impact on the reputation is both on the accounting firms and those of their clients. Accounting firms must understand that compliance is not just another task in their long to-do list. It plays a very important role in ensuring long-term success.
In accounting, especially, compliance is essential because the nature of the business is sensitive. Accountants deal with sensitive data, which, when manhandled, can even fall prey to scammers and digital attackers.
Today, more and more accounting firms are choosing outsourcing to meet their daily business needs. Outsourcing has been helping firm leaders simplify strategy and compliance for their business. Let us delve deeper into how outsourcing has helped businesses make it easy for them.
How does Outsourcing impact strategic decision-making?
The foundation of accounting is based on thorough and impeccable strategies – the ones that help drive compliance. Here are some of the top ways to use outsourcing for strategic decisions:
- Strategic Financial Planning:
Outsourcing partners provide expertise in financial planning and analysis. Outsourcing partners help accounting firms develop strategic financial plans, set budgets, and forecast trends and the future. When firm leaders conduct strategic planning, it allows businesses to align their financial goals with their overall business objectives.
- Performance management:
When it comes to analyzing the success and failure of accounting firms, performance management plays a key role. For small accounting firms, tracking and managing performance, along with all the other tasks can be extremely challenging. When you outsource your accounting practices, businesses can easily set and track the performance on individual levels as well as on business levels through key performance indicators (KPIs). By monitoring the KPIs, accounting firms can easily identify areas of improvement, set better targets, and implement strategies to achieve them. And in all of this, the outsourcing partners can play the role of a strategic advisor, guiding the teams all along the path.
- Risk Management:
Accounting firms deal with critical financial information. Hence, effective risk management is important to ensure that they do not make wrong decisions and do not fall prey to hackers. Outsourcing partners can help businesses identify and assess financial risks early on, develop risk mitigation strategies and ensure compliance and regulatory requirements. Since outsourcing partners also have a fresh perspective, it makes it easy for them to spot a discrepancy. Their proactive approach to risk management helps minimize potential threats and enhance the chance of safeguarding critical data.
- Mergers and acquisitions:
As accounting firms continue to grow, they indulge in mergers and acquisitions. This is a big step for any business. During these times, outsourcing partners provide valuable support in due diligence, financial analysis, and integration planning. The team of experts ensures that all financial aspects of the transaction are thoroughly evaluated, risks are identified and the transition process is smooth. In many cases, there is a need to immediately deploy a new team and outsourcing providers can make it easier.
- Innovation and development:
Outsourcing firms are most often updated with the latest technology and innovation. They are continuously evolving as that is the only way for them to stay relevant. By partnering with these firms, accounting firms can benefit from the innovative approaches to accounting and continuous improvement in the financial process. This is a critical step for accounting firms, especially the small ones. They need to constantly innovate to meet the ever-evolving needs of their clients. Their drive for innovation, along with the accounting outsourcing partners helps in increased efficiency, reduced costs, and better financial solutions.
- Global expansion:
Businesses that are looking to expand globally, also need a global team of experts. By hiring an outsourcing partner, accounting firms can automatically get access to such a team. Accounting Outsourcing partners are also adept in international accounting standards, tax regulations, and compliance requirements. This expertise plays an important role in navigating through the complexities of the global markets and ensuring success in the international market.
Outsourcing as a key tool in maintaining compliance:
To make sure that the data and the finances are safe, secure, and legal, accounting firms need to maintain compliance. However, for small accounting firms, it can be extremely difficult to keep up with the changing regulations. Outsourcing teams can be an aid in ensuring that compliance is met. Here are the top ways in which outsourcing can help in compliance.
- They are the experts in regulations:
Unlike small accounting firms, outsourcing partners have a specialized team of experts who stay updated with the latest regulations and compliance requirements. These experts can help the accounting firm leaders to ensure that the accounting processes are followed and guidelines are abided by. They also help make sure that the processes are streamlined while they follow relevant laws and standards, all while reducing the risk of non-compliance and legal backlash.
- Consistent application of best practices:
Accounting Outsourcing firms bring extensive experience across different industries and geographies. The team of experts also allows them to apply the best practices consistently. This not only helps set a tone for business and streamline processes but also helps maintain high standards of accuracy and compliance in accounting functions. Application of best practices in the processes helps accounting firms remain the top choice for their clients. It helps ensure that all financial activities are conducted as per the established guidelines.
- Automated compliance tools:
Accounting firms are constantly evolving and up-to-date. When you partner with an accounting firm, you get access to automation tools for compliance without actually buying them. Accounting firms are also adept at using several tools. These tools can automatically check for regulatory updates, monitor compliance metrics, and generate reports. It helps ensure that the compliance requirements are met efficiently and accurately.
- Regulatory audits:
Audits should be made an integral part of accounting processes. Outsourcing firms help conduct regular internal audits and reviews as a part of their service offerings. These audits can help both the accounting firms and their cleints. These audits enable identifying discrepancies or areas of non-compliance early on, making timely corrective actions easy. Regular reviews also help ennsure continuous adherence to compliance standards.
- Scalability to meet compliance demands:
There are times of increased scrutiny in terms of regulations in the accounting industry. This can be when new compliance requirements are introduced. During such critical times, outsourcing firms can quickly scale their resources to meet these demands. The flexibility ensures that the accounting firms can handle the compliance workloads effectively without compromising on the quality or timeliness of their reporting.
Redefining accounting with outsourcing – Conclusion
The world of accounting has undergone a tremendous change over the years. Today it is perceived as a business process that does so much more than just helping reduce costs. As outsourcing continues to redefine strategy and compliance, more accounting firms keep adapting this model. By strategically outsourcing accounting functions, businesses can focus on their core activities, drive growth and gain a competitive edge.
To outsource your accounting functions with the industry experts, write to us at connect@finsmartaccounting.com.
Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
