Finance and accounting have and will continue to remain one of the most critical operations for any business. In this niche field, so much has changed over the years – the introduction of technology and automation, the shift to remote work, more flexibility, and better growth opportunities. Outsourcing is one such aspect in the field of accounting. Both nearshore and offshore outsourcing have garnered a lot of attention, especially as we navigate through a shaky economic landscape. While there are still apprehensions about the degree of cost reduction and efficiency that this model can offer, many accounting firm owners are gradually seen to reap the benefits.
Many CFOs have already sought outsourcing as a key method to address the critical gaps in their financial processes. The immense talent shortage problem in this field is a major contributor to that. The pandemic has proved that geographies are not a boundary, when you have an efficient team in a different part of the world, handling some of the most critical jobs for your business.
Since employers, even in the accounting industry, struggled with the Great Resignation, there have been changes in the labor market dynamics. After months of rise in layoffs, in 2024, the global economy continues to pose a threat. CFOs and other accounting firm leaders have been in a fix as they try to find staff who want to stay in the firm for long and have “specialized” skills.
In this article, Finsmart Accounting – globally trusted for accounting outsourcing services – will share top accounting practices and trends with CFOs to follow in 2024. Let’s start by understanding why CFOs should consider outsourcing accounting practices!
Why Should CFOs Consider Accounting Outsourcing?
In a financial and accounting setup, a CFO has to take care of many things at the same time. Many accounting tasks are time-taking, and repetitive. We live in a fast-paced world and the clients want results delivered quickly and accurately. CFOs have to be mindful of several aspects. Outsourcing is not only effective in terms of cost reduction and improving efficiency, it also helps the CFOs manage different sets of tasks seamlessly.
Here are some of the benefits that are compelling the CFOs to consider accounting outsourcing in 2024 if they haven’t already done it:
1. Cost and time effective:
Ensuring that the business can achieve maximum results at a minimum cost is one of the major responsibilities CFOs are levied with. An in-house team of accountants requires capital for hiring, training, infrastructure, etc. And high attrition rates affect this balance of capital investment and returns. By outsourcing, CFOs can streamline their financial operations while concentrating on the other core aspects of the business. It also helps reduce overhead expenses.
This is, especially, beneficial for smaller enterprises that require specific services like financial reporting, payroll management, etc. These tasks require niche skills and with outsourcing, CFOs can gain access to the expertise easily.
Outsourcing firms that provide different outsourced bookkeeping pricing models allow accounting firms to choose as per their needs, allowing flexibility. Firms can also enhance the team’s efficiency and productivity through this business model. This way, they do not end up spending a lot of their time on repetitive tasks, which, in turn, helps prevent burnout. Outsourcing promotes growth and development.
2. Access to expertise:
Small accounting firms, especially, struggle with limited resources and capital. For such firms, hiring resources for every specialized task might be a huge challenge. Outsourcing acts as a huge boon in this case. As firms grow and take up more clients, a team of outsourced professionals allows the team to expand exponentially without creating pressure on the in-house team. Accounting activities like tax preparation are seasonal, and retaining such a team for the rest of the year is an added pressure for the firm. Outsourcing helps manage the additional workflow without creating a dent in the pocket.
For firms at a nascent stage, setting up internal resources, establishing training programs, and providing a huge team with all the facilities needed can be very expensive, Rather than investing in employee recruitment and task-specific training, outsourcing helps gain access to expertise and bring in professionals at a reasonable cost.
Recommended reading: Cash flow management reporting tips and ideas for CPAs.
3. Ease of Growth and Scalability:
Ensuring growth and scalability is part of the CFO’s job role. For firms, looking to scale alongside their business, efficiently adapting to changing resource requirements is of utmost importance. An experienced outsourcing firm is equipped with a proficient team that understands your business needs and is ready to tackle the issues in ways that you want. By defining the scope of work clearly, the firms can ensure proper company expansion, swiftly catering to the increasing accounting needs, while keeping the costs optimized.
As the demand for accounting outsourcing increased over the years, the diversity in skill sets and service offerings by these firms has grown too. Firms specializing in outsourcing, now, tailor their solutions to meet specific client demands. Firms like Finsmart Accounting have years of experience in meeting the diverse needs of clients, the necessary tech and tools to make operations seamless, and a variety of pricing model that caters to individual needs. After being in the industry for years, firms like these also boast of a client base that has reaped the benefits of outsourcing and has been able to scale their businesses in the right manner.
4. Reducing Employee Turnover:
As the world battled with the pandemic, businesses were posed with a few more threats, like the Great Resignation and a huge shortage of talent. CFOs and accounting firms have been struggling constantly to find and retain talent. By outsourcing accounting operations, firms can gain specialized, global talent, who can handle a plethora of tasks at an optimized cost.
Outsourcing relieves the accounting leaders and CFOs of the pressure of hiring and training, which are cost-extensive and time-consuming. For smaller firms, it is extremely difficult to allocate resources for training alone. From bookkeeping to accounts receivable and payable, tax preparation and management to financial reporting and auditing – outsourcing firms are equipped to do it all. This eliminates the need for companies to hire resources for each specialized task internally, thus reducing turnovers. Outsourcing firms align and use their employee skill sets properly with the right job descriptions, which is, may be difficult for the internal teams to replicate.
Recommended reading: Learn everything about auditing in accounting.
Now, you have an idea of why CFOs should consider outsourcing accounting practices. So, let’s explore some outsourcing trends to look out for this year.
Outsourcing Trends for 2024
The global outsourcing market is valued at 92.5 billion in total contract value. The popularity of outsourcing has been growing at a rapid pace. As a CFO, if you aren’t mindful of the latest trends, the chances of you missing out on something key for your business are high. Here are the top trends to look out for:
– Continuous growth in outsourcing: About 50% of executives say that staffing is their top priority. Outsourcing firms have grown massively in terms of communication, cloud-based technology, and the tools needed to provide top-notch services and solutions. As challenges around acquiring and retaining talent continue to persist, it might be time for your business to consider outsourcing.
– Focus on compliance and data security: In the past year, about one cybersecurity attack happened in 39 seconds, which amounts to 2200 attacks each day. An average of 9.44 million data breaches happened in the US. As the threats and costs pertaining to cybersecurity and compliance continue to increase, businesses will look to outsource their cybersecurity, compliance, and data protection.
– Client-driven services: There have been significant growth and improvements in the outsourcing industry. With enhanced abilities and competition leading to higher client expectations, outsourcing firms now have a client-driven approach. Besides providing services like accounting and tax preparation, they are also equipped to provide advisory services, giving firms the support they need in a better way.
– Leveraging the global talent pool: Outsourcing allows businesses to get access to a global talent pool. Access to contractors, consultants, and offshore teams means that businesses can use the best of the lot. This allows the accounting firms to choose between offering traditional business services like bookkeeping and taxation, and more complex services like cybersecurity, compliance, and forensic accounting.
Recommended reading: Learn about the cost of outsourcing accounting services in India!
CFOs Outsourcing Accounting in 2024
For firms with in-house accounting teams, partnering with an outsourcing firm comes with a lot of benefits. The partnership allows the teams to work together, enabling better expertise in the technical areas. Outsourcing accounting services has become a strategic imperative for CFOs. By leveraging the expertise of external professionals, CFOs can streamline financial processes, reduce operational costs, and focus on strategic initiatives that ensure business growth. However, successful outsourcing also requires planning, evaluation, and proper collaboration to ensure that the teams are well-aligned in terms of the objectives and safeguard data security and confidentiality.
To know more about accounting outsourcing and how you can benefit from this business model, write to us at connect@finsmartaccounting.com.
Also, don’t forget to check out:
Accounts receivable outsourcing services
Outsourced financial controller services
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.
