How to Convince Your Management about Outsourcing Accounting
The uncertainty of the past two years has posed new challenges for CFOs, management and finance teams equally in terms of finances and operations. This has included a greater need for more frequent reporting, financial planning and analysis, and cash flow management, among other things.
What can the finance department do to tackle these new challenges? More crucially, what are the most trustworthy and adaptable solutions out there? With these new pain points comes new working methods, processes, and controls, which CFOs and the management must ensure enough flexibility to allow finance staff to be productive and empowered at work.
One option to streamline finance better is by outsourcing the accounting function. As a key team member, you might already be aware of the need to outsource. But how can you get the necessary buy-in from the senior management? Here, we will attempt to give out some pointers to get alignment from the management and ultimately, get them to agree and start outsourcing.
What accounting services can you outsource?
- Accounts receivable and account payable
- Bookkeeping services
- Cash flow and budget preparation
- Tax return review and filing
Convincing The Management to Outsource Accounting
Convincing the management to outsourcing parts of the Company’s accounting functions can be challenging and intimidating. Here are some points you can consider talking to your management to evaluate the need to outsource.
Identifying the needs, pain points of the accounting and finance department
Finance experts are now intimately involved in the day-to-day operations of their companies, offering strategic direction and assisting in high-level decision-making. Transactional tasks and record keeping are no longer the sole focus of finance staff. Finance roles are evolving in new and fascinating ways as the importance of financial planning and analysis grows. This, however, brings additional challenges and areas for finance teams to analyse.
With the evolving journey which involves new responsibilities and complexities, it causes a drop in the performance. Mainly through such tasks as preparing necessary accounting documentations, and queries to be answered from respective stakeholders. To cope with the evolution, it is necessary for management to train and sharpen their employee skills.
Without the right skills and proper training, many operations and tasks would be a flop and causing extra time wasted. In order to train employees to upskill their capabilities, it takes up a lot of time and money, which also leads to pending workflows and piling up of deadlines that would have to be crossed.
How can the management overcome this?
In order to reap a benefit, management can outsource their accounting tasks and operations to an accounting outsourcing partner. The management can address concerns and talk to their prospective accounting outsourcing partner on how they can help reduce this risk that is faced. This reduces the burden of training employees in house or hiring more in house employees with the required skills, as it leads to more cash out than cash in. With this, the management can work on prioritising the right task to boost the company’s revenue in house and reach other required targets and plan more efficiently as they can focus on their core business in house without worries.
Management may fear sharing their confidential information in their accounting section with a completely unknown company to work with. This is why management can start with small projects to build trust with the accounting partner and go through thorough research when finding one. As the trust is formed and comes down to a solid foundation, if the management is happy with the work quality delivered, then the management can go on with larger projects or more complex tasks to work with.
Learning about past outsourcing projects
It’s helpful to understand the reservations your manager could have by learning about past outsourcing projects they have handled. There must be a reason why they stop outsourcing at one point. Some common reasons how an outsourcing project might go wrong included:
- Prioritising lower-cost labour over quality work
One of the most common reasons for outsourcing accounting is to save money. However, it is crucial to remember that the cheapest choice may not necessarily be the best option in the long run. It is just as vital to engage the correct outsourced partner.
When you outsource solely to save money, you risk compromising on labour quality, therefore negating the goal of outsourcing. So, rather than being influenced solely by vendor rates, you can suggest focusing on the other significant advantages of outsourcing which includes specialised skills, greater flexibility in meeting your objectives, enhanced capacity for core capabilities, and the ability to scale quickly, among other things.
- Engaging with an outsourcing partner without conducting thorough research
Most clients will merely look at an outsourced partner candidate’s general background when recruiting them, however this is insufficient. Outsourced partners should possess not just great technical skills but also strong soft skills such as effective communication, time management, and problem-solving. As a result, it is critical to think about a few essential elements that could influence your decision.
Here are some questions that will influence your decision
- Does the outsourcing partner share the same core values, beliefs, and company culture as you?
- Do they have a lot of long-term clients? That could reflect a low turnover rate and good communication from the vendor to the client.
- Do they have experience in handling the exact tasks you are outsourcing?
Lastly, make sure you evaluate the vendor’s previous track record by looking at client comments across many platforms. This data can help you make a better informed decision.
- Not setting clear expectations
Understanding what to outsource and what are your own expectations for how the processes will be handled are two separate things. Make sure you understand why you are outsourcing and what you plan to accomplish, and then explain these goals to your outsourcing provider. Failure to do so may result in sloppy communication, missing deadlines, and a general outsourcing meltdown.
- Legal and contractual procedures was done wrongly
Unlike in-house hiring, the legal outsourcing process is less standardised and heavily influenced by the vendor’s location. You may be required to sign different additional documents that are not part of the legal process in your nation. After the contracts have been signed and the work has begun, the outsourcing troubles begin – simple mistakes in the agreement can lead to significant consequences that can poison the entire dynamics between you and your vendor.
Thus, all these concerns have to be addressed before presenting a case for outsourcing to your management.
Ways to avoid blunders when outsourcing your accounting
- Determine your outsourcing goals
If, for example, you are engaging with an accounting outsourcing team, you should express your expectations and goals outwardly. This always helps you to stay well aligned within your reason for outsourcing and the KPIs which you are looking to achieve through the outsourcing process. Setting clear expectations from the start assure that there will be no resource constraints or workload bottlenecks afterwards.
Here is how to communicate clearly with your outsourcing provider:
- Define your present task, the quantity and quality of resources you will need, your KPIs, and any specific technology details, along with other things that are important to know.
- Communicate your anticipated timeline to review the progress according to designated milestones.
- Tell your outsourcing partner what kind and frequency of communication you are looking for.
- Consider holding an orientation session with your outsourcing partner to clear any ambiguities regarding their roles and obligations.
Transparency with potential vendors can encourage them to invest more in your firm. Some vendors may withdraw from the process early owing to incompatibility thus saving you time and money.
- Be meticulous and thorough.
Prepare a Non-Disclosure Agreement (NDA) for the outsourcing partner to sign, as well as any other necessary regulatory documentation. Discuss every aspect of the process, including scenarios in which your vendor fails to deliver or makes a mistake, and don’t forget to address data security concerns. Compensation, working circumstances, partnership obligations, ownership information, and other pertinent terms should all be included in your contract.
- Implement continuous communication
Integrate calls, feedback loops, and other communication tactics into your project plan to ensure that communication is a key component of the workflow. Plan to visit each other’s offices to conduct in-person encounters that will help you understand each other better and build your empathy.
You should also maintain a good track of communication with the key person in charge of your task and requirements in order to stay in the loop of how your things are working out, and you know who to mainly refer to when goals, KPIs or any other circumstances aren’t going as planned.
- Find the middle ground
Take a step back and evaluate your firm objectively: its size, number of employees, potential for expansion, income, brand awareness, and so on. If you are still in the early stages of your business, avoid hiring a huge outsourcing firm. The money you would spend on it would be enough to pay for an in-house specialist’s salary. At the same time, avoid going with the lowest priced vendor in the market because you will be more likely to get poor outcomes.
You’ve seen how beneficial outsourcing your accounting really is, and you’re on your way to get the greenlight from management. The next step is finding the right accounting partner for your business. There are various firms out there to assist you in taking control of the future of your business by delegating a little bit of your responsibility.
Ledgen has a team of professional accountants to assist you and ensure all your accounting needs are met and follow all compliances with full security. Ledgen has dealt and worked with multiple clients from various ranges of industries and levels and provided excellent services. Contact Ledgen today to get your accounts outsourced rightly and safely.