INDUSTRIES
Accounting and finance outsourcing for small businesses
Finance and accounting (F&A) services were among the first processes that large companies sought to outsource due to their specialized nature and inherent separation from development, production, and sales processes. Today, small and medium-sized businesses are following in the footsteps of bigger companies by outsourcing important but non-core processes like general accounting, accounts payable, accounts receivable, and even high-level activities like budgets and forecasts.
As the finance and accounting outsourcing industry matures, many companies are looking for higher-end services and exploring solutions that make F&A processes more efficient. It is no longer simply a matter of cost savings; small and medium-sized businesses are using F&A outsourcing as a strategic tool to be competitive, improve the bottom line, and gain access to the latest technologies and know-how.
As a result, outsourcing providers are elevating their services by setting better metrics, offering more flexibility, expanding into new areas and new industries, and providing services tailored to smaller companies. Small and medium-sized businesses typically outsource processes such as bookkeeping, payroll, VAT, and statutory and management accounts.
F&A outsourcing market and trends
Cost reduction remains the main reason companies outsource F&A services. Most F&A outsourcing projects are carried out by companies looking to improve F&A process efficiency and move labor-intensive tasks to low-cost labor locations. As costs rise in traditional locations like India and China and budgets shrink, many clients are looking at alternative destinations for better value.
Clients are also getting savvier when choosing outsourcing partners. Gartner reported that F&A customers now understand that it is possible to achieve better productivity and continuous improvement through a vendor’s unique standardization and automation methods. A majority of outsourcing contracts are fixed-price or price-per-FTE (full-time equivalent), with blending pricing models that incorporate elements of transactional and FTE pricing emerging as a top trend.
In terms of outsourced services, low-value F&A processes that require limited language skills are still the most commonly outsourced, while organizations tend to hold on to customer-facing processes and those that require specialized language skills.
Why outsource F&A functions?
Save money
The primary reason for outsourcing any service is cost savings. For companies that outsource services to a third party in an emerging market, labor arbitrage drives down costs even further.
For small and medium-sized businesses with limited resources, outsourcing non-core services may be necessary. Few startups can afford full-time accountants or finance consultants to crunch numbers. Even for sole proprietorships, accounting is a labor-intensive task that can take focus away from more important activities. For accounting firms themselves, they often have a hard time competing in their local markets without outsourcing some portion of their work.
Improve business efficiency
Most big companies outsource finance and accounting to increase business efficiency within a department or across the company. Smaller companies can reap similar benefits when they partner with third parties that have powerful analytics, tools, and domain expertise. Enhanced financial information can help small businesses control budgets and better understand spending.
Digitally transform the finance function
Digital accounting solutions have gone a long way in simplifying and streamlining various finance functions. And the use of AI and machine learning in F&A can speed up processes and help avoid manual errors, leading to a more efficient workflow and more accurate outputs. Smaller companies that may not have the resources to invest in these technologies can instead outsource F&A to a provider that has already adopted these digital solutions.
Offshoring finance and accounting to the Philippines
Offshore outsourcing of finance and accounting functions to the Philippines is an excellent solution for small and medium-sized businesses with tight budgets and also for accounting firms looking to trim costs. Finance consultants and accounting professionals in the Philippines can provide the same high-quality service as local staff but at a fraction of the cost.
Providers in the Philippines offer custom, scalable solutions regardless of industry or company size. Companies can start small by choosing to hire one professional to handle general accounting, or build a team of accountants with less risk and lower costs.
Please contact us to find out about Sourcefit’s custom accounting and finance solutions.
