The Benefits of Outsourcing Accounting Functions in 2023

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Introduction

Outsourcing is proving to be a growing industry in the US with an over 3.7% growth rate in 2023. It has continued to grow since 2018. One common area for outsourcing is outsourced accounting, where businesses partner with specialized firms to handle their financial functions and ensure accurate and compliant bookkeeping.

The world of accounting has come a long way in the last few decades, and the landscape of the profession continues to evolve as newer technologies and best practices emerge. In the past few years, outsourcing accounting functions has become increasingly popular as businesses realize the many benefits it can offer. In fact, in 2023, this continues to become even more important as companies look for innovative solutions to reduce overhead costs, improve processes, and remain competitive.

While the more commonly known benefits of the process have previously been explored, there are several unique advantages that deserve recognition. Let’s check out these distinct benefits and shed light on why these can be the banner year of all forward-thinking companies that swear by outsourcing.

Strategic Insights and Advisory Support

Beyond transactional tasks, outsourced accounting providers often bring valuable expertise and insights to the table. These providers possess a broad view of financial data and trends across multiple clients and industries. They may, among others, provide strategic insights, assessment, and analysis of a company’s competitive standing compared to its competitors. By leveraging expertise, businesses gain access to unique, strategic insights and specific advisory support, empowering them to make informed decisions, identify growth opportunities, and mitigate risks on demand.

Focus on Innovation and Technological Advancement

The increasing speed and complexity of technological advancement have changed the face of business operations across industries, with heavy reliance on faster solutions and better products. This has led to a significant shift in the way businesses approach their operations, and made innovation a major priority. To maintain or improve their organizational performance, companies must be able to keep up with a world that moves in rapid obsolescence, where the only constant is change.

Well, the solution lies in outsourcing – it is an effective way of staying competitive in the market by making the most of the latest developments in technology.

Outsourcing can also help businesses access a wide range of different technologies that they might not otherwise have ready access to. Imagine making use of A.I. to access deep, accurate, real-time data about clients or instantly extracting information from files of contracts, leases, and other documents without having to actually invest in this capability. Or having an entire accounting team onboard and train for RPA (Robotic Process Automation) to automate manual, repeatable tasks because most external providers have their experts who do these themselves?

By embracing outsourced accounting, businesses can stay ahead of the curve and drive innovation to heavily impact their financial operations.

Industry-Specific Expertise

This process enables businesses to access specialized knowledge and expertise tailored to their specific industry. Accounting providers often have professionals with deep understanding and experience in niche sectors, such as healthcare, manufacturing, or technology. This industry-specific expertise ensures compliance with unique regulatory requirements, facilitates accurate financial reporting, and helps businesses navigate complex financial challenges specific to their industry.

Scalable Solutions for Growth

In a dynamic business environment, scalability is crucial for organizations aiming to achieve sustainable growth. Outsourcing accounting functions provides businesses with the ability to seamlessly scale their financial operations as they expand. Whether it’s handling increased transaction volumes, expanding into new markets, or integrating acquisitions, outsourcing providers have the resources and expertise to support businesses during periods of growth and change.

Enhanced Partner Collaboration

Outsourcing accounting functions can foster stronger partnerships and collaboration within the business ecosystem. In the world of finance, the role of accounting providers transcends mere number crunching; they forge dynamic alliances with key stakeholders, including tax professionals, auditors, and financial institutions. By fostering this collaboration, accounting providers are able to offer solutions that elevate financial operations to a whole new level. This approach ensures seamless coordination and exchange of data. The result? Timely and invaluable insights that fuel informed decision-making, empowering businesses to stay ahead of the curve. These partnerships also strengthen relationships with external parties, facilitating more efficient financial transactions and reporting.

Time Efficiency

Accounting functions involve time-consuming tasks such as bookkeeping, reconciliations, payroll processing, and financial analysis. Leveraging providers for these functions frees up valuable time for business owners and internal staff, allowing them to focus on strategic decision-making and other operational priorities. Organizations can reduce administrative burdens by utilizing this expertise. The freed-up resources can be channeled towards value-added tasks that drive growth and competitive advantage, accelerate turnaround times, and improve overall productivity, ultimately enhancing overall organizational performance.

Risk Mitigation and Compliance

When assessing any potential risk relating to outsourcing accounting, it’s important to consider factors such as the security of the hosting environment and the team working in it. Just like any partnership sharing intellectual property and personal data – it’s a minimum requirement to assess the privacy policy of the outsourcing company. The company/provider should have clear guidelines in place regarding the handling of confidential data and how it will be treated in the event of a breach. As a standard, and for everyone’s peace of mind, ensure that the accounting firm is using secure encryption for all data transmissions and that data is backed up regularly to prevent any data losses. Any changes made to the accounting systems should also be monitored and reviewed on a regular basis.

Outsourcing accounting functions can significantly contribute to risk mitigation and compliance efforts. Accounting providers stay up to date with ever-changing regulations, ensuring that businesses remain compliant with accounting standards and legal requirements. These providers implement robust internal controls, rigorous data security measures, and regular audits, reducing the risk of financial discrepancies, fraud, and non-compliance.

Improved Accuracy

Accurate financial reporting is a minimum standard in business. Accounting errors can lead to penalties, reputation damage, and legal issues. Outsourcing to specialized firms with a proven record in accuracy and compliance reduces such risks. These firms excel in precise bookkeeping, timely tax filings, and adherence to financial regulations. Businesses gain confidence in the reliability and integrity of their financial records. For instance, a retail company improved efficiency and trustworthiness by partnering with an accounting firm. Similarly, a tech startup avoided cross-border tax pitfalls by outsourcing to an expert, fostering business growth. This enables businesses to maintain robust financial practices, safeguarding their success.

Conclusion

This year, outsourcing accounting functions continues to offer businesses alternative solutions for operational and strategic growth. This function is not just a trend; it has become an essential strategy for companies aiming to gain a competitive edge in today’s fast-paced business environment.

As the business landscape continues to evolve and face new challenges, outsourcing accounting functions, among other solutions, may be a key pillar in achieving long-term success. Embracing this strategic choice empowers businesses to thrive, adapt, and stay resilient in an ever-demanding world. With the right accounting partner by your side, you can confidently navigate the complexities of finance, ensuring a brighter and more prosperous future for years to come.

Benefits of Outsourcing Accounting Functions: FAQs

Is the outsourcing industry growing in the US?

Yes. Outsourcing is a growing industry in the US with an over 3.7% growth rate in 2023. It has continued growing annually since 2018.

What are some of the common reasons for outsourcing?

Companies outsource to look for innovative solutions to reduce overhead costs, improve processes, and remain competitive.

How does outsourcing enhance partner collaboration?

Outsourcing accounting functions can foster stronger partnerships and collaboration within the business ecosystem by forging dynamic alliances with key stakeholders, including tax professionals, auditors, and financial institutions. With this, accounting providers are able to offer solutions that elevate financial operations to a whole new level.

Are You Considering Outsourcing Accounting Services? IQ BackOffice Can Help.

Here at IQ BackOffice, we provide financial business process outsourcing for large and mid-sized enterprises. We serve a range of diverse industries, including manufacturing and distribution, healthcare and dental, restaurant and hospitality, energy, retail, and technology. Our solutions enable companies around the globe to automate and streamline the complex financial processes they manage.

IQ BackOffice reengineers financial processes to take advantage of best practices and leverage state-of-the-art automation. This allows us to remove manual or inefficient steps, delivering improved controls and up to 70% cost savings for our clients.

To find out more about how IQ BackOffice can reduce costs and streamline your Accounts Payable function, get in touch with us.