Basics of Financial Service Outsourcing – a Guide for Small Business

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Basics of Financial Service Outsourcing - a Guide for Small Business

Financial and accounting functions are one of those business processes that firms are looking to outsource. A study says 71% of financial service executives outsource the entire department or some of their services.

Whether it’s saving their time and money or leveraging the expertise of professionals, outsourcing firms represent great things for a lot of small businesses around the world that want to grow their operations and make the best of out of opportunities available to them.

Accounting and finance often confuse people, and keeping with the industry and legal rules and regulations seem like a complicated task. However, managing a business involves a lot of these complexities. Hence, in the long-run, it only makes sense to get this side of your business in the hands of specialists.

What is Financial Service Outsourcing?

Due to the highly technical and time-consuming and monetary nature of the job, many small businesses prefer outsourcing to account and finance companies. With the limited budget, lack of experts, and the importance of financial services in the growth and survival of the business, companies choose to work with outsourcing firms for all the value they add to their operations.

A typical outsourcing financial services will include comprehensive bookkeeping solutions, accounting services, CFO Services, tax services, payroll services, and other financial management services.

There are many more reasons and limitations of small businesses, which makes financial service outsourcing a more effective and efficient option.

Benefits of Hiring Financial Service Outsourcing Firm

Increase Your Access To The Latest Technology

The increasing advancement in technology has also made revolutionary changes in how companies record and organize business transactions, and manage their finances. However, many businesses that handle their own accounting and finances find it difficult to upgrade with the latest technologies and industry innovations. It can be costly to buy new products, update software, and train employees.

Working with outsourcing finance and accounting firms is like collaborating with industry experts whose job is to stay competitive with industry changes. This means that your outsourced firm helps you use the latest technologies and high-end software through them without having to pay the additional cost. This enables you to get at the top of your game, without the premium charges.

A vast majority of companies use software like QuickBooks to record and manage books. The right firm will not only help you set an account, but they will also guide your team on how to use the platform.

Access to Accounting And Financial Specialists

It is relatively easier for companies to find resources for business bookkeeping services than to hire financial experts who can analyze and forecast financial data to enable companies to make essential business decisions. Outsourcing firms have a big team of experienced accounting and finance professionals who work with your in-house resources to guide them.

Besides, hiring an in-house CFO often seem unnecessary expense for small businesses, but the insights and knowledge of the source is the basis for expansion and growth. Hence, one of the most significant parts of outsourcing financial services is access to CFO services. Outsourcing CFO enables you to hire the experts on per hour or project basis. They help you analyze financial reports, identify business opportunities, and make more-informed decisions that improve business competitiveness.

Avail Complete Flexibility And Scalability

Most small business owners plan to grow their operations. However, business growth is more than just more sales, higher revenues, and an increase in profit. The key is to scale up efficiently and cost-effectively.

Lack of expert resources to lead the growth and strategic vision becomes a significant disadvantage for the business. But there is a solution to this limitation.

When partner with an outsourcing financial and accounting company, they provide your business solution that is tailored to your business model and requirements. The outsourcing firm can scale up and down their comprehensive accounting and financial services to cater to your changing business needs.

Stay Up-To-Date With Best Industry Practices and Latest Policies

The finance and accounting industry isn’t like advertising. Where it’s all about following stringent industry rules and regulations by authorities, and there is no room for creativity and personal interpretation. In case businesses lack in following the rules, they face stiff penalties and legal repercussions.

Working with an outsourcing company gives you a peace of mind because you know the specialized team will always guide you to keep up with the most recent financial policies, accounting rules and comply with industry rules and trends. This means businesses don’t have to spend hours researching and keeping up with changes in tax laws or the tweaks in IRS. Part of the job of an outsourcing firm is to stay up to date with industry news and happenings and enable you to comply.

Create Awareness of New Business Opportunities

As a small business with several competitors, you need the help of an unbiased expert who will be able to see the strengths and weaknesses in terms of productivity and operations and be able to provide defined and informed actionable tasks to achieve the desired goals. With increasing competition, small businesses can use the help of specialists who understand the management of finances and have experience in leading business growth.

Reduce Overall Stress Levels

If you have been running your business for long enough, you would have realized by now that you cannot do everything. This realization hits every entrepreneur and small business owner, but the journey to this point can include a lot of stress and anxiety.

Managing finances is a big part of running a business, and if you are not technically trained, it can be a challenging job to do and may even raise a question on your business survival. More than anything, outsourcing firms take finance and accounting responsibilities for your business, and they give you pecan of mind by knowing that some of the industry’s experts are working for you.

Improve Your Compliance of Tax Laws and Regulations

Tax season is a big problem for small business owners, particularly ones’ who lack technical knowledge. Most of them hire tax experts for planning and guiding them through the tax season. However, the authorities make changes and tweaks in tax comply laws and regulations that affect businesses in different ways.

Your outsourcing firm keeping with tax laws and regulation because their job require them to and this is their world they like learning about updates. Hence, you need tax services to keep up with trends and avoid getting stuck with penalties.

Availability of Team 24*7

Outsourcing firms deliver the availability of experts around the clock ready to help your busy, in case of any emergency or regular operations. This is one of the aspects of the outsourcing industry that businesses can only imitate if they are ready to make huge investments. This gives your business confidence that their concerns will be answered, and tasks will get done within the schedule.

It Saves Your Time and Money

We have already mentioned that hiring financial experts can be very expensive. But they are also crucial for the growth of small businesses. This again brings us to why outsourcing financial services are the only smart option for some companies out there.

Companies can avoid additional expenses like employees’ benefits, medical, salaries, and overhead costs of running an in-house department or team. Outsourcing firms help save time as their services are scalable—businesses only for hours and exactly services or tasks they need from the professionals.

Besides, managing business finances is a tough job. Depending on the size of their business, a trained team is required to do the job. Outsourcing firms can help companies to avoid financial mistakes that may end up, causing them huge profits or even their business.

How to Select The Right Financial Service Outsourcing Partner?

According to Clutch, finance, and accounting solutions are the most commonly outsourced services by small businesses, followed by IT services. There are several reasons for this, many of which we have covered above. However, the role of finances within each aspect of business and profitability being one of the primary business objectives, it is imperative to find a reliable and competent finance service outsourcing firm.

It all starts when you realize the need for outsourcing the services. Make sure to look for a company that can meet every requirement of your business, understand your industry, has to experience in similar work, and above all, you can trust them.

Another factor to keep in mind is to ensure the firm will be able to increase the workload as your business grows, as changing outsourcing firms is a lot of unnecessary work.

Moreover, it is a good idea to find a firm that overs comprehensive accounting and financial services, including:

  • Bookkeeping
  • Payroll processing
  • Tax planning, preparation, and filing
  • Financial statement preparation
  • CFO services

To be able to make a more informed decision, try to reach out and contact the firm’s previous and current clients. It will help you decide if a particular firm is the right outsourcing partner for your business or not.

Wrapping up

It is either very difficult or, at times, not possible for small businesses to hire every expert they need as an in-house resource. When it comes to financial services, it’s a more efficient and cost-effective option to hire and outsourcing firms. They don’t just come with a unique perspective, but they allow businesses to customize their business partnership purely based on their needs.

Author Bio

Umair Javed is a highly renowned professional in the field of outsourcing solutions for the accounting and financial sectors. He has over a decade of industry experience and he is now bringing it to use by offering his insights on the latest in this field for the benefit of the industry.