5 Critical Challenges of Outsourced Finance and Accounting Tasks + Actionable Solutions
Are inefficiencies in your outsourced finance and accounting functions affecting your business’s performance?
You’re not alone.
Deloitte’s recent survey reveals that 32% of organizations said the quality of services from finance and accounting outsourcing companies did not meet their expectations. The result? Additional oversight and corrections!
As operations become increasingly complex, many companies need help managing tasks effectively. That’s why the demand for specialized finance and accounting experts is rising.
In this blog, we’ll share strategies to enhance efficiency and profitability in outsourcing (or offshoring) your financial operations.
But first:
What is Finance and Accounting Outsourcing?
Finance and accounting outsourcing involves delegating functions to external companies. Those tasks include:
- Bookkeeping
- Payroll processing
- Auditing
- Tax services
And more.
This approach allows businesses to focus on core activities while ensuring experts handle their financial operations. It also comes with significant cost savings compared to an in-house team.
As more companies seek efficiency, the reliance on finance and accounting outsourcing companies grows. But what’s the key driver of this trend?
According to SNS Insider Research, the finance and accounting BPO market is projected to hit over $134 billion by 2032. This surge shows the expanding role of outsourcing in a global economy. Efficiently managing financial complexities is essential for business sustainability and growth.
However, despite its advantages, finance and accounting outsourcing also comes with drawbacks. From communication barriers to security risks, businesses must navigate several obstacles to reap the full benefits of these services.
5 Major Challenges You Might Face with Outsourced Finance and Accounting Tasks
While outsourcing finance and accounting tasks can streamline your operations and reduce costs, it's not always smooth sailing. Here are five common challenges that businesses often encounter when working with finance and outsourcing companies:
Quality and Accuracy
Did you know that financial restatements can damage up to 35% of your business worth?
Accuracy is non-negotiable in this field. Unfortunately, outsourcing can sometimes lead to costly errors if not managed properly. Inconsistencies in financial reporting can significantly impact a company's credibility and compliance status.
Consequently, you’ll experience multiple financial corrections and a loss of investor confidence.
Security Risks
About 20 major data breaches have already impacted companies in 2024. That’s why stringent security measures are necessary, especially when it comes to outsourcing!
With increasing data security and privacy regulations, outsourcing financial services heightens the risk of cyber attacks. Non-compliance with finance and accounting outsourcing companies' laws like GDPR or HIPAA can raise critical issues.
Culture Fit
It can be tough to navigate the waters of cross-border differences. Language barriers and time zone discrepancies can be tricky when outsourcing finance tasks.
Miscommunications might lead to misunderstandings or delays in critical financial activities. For instance, a time zone mismatch could delay urgent financial responses needed for real-time decision-making. This could directly affect your company’s operational efficiency.
Control Over Financial Processes
Maintaining oversight in financial processes is a common concern among businesses outsourcing their accounting tasks. Losing grip on day-to-day financial operations can lead to inefficiencies and a disconnect in strategic financial planning.
Hidden Fees
Did you know that 21% of companies experience unexpected expenses from outsourcing contract management and team integration?
Hidden costs are a common pitfall with finance and accounting outsourcing companies. These might include:
- Transaction fees
- Communication costs
- Additional charges for services not initially specified in contracts
Transparent pricing and detailed contracts can prevent such surprises and ensure budget adherence.
These challenges can undermine the advantages of outsourcing your financial tasks. Being aware and proactive can turn these potential obstacles into opportunities for enhanced efficiency.
Practical Strategies to Overcome Finance and Accounting Outsourcing Hurdles
From strengthening security to ensuring operational control, here’s how you can tackle these challenges head-on:
Boosting Communication
Set up structured check-ins using Zoom or Slack to ensure alignment. Establish a clear protocol for emergency communications to avoid any delays in decision-making. Shared documents can also provide real-time updates and feedback.
These steps will help prevent misunderstandings and keep projects on track!
Conducting Checks and Balances
Try implementing a dual verification system. In this setup, outsourced tasks are reviewed by both the outsourcing company and an internal auditor.
Schedule regular audits to ensure compliance with accounting standards. You can also use automated tools to track discrepancies in real-time. These measures will uphold the integrity of your financial data.
Strengthening Compliance and Security
Enhance your data security protocols immediately. Require finance and accounting outsourcing companies to comply with international standards.
You can also implement these practices:
- Conduct regular security training sessions for your team and the outsourced staff
- Employ advanced encryption for data transmission
- Regularly update and patch all systems involved in financial operations
These steps will help reduce vulnerability to cyber-attacks.
Ensuring Operational Control
Use cloud-based accounting software and other remote tools for greater transparency and control over financial transactions. Set clear guidelines and access controls to handle sensitive financial information properly.
You can also monitor the performance of outsourced tasks through dashboards that provide insights into key financial metrics. Regular reviews of the outsourcing arrangement can help adjust processes for better efficiency!
Clarifying Costs
Avoid hidden fees with clear contracts. Before signing any agreement, insist on a detailed breakdown of all costs and services the outsourcing firm provides.
Here’s another tip: regularly compare costs against deliverables to ensure you get value for money. Negotiate terms that allow for adjustments or termination of the contract if costs become prohibitive.
Consider partnering with a provider like MultiplyMii, which offers success-based pricing. This model aligns your costs directly with achieved results, with no hassles or hidden fees.
Implementing these straightforward, actionable strategies leads to smoother operations and better financial health for your business!
MultiplyMii’s Solution: Boost Your Operational Efficiency with Remote Finance and Accounting Experts
In a world where finance and accounting complexities are ever-increasing, MultiplyMii offers a strategic advantage: providing offshoring solutions, not just outsourcing.
This subtle but significant difference enhances your efficiency by integrating top-tier talent directly into your teams.
Offshoring Over Outsourcing
We integrate remote professionals into your operations rather than merely outsourcing tasks. This approach ensures our remote team members are an extension of your in-house team. It leads to better alignment and collaboration!
Watch our Outsourcing vs. Offshoring video to better understand how each model can impact your business processes.
Access to Specialized Talent
Unlike most finance and accounting outsourcing companies, MultiplyMii connects you with highly skilled Filipino talent. These professionals are not only college-educated but also bring extensive experience in specialized roles.
Whether you need a Tax Accountant, Internal Auditor, or Financial Analyst, we have the experts to meet specific business needs.
These professionals are adept at navigating the complexities of finance and accounting. They handle your financial operations with the utmost precision and care.
English Fluency and Cultural Fit
Communication is key in finance and accounting, and our English-fluent professionals excel in this aspect. In fact, the Philippines ranks 20th among 113 countries in the latest English Proficiency Index.
Not only are they proficient in the language, but they’re also culturally adaptable. This combination ensures seamless integration with your existing teams!
Performance Management and Upskilling
Our commitment to performance management and continuous upskilling sets MultiplyMii apart.
Take the example of Model Citizn, a leader in financial modeling. They needed to bridge a critical gap during scaling efforts in COVID-19. We placed a remote Executive Assistant who transformed their operational efficiency.
Our structured check-ins and upskilling sessions have significantly enhanced team dynamics and reduced turnover by 14.9%.
You can read more about Model Citizn’s case study here.
When you choose offshoring, you’re not just filling gaps in your finance and accounting teams. You are:
- Enhancing your overall operational efficiency
- Adapting to challenges dynamically
- Unlocking significant cost savings without compromising quality
Ultimately, it sets your business up for sustainable growth!
Hire Dedicated Offshore Finance and Accounting Experts with MultiplyMii
As a global leader among finance and accounting outsourcing companies, we ensure the efficient integration of specialized Filipino talent into your teams.
We have a decade of experience placing remote roles across borders and ensuring top-notch performance. Our talent pool of remote finance and accounting experts:
- Enhance communication
- Increase operational control
- Provide specialized expertise
All while significantly cutting costs!
Ready to see how we can transform your financial operations? Book a free consultation with us today and start building your team of elite remote professionals.
