August 19, 2021
Selecting an accounting outsourcing partner for your business
Outsourcing of accounting function is one of the most crucial outsourcing exercises as all the glitches experienced or all the failures that take place affect all other functions. The exercise is taken up with the hope that value addition in business will take place at a much lower cost than in-house team hiring, training and retaining. However, this goal can be achieved only if one has found the right outsourcing partner after having taken the correct measures during the selection process. In case of erroneous or complacent choices made regarding outsourcing partner, businesses end up having a highly sour experience without clear understanding of what really went wrong. Hence to help businesses make smart choices as far as accounting outsourcing partner is concerned, following guidelines could be kept in mind:
The most important step to focus on is the process followed by the prospective partner for the accounting services the organization wants to outsource. Until and unless there is at least partial synergy in the processes followed at the organization and by the service provider, any further discussions are pointless because the organization wouldn’t want to go through complete changes as far as this factor is concerned. The staff of all other functions cannot undergo trainings for a completely new process as it will cause major loss of resources and time and nor can the service provider be expected to gain experience in a completely different process than what they have been following. The synergy in processes in turn will affect synergy in cultures of both the parties involved making the transition very smooth.
Once the service provider seems to fulfil the first major requirement, it is important to know what their models for delivery of the expected results are. This could cover various technical work questions eg. 1. Whether they are capable of producing accounts from incomplete records? 2. Which format do they prefer the client records to be in? 3. What kind of analysis can they provide and whether they are capable of performing complete reconciliation? etc.
Once the model of delivery is figured out, it is important to also agree as to how the service provider’s performance will be measured. Even though both parties are at consensus regarding processes and delivery models, if there is now way to measure whether increased efficiency is achieved, qualitatively as well as quantitatively, after the outsourcing exercise, organization would be unable to gauge whether expected benefits have been achieved. Also, if the same has been communicated prior to outsourcing, the service provider can agree of decline taking up work in case they don’t think they can perform accordingly, hence making this communication very important.
Software application expertise
One of the major reasons to outsource is to be able to achieve expertise in various technological aspects in minimal time, using expertise of the service provider. Hence, analyzing the provider for this aspect is imperative and unavoidable. All the prospective service providers should be analysed vis-a-vis each other for these skills and the outsourcing decision finalized only after then.
Finally, for all practical and business purposes between the two parties involved, it is necessary to discuss and find out the time availability and preferences at both ends. This might seem like a minor matter to be discussed later, but many an organizations have gone through rough patches in the transition due to such a slip. The expectations from client’s end should be communicated clearly regarding timings and service provider should be equallyclear on whether or not their team agrees. All the involved negotiations should be made and if possible documented in the agreement to avoid any kind of surprise dissatisfaction occurring due to unavailability of support to the most important function of the organization.