For companies in the business services industry, focusing on the needs of your clients is a top priority, and any opportunity that allows you to maximize time spent with clients should be considered. As a result, many business services companies are considering finance and accounting outsourcing (FAO), which allows a company to focus on its core strategic objectives (such as growth, client delivery and customer satisfaction). Additionally, FAO gives you access to a wide array of tools and subject matter expertise that you might not otherwise have at your disposal.
Benefits of FAO
- Improved technology – When business services companies outsource their finance and accounting functions, they benefit from technological improvements. Technology can be leveraged to streamline processes, improve management of complicated tasks, drive down costs, and enhance reporting and analytics to inform decision-making.
- More flexibility – Outsourcing is flexible, in that the arrangement can cover a certain function or replace an entire department. By choosing a partner that can scale and grow as the company evolves, outsourcing can take the stress out of the back-office responsibilities and allow a company to focus on business demands and client needs.
- Expanded knowledge – Companies and customers rely on business services organizations to help them succeed. In a similar way, a business services company can benefit from the right partner who understands the nuances of the business services industry. The needs of a business services company are very different from the issues faced by, for example, a nonprofit or an educational institution. Outsourcing, in effect expanding your team, increases the collective knowledge and expertise you rely on to operate your business, upskill your current talent and make important business decisions.
FAO covers a wide range of services. These include the following:
- Transaction processing: Uses technology-enabled processes that simplify back-office operations.
- Financial reporting: Provides valuable insights through real-time reporting.
- Month-end closing: Closes financial periods on a timely basis using a process that ensures balance sheet accounts are reconciled, required month-end entries are posted and all other back-office tasks are completed accurately.
- Financial planning and analysis: Includes budgeting and forecasting, as well as oversight over internal controls.
A business services company can rely on its partner to handle everything from data entry to controller-level oversight and review. Business services organizations should also consider hosting services to take full advantage of cloud technology. Furthermore, a good partner can provide access to key information to help companies manage their business. In all cases, the services are tailored to meet the company’s unique needs.
How it looks in the real world
A business services organization, XYZ Company, outsources its accounting functions to enhance its efficiency by leveraging a variety of FAO services.
The outsourcing partner soon discovers that XYZ has an antiquated system that records revenue only when it hits the company’s bank account. As such, the company is not making financial decisions in real time. On the contrary, XYZ is managing its finances based upon the previous month, or in some cases, upon the previous quarter. This approach does not allow the company’s management team to make appropriate business decisions, update strategies or correct their course.
Upon implementing FAO, revenue is now recorded at the point of sale, the month-end reconciliation process is automated via Blackline and payables are processed timely. This gives XYZ greater visibility into its financial situation and offers real-time reporting. In addition, the company’s accounting system and processes are significantly enhanced by leveraging the latest technology tools such as Bill.com (a cloud-based paperless bill payment tool) and modern expense reimbursement platforms.
Additionally, as a result of implementing FAO, the company is able to upgrade inefficient processes. For example, it no longer has to print cheques for certain functions or manually transfer funds. Possibly one of the most important aspects of adopting FAO is that XYZ receives timely and accurate business results, which in turn helps the management team make appropriate strategic decisions in real time.
The transformed organization
Although XYZ Company is a blend of real-world organizations—used here for illustrative purposes—its issues and solutions are common for business services companies. For many companies that want to improve their financial environment, FAO can be the difference between stagnation and innovation. A well-executed FAO system can provide the following benefits:
- Access to accounting and financial professionals who can provide guidance on best practices (including technical accounting issues)
- Improved technology platform
- Faster turnaround on crucial data
- Better visibility into revenue, expenses and other financial aspects
- Elimination of tedious or repetitive tasks
- Improved morale among internal staff
Ultimately, FAO can help business services companies manage their own business in a more efficient way, paving the way for future success.