Accounting Outsourcing can save you money – and possibly your job!
Accounting outsourcing is a fast growing trend. Maybe your company is currently considering outsourcing accounting or looking at it as part of a strategic plan. You’d like to be part of that decision, but it’s a big leap. To help you avoid making expensive mistakes, we took some time to talk with Ken Johnson, Senior VP of Development at IQ BackOffice, a leader in the Accounting Outsourcing field. Here are his thoughts on the top 5 mistakes he sees accounting departments make when hiring an accounting outsourcing firm:
#5: Making an Accounting Outsourcing Decision Based on Price
Make sure you know exactly what you are getting for your investment. A low price may indicate that you are getting poor technology solutions, an incomplete accounting outsourcing solution or one where your support will be handled by a pool of untrained resources.
For example, some companies may sell you a simple software package with basic reporting and Optical Character Recognition (OCR) technology that captures data off of invoice images but leave you and your staff stuck dealing with all the data exceptions. Automation without re-engineering inefficient processes simply speeds up a bad process and may require more work to integrate new software with your financial system.
Other companies may sell you services performed by junior resources where you end up managing their staff. These options often end up being the most expensive and least satisfactory in the long term.
The capabilities of outsourcers vary wildly. If you go this route, make sure that the firm you hire has SSAE16 certified best practice processes, is using best in class technology, and has well-trained resources that will be dedicated to your account. IQ BackOffice provides a proprietary cloud-based Enterprise Process Management workflow solution called Archimedes, which sits on top of any client ERP. For IQ’s Full Service Accounting clients, IQ recommends Intacct’s innovative and award-winning accounting suite which is the AICPA preferred financial application.
#4: Not Understanding the Accounting Services You’ll Need
If you don’t properly define the scope of what you need you will end up with partial solutions that take time to integrate and complete. Make sure that you have outsourced a complete process.
For example, for accounts payable management, you may feel that you just need invoice scanning and data entry with software for routing. But it pays to think through how your team’s time is spent throughout the entire process.
Most businesses find that the biggest benefits come from a complete outsourced accounts payable management solution that includes automated routing for approval, vendor setup, exception management, and vendor support as well as vendor payments.
A complete accounts receivable management solution would include customer billing, cash application and cash application exceptions (such as dispute management and credit card expirations), and customer late payment reminders.
An integrated end-to-end accounting process should be customized to your needs based on your business rules for a successful accounting outsourcing solution.
#3: Hiring an Offshore Firm that Does “Lift & Shift”
It is worth the time and money to work with an accounting outsourcing firm that will re-engineer your accounting processes before they are outsourced. Firms that simply move bad accounting processes to offshore locations with lower labor costs are doing what’s known in the industry as a “lift and shift,” which simply means transferring your process inefficiencies overseas. The savings you expect to see from using cheaper labor will vanish when your staff has to review and try to manage the work that is sent from afar.
Re-engineering the processes will ensure that best practices are used, that the accounting is SSAE 16 compliant, and procedures are based on industry best practices and customized business rules (which helps assure the process follows your policies consistently).
#2: Hiring a Firm Without Experience in Accounting Outsourcing
This happens more often than CFOs like to admit. Just because a firm is offshore and offers cheaper labor costs doesn’t mean they will have the expertise to do your accounting processes effectively. Some firms that successfully offer offshore technology support or offshore call center resources have now tried to position themselves as accounting outsourcing firms even though they really are not experts in accounting.
Similarly, hiring a local CPA firm as an accounting outsourcing firm may gain you well-trained accountants, but their services will only result in savings of time or money if they have deep expertise in outsourcing, which involves management of efficient end-to-end financial processes. Many CPA firms focus on audits or write-up, tax or financial advisory services. A CPA firm needs to have expertise in managing the efficient and timely processing of large volumes of accounting transactions.
#1: Not Doing your Homework
Once you are clear on what you want to accomplish, research which accounting outsourcing firm has the expertise and complete solution to meet your goals. You could start by researching outsourcing industry analysts, such as the Everest Group, or by looking at Business Process Outsourcing experts working with premier cloud-based accounting software, such as Intacct. But if you are looking for a complete solution, the best option is to look for a firm with an established, successful track record of outsourcing accounting transactions effectively, such as IQ BackOffice.
IQ BackOffice, based in El Segundo, California, is a global leader in business process outsourcing, delivering customized solutions for its clients, which range from boutique to multibillion-dollar firms. By re-engineering existing processes, such as accounts payable, accounts receivable, and payroll, IQ BackOffice can offer 99.97% quality while reducing costs 40-50% and shortening the close on financials to three days. Using a combination of Intacct and Archimedes, a proprietary cloud-based software, IQ BackOffice can deliver real-time reporting from any web-enabled device, resulting in better decision-making and stronger financial controls.
Interested in learning more about how IQ BackOffice is crafting innovative solutions to meet complex accounting environments and cost pressures across a broad spectrum of industries (such as restaurant and hospitality, real estate and property management, manufacturing and distribution, telecommunications, utilities, energy, financial services, and professional services)?
This content was originally posted here.