Accounting outsourcing means to hire a specialist company to handle your full accounting department needs including day-to-day transactions,payroll management, keeping track and record of accounts receivables payables, financial reporting, and so on. Many outsourcing companies provide complete set of services including quick transaction processing, vendor bills payments, sales invoicing, budgeting, forecasting, and tracking and updating key performance indicators of your business. When you are considering hiring an outsourcing company, there might some challenges before and while you are entering a contract. Here are some of the most common problems you might face and guidance on how to avoid them.
Consider the language and culture barrier between you and your potential outsourcing partner. It might appear cost-effective for you to take on board an overseas firm with different time zone and different – much cheaper – currency. However, remember that they might have different legal and regulatory requirements as well. They might be sincere when they promise to do your project as per your country’s laws but might not have the required skills. Incorrect accounting statements can lead to fines and penalties that can damage your market image.
The brand strength of the company you are considering to hire is also important. You need to be aware of their performance history and reputation before you decide to take them on board. If you are an environment friendly business with your chief marketing campaign tailored around you being ‘green’, it will be of use to you to know that your choice of brand is known for its biggest client in the petroleum refinery industry.
Common Accounting Outsourcing Challenges
The next challenges are at the time of the contract. The post-contract processes and the authority of decision making need to be clearly decided between both partners, to avoid any management or operational clash later. This is by far the most common, and most damaging, problem without sourcing. Your team’s skill level in handling a vendor should be at par with your preferred choice of outsourcing company to avoid misunderstandings, power clashes, and outright suspension of services later.
Another, point of concern related to this is the potential of the management change in both your company and that of your outsourced partners. The relationship building should be between businesses and not individuals to avoid a complete overhaul of the processes in case the management of either of the company changes.
One final problem is with regards to the key resources you are taking on board by outsourcing to a specific company. You need to be straightforward about the employee turnover and contract tenure for their employees. Accounting processes are complex, and require as much knowledge of the law and industry, as of the historical accounting performance of a particular business. Frequent changing of the professional handling your accounting business operations will not work in your favor so get this challenge out of the way at the time of the contract as well.
The good part in all of this is that all these problems can be avoided with through research into your business requirements and then clear communication of those targets with the respective outsourcing company in concern.