At the inception of every company, the founders and first employees take on every task themselves. Working from the ground up requires some multi-tasking, staying small, and thinking frugally. But as the company grows, some things will outgrow the capabilities of the current employees. This is not a negative, but rather a sign of positive expansion. Growing beyond your core competencies is a sign of success.
The challenge with thriving in this way is knowing when to let go of some internal functions in favor of outsourcing. Outsourcing any type of business operation can be risky, and many professionals fear the mishandling of their business or failure not caused directly by the main players. While trust is a precious commodity in business, the benefits of outsourcing generally overtake these apprehensions.
Hiring a third party to take on some of your responsibilities is cost effective if your time and energy is more effectively spent in other ways. It also helps to have an expert devoted to specific tasks to streamline your operations. An expert’s depth of knowledge is going to help achieve success faster and more accurately, even if you were managing well beforehand.
Regardless of how you feel about outsourcing, you may not know where to start. What financial operations should you send to outside firms to complete? This answer to this question should begin with an examination of what is important to you and your company.
Financial operations is one of the most commonly outsourced areas because it does not create a competitive advantage. Thinking about what is central to your company is where you should keep those departments internal. Things like product development, marketing, and customer service should be built within and remain in-house. It’s things like analytics, accounting, and legal services that companies should feel confident outsourcing.
A 2016 Deloitte survey found that many companies outsource financial and accounting services, with 36% planning to increase outsourcing of financial activities. Currently, most companies outsource transactional financial processes, such as accounts payable, collections, and payroll. But as technology improves or resources are focused elsewhere, organizations tend to outsource other pieces of financial operations. Deciding the steps your company will take is a matter of choosing what you can afford to move externally and what you should keep internal because of confidentiality, expertise, or an inside knowledge of the information.
Best Areas to Outsource
After determining the core values of your role, you can choose the areas to be outsourced. It’s easiest to begin broadly and then narrow in if necessary. These are the best places to begin:
- Accounting. The most logical place to start is accounting. With so many accounting professionals around the world, it’s relatively easy to find a firm compatible to your way of working and budget. This firm can manage tax preparation, accounts payable, accounts receivable, or payroll, and will often take care of all those and other small financial responsibilities.
- Audit. An audit keeps your records clean and your company reliable. It is possible to have an internal auditing team, but more than one third of companies outsource this job. Choosing an auditing firm for your business is an important task, but with the right considerations, you will find the right one. An honest audit brings transparency and clarity to your overall financial operations and can guide future plans.
- Analysis and forecasts. Recent trends have seen corporations outsourcing more valuable functions like financial analysis, budgeting, and forecasting. These higher-level tasks take more trust to outsource, but can benefit greatly. A third party might be more equipped with technology, manpower, and knowledge to make sense of your financials. This simplifies the whole process, closes books faster and gives companies more cash and information. This simplification can also help an organization meet regulations and compliance parameters more easily and effectively.
There is no definitive way to outsource your financial operations. Weighing whether to keep a project internal or send it out can be difficult, but the decision comes down to the value added your company. Consider whether you have the expertise to perform a function in house, or if an outside expert could streamline the operation. Remember, outsourcing is a good sign. The ability to expand your business beyond its original boundaries shows a lot of promise for future growth.