Outsourcing accounting and bookkeeping is a growing trend among companies looking to reduce costs and improve efficiency. However, many businesses have concerns and hesitate to take the leap due to common myths and misconceptions about outsourcing this critical business function. Let’s debunk some of these myths and see how you can ensure a successful accounting outsourcing partnership.
Security and Data Privacy Concerns
One of the biggest myths is that outsourcing accounting makes your financial data vulnerable. Many worry that an overseas provider may mishandle sensitive information or expose it to cyber threats. However, reputable outsourcing providers invest heavily in data security and operate under strict regulations on data handling. Encryption, rigorous access controls and data backups help mitigate risks. Check their security protocols and onboarding process before choosing a provider.
Loss of Control Over Finances
Businesses worry they’ll lose visibility and control over their finances if accounting is handled externally. However, the right provider will ensure transparency, real-time reporting, and full access to your financial data. Define KPIs, reporting needs and quality control processes at the outset to prevent lapses. Partial outsourcing of non-critical tasks can help retain control while benefiting from outsourcing.
Communication and Coordination Issues
Many fear that offshoring accounting to a remote team can cause miscommunication and process breakdowns. While differences in time zones, culture and language can be bridged with the right coordination. Look for providers with excellent English proficiency and experience serving overseas clients. Implement tools like shared online dashboards for real-time visibility. Frequent calls and visits can align teams better.
Finding the Right Outsourcing Provider
Choosing the wrong provider with inexperienced staff and weak security can spell disaster. Do thorough due diligence – verify capabilities, client references, security measures and service quality before signing a contract. Clearly define service expectations and have an exit strategy in case things go wrong. Start small by outsourcing peripheral tasks before outsourcing core accounting functions.
Success Stories: Overcoming Key Challenges
Aegon:
a multinational insurance company, outsourced accounting and reporting activities to Indian firm Mphasis. This helped Aegon benefit from significant cost savings while also tightening financial governance, improving security and enhancing report quality.
PepsiCo:
worked to overcome communication and coordination issues as they built a 500-member shared services accounting team in India. Through cultural training and implementing robust feedback loops, they created a high-functioning global team.
Though outsourcing accounting takes effort to perfect, the benefits clearly outweigh the myths. Follow best practices and keep communicating to form a successful partnership. In summary, most fears about outsourced accounting stem from misconceptions that can be mitigated through careful provider selection, governance, oversight and relationship management. This forms the basis of a mutually successful accounting outsourcing partnership.
