Okay, so the idea of outsourcing your finance department fully or partly has grown and taken shape.
TL;DROutsourcing finance operations can accelerate digitization for companies that want to focus resources on core business areas, but choosing the right partner matters enormously. Not all outsourcing vendors have a well-thought-out technology setup, so assessing their approach to automation and digital tools is just as important as the commercial relationship.
With this blog post, I’ll continue where I left a while ago and I’ll work a little bit more with the idea of the digital accountancy. This time, I’ll look into outsourcing of the finance operations. Outsourcing can in fact be a route to take, for businesses that focus on accelerating digitization of their administrative processes. However, it’s important that you choose the right outsourcing-partner, if you’re thinking outsourcing in interplay with technology, digitization and automation – because already now, I can reveal that not all vendors have a well-thought technology setup in place.
Most business leaders know about outsourcing in various contexts and they’re aware of what the concept means. Outsourcing means, as we all know, that a business lets an external vendor take care of a specific set of tasks. We’re talking tasks that otherwise would be taken care of internally in the business. Outsourcing is used by all types and sizes of businesses and when it comes to the finance function and their administrative tasks, more and more businesses are considering going for outsourcing.
The reasoning is that the business wants to focus resources on their core areas and a finance function can quickly become complex and demanding to run internally. When we look at the finance function, several subprocesses can be outsourced. Typically, we see that bookkeeping and payroll administration is outsourced.
The actual selection of an outsourcing-partner is to a large extent a matter of trust. It’s evident that a strong relation between the business and the outsourcing partner needs to be built. That said, I’ll also argue that there’s other important factors to take into account. For example, around the technology that a given vendor is using and how they are activating it in relation to the customer. I’ll get back to that later in this post.
Time and resource savings are the two obvious advantages related to outsourcing. As I’ve already mentioned, you can, as a business leader, focus your resources on growth if you’ll let an external partner take care of one or more administrative tasks.
Obviously, there are costs associated with running an outsourced setup, but the advantage is that it’s flexible when it comes to employee costs, absence and leave, resignations etc. All of this is the responsibility of the outsourcing partner. In addition, it’s also relatively easy to scale up and down in an outsourcing constellation, which is typically beneficial during a growth journey. This is obviously dependable on the capabilities and capacity of the outsourcing provider. Bottom line is, that in many cases, it can be cheaper to outsource a finance operation as opposed to running it internally.
Okay, so the idea of outsourcing your finance department fully or partly has grown and taken shape. If you haven’t already thought digitization and automation into the equation, then I’ll strongly recommend that you do that. As I’ve mentioned earlier, you need to have an opinion about this, when you choose to trust your finance operation with an external partner. Most outsourcing providers are using a range of digital tools to manage the task and yet another advantage with outsourcing is that you get access to the technology. However, it’s important that your vendor has chosen to pick the right solutions from the shelves.
Together, you and your outsourcing partner needs to secure that the digital accountancy is established. As an example, when we’re talking accounts payable, I’m not really a fan of the vendors that simply instruct their customers to unload receipts and other documentation without any form of structure. Obviously, it’s easy for you as a customer, but it creates piles and bulges at your outsourcing partners end and one consequence is that you’ll experience delays in reporting of your numbers. In other words, you won’t be able to steer your business based on up-to-date financial data. And I cannot recommend that.
No, the right way to do things is that your outsourcing-partner will put intuitive digital tools at your disposal. Tools that are easy to use by your “frontline” employees. Tools that, during the first instance of some sort of transaction, makes it simple to manage receipts, invoices, expenses, disbursements, approval, registration of time and absence etc. After this, your outsourcing-partner will take care of correct bookkeeping and accounting, expense settlement, reconciliation of company card transactions, VAT reporting, payroll administration, holiday records etc.
The point is, that a digital chain across your business and your outsourcing-partner – from transaction to bookkeeping – must be established. The big advantage with this, is that you’ll get access to far more precise and updated financial data for your business.
I have a few suggestions for vendors, that operates with a digital mindset:
In addition, I can also mention a few of our progressive Finnish friends:
So, to sum up, outsourcing of the finance department can save you time, money, and resources. It is, however, crucial that you team up with a partner who operate with a digital mindset and who puts solid digital tools at your disposal. Tools that can facilitate full digitization of the finance processes.
Frequently Asked Questions
What finance tasks are most commonly outsourced?
Bookkeeping and payroll administration are the most frequently outsourced finance tasks. Companies typically choose outsourcing because internal finance functions can become complex and resource-intensive, and freeing those resources lets the business concentrate on its core operations.
What should you look for when choosing a finance outsourcing partner?
Beyond trust and relationship quality, you should closely evaluate the vendor's technology setup. A key question is whether they use modern digital and automated tools, and how they activate those tools in practice for their customers. Not all vendors are equally equipped on the technology side.
Can outsourcing the finance function help a company digitize faster?
Yes, outsourcing can be a viable route to accelerating digitization, particularly for organizations that lack internal capacity to drive the transformation themselves. However, this only works if the outsourcing partner is genuinely digitally mature and uses automation as a core part of their service delivery.
What are the main advantages of outsourcing finance operations?
The two most cited advantages are time savings and resource savings. By handing off repetitive administrative tasks to an external partner, the internal team can focus on higher-value activities. Outsourcing can also bring access to specialized expertise and technology that would be expensive to build in-house.
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