The Pros and Cons of Outsourced Finance & Accounting Services

In the intense stages of rapid growth at startups and small to mid-size businesses, there is always a moment when pivotal accounting questions come up. Should we start building a full-fledged finance & accounting department to support our growth? Can and should our bookkeeper continue to handle our back office? Could outsourcing our finance & accounting services give us the time and space we need to focus on the opportunities at hand?

For overwhelmed business leaders and staff, that third option, outsourcing to a competent finance and accounting services partner, is a highly attractive one. Building an in-house team takes time and a lot of investment. Relying on a trusted bookkeeper may feel secure but can increase risk and slow down service as accounting requirements grow in size and complexity. Is outsourcing the perfect answer?

Nothing in business is perfect, but there are reasons most businesses large or small outsource some elements of their operations, from IT services to recruiting to finance and accounting. Outsourcing can reduce costs, increase efficiency, and expand resources with little to no internal disruption. That said, outsourcing finance & accounting services, or any business operation, is a big decision, which is why it’s important to consider the pros and cons.

The PROs of Outsourced Finance and Accounting

With the market value of business process outsourcing predicted to grow to $620 billion over the next 10 years, it’s clear that outsourcing offers plenty of advantages that companies worldwide are harnessing. Here are 10 of them.

  1. Efficiency. By leveraging the proven tools and systems of an expert finance and accounting services provider, a business gains a powerful efficiency advantage. Those tried and true processes become an immediate advantage to the business as opposed to a long-term investment for businesses building their own accounting teams.  Deloitte’s 2021 Global Shared Services report validated the importance of efficiency gains in outsourcing. The report found that process efficiency and standardization overtook cost reduction as the primary objective for choosing to outsource.
  2. Accuracy and accountability. Outsourcing contracts and KPIs are powerful tools for ensuring work quality and accuracy. With service standards like data integrity and compliance built into contracts and reinforced by KPIs, outsourcing providers succeed or fail based on their ability to meet the requirements of the contracts. 
  3. Cost reductions. One of the main reasons businesses choose to outsource is to better control costs.By outsourcing finance and accounting services, a business eliminates fixed employment costs as well as recruiting, hiring, training, and benefits expenses for these functions. According to the Deloitte Share Services report, 88% of businesses see cost reductions from their outsourcing solutions.
  4. Scalability. An outsourced finance and accounting function gives a business the flexibility to scale up or down with ease. Rather than hiring full-time staff to support surges in business demand or laying off staff should operations need to downsize, outsourcing cushions the ups and downs of fast-moving business growth and change.
  5. Time saved. For fast growing businesses and resource-strapped startups, time is a precious commodity that outsourcing services can replenish. One of the most rewarding aspects an outsourced accounting solution for a business is gaining an immediate surge as company leaders and staff are relieved of finance and accounting duties.
  6. Expanded knowledge. By outsourcing finance and accounting services, a business gains access to a bench of world-class experts with specialized accounting knowledge and veteran talent who have seen it all. That consistent access to deep knowledge and experience can support an organization through tough transformations or challenges. It’s a mega boost to accounting competence and confidence as this insight from a Sayva outsourcing client demonstrates:  “The accounting support and financial insights Sayva has provided to our business over the past few years are exactly what we were looking for to help forecast and accomplish our goals and objectives. They work diligently to thoroughly understand the way our business operates to help us make informed decisions both proactively and reactively.” – Justin Buckley, Partner, ATTN Agency.
  7. Data-driven tech and analytical insight. Business advantages today are won with the ability to make real-time, data-driven strategic business decisions. The mark of an exceptional finance and accounting services outsourcing partner is a reporting package that delivers operational transparency and powerful analytical insights to support business strategy and decision making.
  8. Compliance support. Keeping pace with regulatory change is not easy for any business, especially in times of rapid growth and/or transformation. An outsourced finance and accounting partner specializes in ensuring the integrity and accuracy of financial transactions and data, and that means ensuring they are up-to-speed with compliance at all times.
  9. Reduced workforce pressure. Outsourcing accounting services lightens recruiting and hiring workloads, which have been heavy for talent acquisition teams in recent years. The unprecedented talent crunch has made recruiting time consuming, costly, and often frustrating as good candidates are quickly gone and mediocre candidates have unrealistic expectations. Leveraging the proven resources of an outsourcing team relieves that strain while also reducing the added costs and risk that can come in a job market that favors job seekers, such as high turnover, ghosting, and swollen recruiting budgets.
  10. Speed. Because outsourcing teams are committed to KPIs and service level agreements, the speed a business wants and expects (and establishes in a contract) will be met. That’s hard to get from busy internal teams with multiple areas of focus or personal relationships that might be used to win more time to meet deadlines. 

The CONs of Outsourced Accounting

Despite the many advantages, there are factors that might deter a business from outsourcing accounting services, such as:

  1. Less control and accessibility. Outsourcing takes a team one degree further from its finance and accounting processes and teams. This distance can be challenging if there is not an outstanding relationship and engagement effort with the outsourcing partner.
  2. Hidden costs. If an outsourcing contract is not well crafted and managed, there can be hidden costs or scope creep that create spending instability. Choosing the right partner and carefully building the terms of the contract together is key to avoiding unexpected costs.
  3. Elevated Risk. Inherent risk is a part of any partnership. With an outsourced accounting partner, risk increases because you are sharing assets with an outside partner: financial data, intellectual property, etc. The risks of security breaches and data loss increase.
  4. Time discordance. In some cases, internal and external teams can struggle to find a working rhythm. If an outsourcing accounting services provider will not live up to your deadlines and timeline expectations, it will affect business operations and, potentially, the morale of teams that rely on the partner’s timely output.

With both advantages and cautions to consider, outsourced accounting services are worth thoughtful consideration. To dive deeper into the possibilities, connect with Sayva. Every day we help businesses find the right workforce and back-office solutions for several areas of their business operations including finance and accounting, technology, and human resources.

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