Prioritizing Finance and Accounting for Better Outcomes
Massive transformations have been the order of the day in the Finance and Accounting (F&A) domain. The dynamics of the marketplace have been altered, such that, there are opportunities galore for all the main players in this arena — Providers and Enterprises. Given the phenomenal manner in which it is impacting the scope of operations, the F&A outsourcing sphere is increasingly viewed as being more than a mere method to reduce costs and risks reduction.
What then are some of the regular outsourced services within accounting? Over the past few years, there has been a steady increase in accounts payable, accounts receivable and of course, payroll accounting. At the same time, we have studies that indicate clearly that companies are almost on a mission to move up the value chain insofar as the various kinds of F&A functions that they now outsource.
Today, a vast chunk of enterprises are outsourcing the all-important internal auditing function. These shifts are offshoots of their desire to transcend from fundamental transactional processes — for example, accounts payable to even greater and centered functions such as forecasts, budgets and internal audits.
The Path Forward
There are two indicators that point to competent and efficiently-managed organizations that handle F&A processes — one, is their ability to simplify, and two, the capability to standardize. These crucial implementations provide benefits that are varied. There is an inflow of information, service and money.
With the simplification of F&A processes, enterprises have realized that they are well-placed to reduce the cycle required to close books. Further, they are in an advantageous position to evolve improved benchmark and baseline financial processes that enable them to meet the necessary regulatory requirements.
As mentioned, amplifying the ambit of outsourcing can increase benefits. Take for instance accounts payable and receivables. Industry experts point out that if a company outsources just one of these functions, its benefits are curtailed.
On the other hand, enterprises that outsource both garner value over and above merely bettering the transactional aspect, because the outsourcer is able to clearly note the inflow and outflow of cash. This enables an enterprise to make the most of the money at their disposal and thereby advance their internal processes.
Data and the role of CFOs
Enterprises across the board are finding new and improved ways of leveraging data, so as to reap the benefits thereof. In keeping with this goal, organizations are employing the services of outsourcers who possess exceptional skills, coupled with technological resources.
The immediate aim of CFOs of big organizations is to leverage outsourcing so that they can positively impact their operations across the globe. Simultaneously, and not to be outdone, smaller enterprises, who traditionally remained aloof from F&A outsourcing have begun to accept the prevalent realities and adopt it. To cater to companies of this size, outsourcers have developed solutions that are aimed to influence select vertical industries.
A survey performed by finance staffing agency Robert Half Management Resources concluded that chief financial officers (CFOs) in the US are more likely to outsource their general accounting and finance projects to financial consultants this year, including areas of forecasts and budgets, financial reporting, mergers and acquisitions, and also systems and performance upgrades.
Out of the 900 CFOs from random companies that were interviewed, 50% are planning on outsourcing finance and accounting services. Moreover, 48% said they are looking at outsourcing non-finance-related processes such as business systems and performance improvement. Overall, 40% are focusing on governance, compliance projects, and risk management, while 40% percent are eyeing taxation.
Key Prioritization Indicators
With the expansion of what has come to be known popularly as “New Generation” F&A outsourcing; cost reduction is paramount. In addition to this, companies will have to concentrate on an entire gamut of priorities. Here are a few of them:
Improved Data Management: New Generation F&A outsourcing will help businesses quickly examine large amounts of financial data for better decision-making insights.
From revenue assurance to working capital analytics, clients must be able to leverage their data to improve the quality of their Accounts Receivable portfolio, maximize cash flow and drive strategic initiatives.
Fully Integrated Solutions: New Generation F&A outsourcing will deliver integration and holistic end-to-end approach. F&A’s outsourcing value proposition will expand beyond the bottom line and will directly target the clients’ top line performance.
Transformative Technology & Tools: Technology and tools that would help improve insights, reporting, business performance, process efficiency and transparency are essential for companies.
New Generation F&A outsourcing offers organizations the ability to access add-on tools that will improve existing technology and take advantage of emerging technologies like robotics automation, cloud, and mobile.
With these tools in place, companies are in a position to achieve better insights and improve productivity, all while working within the parameters of their existing systems.