How to: Choose a Financial and Accounting Outsourcing Provider

Outsourcing means something different today than it did a decade ago. Increasingly, the use of third-party services is becoming strategic and transformative, focusing on efficiency and effectiveness–not just cutting the bottom dollar costs.

More than ever, choosing the right provider is a complex decision. You need to understand what’s available–and what you really need before you can begin the shopping process in earnest.

Let’s take a closer look at what goes into making the right decision when hiring a financial and accounting outsourcing provider.

What is a Financial and Accounting Provider?

Outsourcing is, by definition, the use of a third-party service provider to accomplish a specific task. When utilized as part of business strategy, outsourcing offers benefits beyond cost savings. Companies can partner with service providers to access expertise, save time, and keep their financials current.

In accounting and finance, outsourcing providers handle a variety of tasks, like:

• Bookkeeping
• Payroll
• Tax Preparation
• Financial Reporting
• Accounts Receivable/Payable
• Budgeting
• Financial Planning & Analysis
• Reviews and Audit Support

Types of Financial and Accounting Service Providers

The global outsourcing market for accounting and financial services continues to evolve, leaving businesses with a fragmented selection of service provider choices. So, not only do you need to know what you are looking for–but you also need to be able to identify who can offer it.

Types of Outsourcing Service Providers:

• Support Services (e.g., BPOs, Call Centers, Data Entry)
• Managed Services (e.g., Done-for-You Payroll Providers)
• Technology Providers (e.g., Freshbooks)
• Transformation Partners (e.g., Fractional CFO, Financial Advisory)

At kept.pro, our business model utilizes a combination of core services and critical expertise to provide you with support that goes beyond efficiency to transform your business.

What Do You Really Need: A Fractional CFO, Accountant, or Bookkeeper?

According to a 2022 Global Outsourcing Survey by Deloitte, more than half (52%) of executives outsource business functions. And at the top of that list, you’ll find that 51% outsource finance functions. Under the finance umbrella, there are many different options. To choose the right provider, you need to start with a clear understanding of your needs.

Financial Advisory & Fractional CFO Services

Did you know that you can outsource expertise? From advice on tax laws, investment strategies, and insurance to financial planning, budgeting, and forecasting–financial advisory and fractional CFO services provide access to financial expertise.

According to a survey conducted by Quickbooks, 61% of small businesses struggle with cash flow. And for many, this means that they fall short paying vendors, debts, or employees. For these companies, outsourcing financial advisory or CFO services can help them create and execute a plan to turn things around.

The key to finding the right provider is to ask specific questions about their team composition and experience. Ask about the provider's experience with other companies of similar size or in your industry. And get to know who is on their team–where they come from, what their experience is, and who you will have contact with.

Read More: Signs Your Business Needs a Fractional CFO

Accounting Services (Controllership)

Accounting providers manage various aspects of a company’s financial activities. These duties go beyond data entry and traditional bookkeeping to include oversight, audit support, and accounting advice.

Many smaller companies rely on a single bookkeeper to handle everything from accounts payable to revenue recognition schedules. However, as companies grow, particularly above the $2M per year mark, finances become increasingly complex. Accounting providers can fill in the gaps with different levels of expertise, providing access to an entire department of accounting talent with the flexibility to keep commitments small.

When looking for an outsourcing provider to handle accounting work, ask about certifications and experience with the specific type of accounting that you are looking for. First, you need to know if they are qualified and experienced. Second, you want to know if they can provide references to attest to the quality of their work. And third, you want to know what it will be like to work with them. Ask about communication preferences and who will be the designated point of contact.

Bookkeeping Services

Bookkeeping services record and code all of the financial transactions in a business. These records are then used by accounting and finance teams to create forecasts and budgets that inform strategic business decisions/

Providers might offer any combination of tasks like:

• Recording Financial Transactions
• Posting Debits and Credits
• Producing Invoices
• Maintaining and Balancing Ledgers
• Completing Payroll
• Maintaining the Company’s Chart of Accounts

What to Look for in an Outsourcing Provider

Now that we’ve covered what is available and how to identify what you actually need, it’s time to come up with a shortlist of providers and start evaluating your options. Avoid common pitfalls when choosing a provider with these screening questions:

Experience and Expertise

The provider should have experience and a proven track record in the specific area you are looking to outsource. They should be familiar with your industry and the specific challenges and requirements it presents.

• Can you describe your experience with companies in my industry?
• Can you provide case studies or examples of how you’ve helped businesses like mine?
• What qualifications or certifications does your team hold?
• How do you handle challenges or issues that arise during a project?

Quality of Work

Consider the quality of their work and their commitment to excellence. Ask for references or case studies, and talk to previous clients if possible.

• What quality control procedures do you have in place?
• Can you provide a specific example of how these measures have helped maintain or improve the quality of your work?
• How do you handle situations where a client is not satisfied with the quality of your work?

Security and Confidentiality

Your outsourcing provider should be able to scale their services to match your business growth. They should be able to handle an increased workload as your business expands.

• How have you handled increased work volume from clients in the past?
• What is your process for scaling as my business grows?
• Can you provide customized services if my needs change?

Technology and Innovation

The provider should use up-to-date technology and be aware of the latest trends and innovations in accounting and finance.

• What platforms do you use?
• What role does automation play in your services?
• What new technologies are you exploring, and how have they impacted your service delivery?

Legal and Compliance

The provider should adhere to all relevant laws and industry standards, including data protection regulations and accounting standards.

• Are you familiar with the FTC Safeguards Rule, GAAP, or other relevant regulations?
• Can you provide evidence of compliance audits, certifications, or other validations of your compliance practices?
• Have you ever experienced a legal or compliance issue? How did you handle it?

Choosing the right financial and accounting outsourcing provider is a strategic decision based on current state conditions and goals for future growth. What was once a key driver of cost savings is now a driver of efficiency, sustainability, and growth.

Final Thoughts–With the Right Provider, Outsourcing can be a Strategic Choice

Your business doesn’t need to outsource bookkeeping because it’s cheaper. In fact, every provider has a unique value proposition, and extreme cost savings isn’t always part of the packaged deal.

What modern outsourcing providers offer is value. An increasing number of businesses struggle to access the talent they need when they need it. Outsourcing can be an effective way to gain the expertise that you need while boosting operational efficiency in the process.