Business process outsourcing, or BPO, is the act of hiring another business to handle a core operational process of your business such as accounting, human resources, or IT. By utilizing a firm that specializes in a certain discipline your business can save time, money, and headaches by letting a professional services firm take these tasks off of your to-do list.
Finance and Accounting Outsourcing or FAO is one of the most popular forms of BPO. From small businesses that don’t have a need for full-time accounting staff, to large organizations who need access to teams of CPAs during tax season, outsourcing your accounting gives you the flexibility to get as much or as little help as you need.
If your business is currently considering accounting BPO or FAO, we’ve put together a guide that justifies the expenses of outsourced accounting services.
First, let’s take a look at the costs. You’ll likely pay an hourly rate for the work being performed, and your agreement may require a monthly minimum to be hit. Minimum commitments vary by the vendor, but they’re unlikely to give you sticker shock. While hourly rates may vary, you’re likely to be paying equal to or less than the cost of hiring in house.
Outsourcing your accounting and finance functions can provide a ton of benefits to your business, both financial and operational.
Decreased Overhead
When using a 3rd party accounting firm, you avoid paying for costly overhead such as insurance, 401k match, equipment, and more. According to the Bureau of Labor Statistics, benefits alone constitute nearly 30% of the cost of in-house staff. With outsourced BPO accountants, you can strictly pay for the labor you need and nothing more.
Less Headhunting & Turnover
Headhunters typically charge 20-30% of a recruit’s annual salary for their services. With CPAs and accountants nearing 6 figure salaries, you’re looking at a $20,000+ commitment just to get a new accounting staff member in the door.
Training
Handling accounting in NetSuite requires two complex skill sets. Of course you’ll want your staff to have significant accounting experience, and preferably the CPA credential, but they’ll also need to be adept at utilizing NetSuite. Hiring accountants with limited NetSuite experience will require significant training and a slow onboarding process. When you outsource your accounting to a NetSuite BPO provider, you can get access to a team of CPAs that live and breathe NetSuite.
Flexibility
For small businesses, flexibility is a key part of their strategy. If you hire an accountant in-house, you need to have at least 40 hours of work for them to complete a week. In periods of growth or stagnation, you may end up paying for an underutilized asset. Further, some businesses try hiring less advanced accounting staff who are willing to be flexible and dip their toes in other departments. The problem with this approach is that less advanced or non-dedicated accountants can lead to costly financial mistakes or IRS audits. With accounting BPO you get access to full-time CPAs at a capacity that makes sense for your business.
Accurate Data
When you outsource accounting to a third party firm, you get access to an experienced staff that lives and breathes accounting. With dozens of CPAs in our ranks, ScaleNorth’s accounting team provides accurate bookkeeping using best practices that can be trusted and relied upon, no matter how complex your business is.
Better Forecasting & Modeling
Just closing the books properly isn’t enough for many organizations to get a financial edge over the competition. Seasonal fluctuations, growth periods, pandemics, and all sorts of variables can make it difficult for your team to paint an accurate picture of the future. As seasoned financial professionals and CPAs, ScaleNorth can help clearly capture the financial health of your organization, and provide detailed models for the future.
Scalability
As your business grows, and your accounting functions become more complex, you may find yourself in the awkward space between packing the workload of your existing accountant(s), and needing to hire another full-time. When utilizing BPO accounting, you can get the expert help you need for any number of hours required. Whether you need 10 hours a week or 100, you can rest easy knowing that your accounting functions are handled properly.
Accounting Automations
Accounting is a tedious process. From manual data entry to repetitive monthly processes, there are many reasons why it’s such a time consuming profession. Wouldn’t it be nice to put your accounting on auto-pilot? When you outsource your accounting to a professional services firm like ScaleNorth, our certified NetSuite consultants and CPAs can automate a large portion of your current manual labor, saving you time, money, and stress.
What to Look For in a BPO Partner
When it comes to outsourcing your accounting, finding the right BPO partner is essential. You need to make sure that not only is the BPO provider someone that is a trusted advisor, but someone that’s professional, knows best practices, and is experienced. Afterall, this is a business partnership that will impact your organization for years to come, and will directly influence your bottom line.
Credentials
Accountants have to follow extremely strict standards in order to remain compliant with the IRS, SEC, investors, and more. Fortunately, licenses such as the CPA can prove an accountant’s experience in and knowledge of key regulatory standards such as GAAP.
Experience
Years of experience are an important deciding factor when it comes to choosing a BPO provider. Apart from making sure that your BPO provider is adept in the latest accounting practices, you’ll want to be certain that they have a deep understanding of your accounting platform. For example, ScaleNorth has helped countless businesses rescue their accounting functions after they hired accountants who had limited working knowledge of NetSuite. Having experience in your existing platform is crucial.
Recognition
When outsourcing one of the most important aspects of your business to a third party partner, you’ll want to make sure they have a proven track record of successful work for similar clients. Partnering with an established company with happy clients is a sure way to mitigate any risk.
Price
Of course the topic of price will be a deciding factor when searching for an outsourced accountant. What do outsourced accountants typically cost? Unfortunately there’s not a straight answer to this question. Price will depend on experience as well as the complexity of the accounting. For small businesses, you can expect to pay between $1,500 and $5,000 per month depending on many different factors.
Professionalism
Lastly, you should think of your outsourced accountants as an extension of your current team. You’ll want to make sure that they take the job and the onboarding process as seriously as an in-house hire would. Since you’ll be closely entwined with this group for years to come, make sure that they’re professional, ethical, and understanding.
Conclusion
Is hiring outsourced accountants worth it? We find that it ultimately leads to lower costs, improved financials, automations, better forecasting, and less audit risk. When it comes to accounting BPO, the benefits far outweigh the costs in a large majority of cases. That said, outsourcing your accounting to a third party partner is a big decision that should be approached strategically. In order to truly experience the amazing benefits of accounting BPO, it’s essential to vet and hire the right accountants. Do your homework and research, and you’ll be giving a major contribution to your business for years to come.