The success or failure of a company is largely determined by how well it manages its finances.
Businesses discovered it was more advantageous and profitable to contract out their financial services hence financial services outsourcing was born. This article discusses the types and benefits of financial outsourcing.
What is financial service outsourcing?
This is the process of outsourcing various financial tasks to outsiders who provide such financial advisory services. It can also be defined as the process for assigning certain financial responsibilities to outside financial service providers.
A group of professionals handling financial services outsourcing will increase flexibility when reacting or handling market volatility. It also eliminates the need to shell out extra cash for internal staff training costs or expensive accounting software.
Types of outsourced financial services
Here are a few financial services that can be outsourced by organisations:
Bookkeeping - This is the process for recording your business daily financial transactions into structured accounts.
Management accounting - This accounting method generates records, statements and reports to help management make more informed decisions about how their business is run.
Account receivable management - An organisation could outsource the collection of outstanding payments from its clients.
Account payable management - A company may contract out the process of collecting unpaid invoices from its customers.
Financial projections and financial accounts preparation - Financial managers prepare financial projections, which are records that anticipate a company's future revenue and costs. These are frequently used by businesses as the foundation for choices about investments, budgetary management, and operational plan management. Financial accounting is the process of recording, analysing, and evaluating each transaction made by a company or organisation in order to evaluate the stability and health of its finances.
Benefits of outsourcing financial services
Here are a few benefits of outsourcing financial services:
Cost saving – This is the main advantage of outsourcing financial services. It helps in decreasing the company’s expenses associated with hiring employees for the jobs dealing with for example salary, bonuses, taxes and other employee benefits.
Time-saving and increased productivity - Business owners can save time and concentrate more on managing other areas of the company, such as marketing and operations, by outsourcing. Because the outsourced professionals are aware of the factors that will most directly affect you, outsourcing can free up your time to be more productive in other areas of the business. In fact, their goal should be to save you time by arming you with the information you need to make the best decisions possible to grow your business.
Access to better expertise - You may be able to obtain more qualified financial specialists through outsourcing. The external parties possess the specific expertise that your company needs. Typically, they are professionals who work for outsourced businesses and have specialised expertise in accounting and finance.
Reduces unnecessary hiring - It may be that you won’t require accounting and financial services on a daily basis. Outsourcing these services on a need-basis may be more advantageous than employing permanent members of staff..
In summary, although, hiring a team of financial professionals and financial experts to handle the finances may be expensive, particularly for most start-ups and small enterprises, in the long run, it might be more advantageous and profitable to contract out your financial services.
If you need some financial services support, please email enquiries@ovacgroup.com for a free consultation with our team specialists.