Finance and accounting business process outsourcing

Finance and accounting business process outsourcing

It is one of those several things that you have to do, whether you have an aptitude for it or not. All organizations have to. It is part of the package. When you sign up to run a business, you also sign up for ensuring that the business follows the law of the land, whether it is compliance with the minimum wages to employees, the fire and safety measures at the workplace, or the paying of taxes and filing of financial returns to the government. These activities are varied in nature and are something referred to as ‘support services.’ Whether you run a restaurant or a school, a for-profit or a not-for-profit, these are activities that need to be performed, and as specified by various regulations governing them.

It does not help that some of these practices are governed by complex, ever-changing regulations which requires one to be completely on board with the moving target in constant sight. It also does not help that some of these processes involve working with a lot of numbers, a skill not everyone is comfortable with. This becomes an additional challenge with the finance and accounting related activities one needs to carry out to ensure compliance.

To be fair, the reason for the relevance of finance and accounting is not just to comply with regulations. Tracking money, which is the lifeblood for any organization, for-profit or otherwise, needs to be done. That is the eventual validation of the success or failure of an enterprise. Finance and accounting become a necessary supporting activity for tracking the use of money in achieving the goals of the organization. Without finance and accounting, the organization is running blind.

With deep access to talent pools, oWorkers equips itself with the best talent which is then trained to support its clients in the chosen domain. As a preferred employer in all its delivery locations, oWorkers accesses a continuous supply of walk-in talent.

 

How does an organization handle it?

Of course, what has happened has happened. Nothing can be done to change what has happened. If an organization has performed poorly over the last reporting period, then it has performed poorly.

So, should we stop tracking?

Clearly, that can be nobody’s case. While it may not be able to change the past, it certainly provides the information based on which the decision-makers could strive for a different future for the organization. Tracking also serves as a support system in all decisions. As a simple example, if the business does not know how much raw material has been purchased, it may not be in a position to make commitments on client requirements.

While finance and accounting business process outsourcing may be a relatively recent development, the need to track financial performance is not new. Ever since organizations have existed there has been a need to track financial performance. Even individuals need to track their finances, make sure they have enough in the bank to pay the bills that will be received as per their cycle, pay taxes and for the rainy day, even though one hopes it never arrives. Finance and accounting, hence, has existed for a long time and can be considered as a legacy profession, much like doctors and lawyers.

Since it is a specialized function, most companies look for specialists to support them with this process. Chartered Accountants (Cas) and Certified Public Accountants (CPAs) are well known the world over as professionals qualified to handle accounting and finance related matters not only of organizations, but individuals as well. They are amongst the most respected professions in the world.

There are typically two ways in which companies source the services of CAs/ CPAs:

Hire them – Some companies will hire one or more of these professionals, and make them a part of the staff, like many other business professionals it hires. This way the company has a complete call on the time of the professional. It is common for large corporations to be able to justify the hiring of these professionals, who don’t come cheap.

Retain them – Many companies don’t hire CAs/ CPAs but prefer to work with professionals who run a practice of their own. These professionals have a broader perspective of the marketplace as they would be working for several other clients too. However, they can be expected to provide only the contracted services and nothing more. Typically, companies which don’t have the scale for full-time engagement of these professionals will opt for this model.

Of course, it goes without saying that a combination that suits the company is always possible.

oWorkers is already recognized as a top global provider in its chosen area of work, that of data based BPO services, despite being only eight years in the business. With its leadership team that has over 20 years of hands-on industry experience, it drives the industry and change in the industry.

 

Finance and accounting business process outsourcing

Organizations have always relied on professionals for handling finance and accounting related activities. The remit of these activities has been to ensure that they are kept clean as far as regulatory requirements are concerned, and presenting an accurate picture of the financials, both to the management team as well as the external world, especially in the case of public companies.

The money trail, however, extends far beyond just ensuring regulatory compliance and reporting in order. It touches almost each and every activity of the organization. Many of these were handled as operational activities, such as issuance of purchase orders, following up for debt collection, payment of invoices for items purchased, etc. and not as activities that could yield a competitive advantage to the organization.

As competition, scale and complexity of the organization as well as the business environment has increased, so has the need to manage many of these areas much more carefully than has hitherto been done. Any performance benefit that can be obtained through valid means, is good.

The need for greater, sharper focus has meant money related activities that were being handled as routine operations, have increasingly come under the ambit of finance and accounting.

So, does that mean that companies are hiring more CAs and CPAs to do the additional work?

If we think about it, the second model discussed above can be considered as a precursor of what today is known as finance and accounting business process outsourcing.

The engagement of professionals does not appear to have changed much. Some organizations, typically the larger ones, employ full-time CAs and CPAs while others continue to rely on professional services provided by accounting firms.

What has changed is that a new type of provider has arrived on the landscape. This is the finance and accounting BPO partner.

Are these partners different from the professional CA/ CPA firms retained by organizations that did not wish to hire full-time personnel?

Yes, these partners are different. While they still provide all the services that were provided by the retained firms in the traditional arrangement, they have the capacity to do a lot more and are able to support a much longer part of the money trail in an effort to handle them professionally, squeeze out the efficiencies from those processes, and ensure they are in step with changing requirement, processes and technologies. They operate as a partner providing comprehensive services within the domain.

And it helps that they have a service mindset. For example, each of the three global centers of oWorkers are equipped to operate on a 24×7 basis, supporting clients and turning transactions around at the speed of light.

 

What comprises finance and accounting business process outsourcing

It will perhaps not be out of place to look at some of the services, at least the more common ones, offered by these providers.

Procure to Pay

A company needs to spend money to acquire raw material and other goods and services which are eventually converted into products and services the sale of which constitutes the revenue stream of the company.

While a BPO partner will not be able to help you avoid paying for what you buy, there are many steps and inefficiencies in the system generally followed by companies that can be ironed out to generate benefits.

BPO partners, with exposure to multiple clients, are able to invest in improved technologies. For instance, document imaging and retrieval solutions, that are now fairly commonplace, help speed up the processing. In addition, capable partners are able to put in place checks and balances, like matching against the Purchase Order (PO) before paying the invoice, that seek to prevent errors.

They are also able to take care of vendor interaction and queries, often providing self-serve options to them for optimizing manpower involvement. This process also managed the Accounts Payables, what has been or needs to be paid to vendors.

With its ISO certifications (27001:2013 & 9001:2015), oWorkers adopts the highest standards of security for client transactions. It helps that it is also GDPR compliant.

Order to Cash

The flip side of Procure to Pay is the Order to Cash process.

This process might be considered as one of the most critical ones as it supports the main business activity of generating revenue through sale of goods and services. When clients purchase the goods and services your company offers, they also need to compensate you through money. In retail transactions this exchange happens directly, with the customer paying you right away or an intermediary, like a credit card company, assuming the risk of payment.

In B2B transactions, the settlement is usually a negotiated one. Each one could be different. Tracking them and ensuring money is realized forms a core part of this activity. Finance and accounting business process outsourcing partners take upon themselves the responsibility of not only reducing payment defaults, but also the period for realization of dues. The faster money is realized the lower is the financing cost for the business.

Additionally, a partner is also able to generate insights into the process, as well as clients, that could even result in clients being blacklisted to prevent a recurrence of payment default issues in future. This function handles the Accounts Receivables of the company, the money they receive or are going to receive.

Some companies go a step further and refer to its as the Quote to Cash process which means that it gets managed right from the point a quote is issued to a prospect, and not merely from the point of order.

oWorkers maintains close relations with technology companies. It is able to leverage new and even emerging technologies for client work, something clients themselves will rarely have access to.

Record to Report

Recording of all financial information is considered as one of the original, key functions of the accounting function. By recording, it lends itself to reporting; making information available to the decision-makers that facilitates transparent and informed decision-making.

It follows, therefore, that the lower the lag between a transaction happening and being recorded, the more current the information based on which decisions are being taken, making them more wholesome.

No doubt this particular process also ensures timeliness and accuracy in compliance with regulatory requirements that pertain to filing of certain reports with the authorities as well as paying taxes.

With an avowed policy of working with a multicultural and multinational workforce, oWorkers gets a rub-off benefit of having a multilingual workforce. It offers services to clients in 22 languages, which is a huge benefit for growing corporations that operate across geographies.

Performance Management

Using the recording process as a backbone, finance and accounting business process outsourcing serves as a central enterprise performance tracking and management function. In a way this process sits at the crossroads of the company, where all transactions passing through have to leave their impression on it. It acts as an enterprise performance management function as it has overall visibility over different moving parts.

Partners, with the benefit of a cross-sectional view across industry, as well as processes and systems designed for the purpose, are able to analyze and deliver insights that enable the client to proactively not just manage, but prevent risk-creation events from happening.

This operates like a ‘finance as a service’ function for the client. It delivers enhanced insights. ROI and compliance.

If ever there is a sudden requirement or a spike in an existing requirement, with its local positioning, oWorkers is able to provide additional hands to handle the volume. It can hire an additional hundred resources with a notice of only 48 hours.

Tax compliance

In the connected world we live, with corporations growing and expanding their footprint across the globe, and each geography having its own taxation regime, staying compliant with the array of regulations is a challenge. Not only are companies impacted on their own account, there are other ramifications too like personal taxation, such as employees from one location working in another.

Tax compliance is mandatory. It is not a choice. Finance and accounting business process outsourcing providers provide much needed relief to enterprises through their knowledge and support in this area. They are able to provide complete support with activities like coding, preparation of returns, filing, audits and even taking care of double taxation issues.

Not only can it save money for clients in taxes, through its innovative pricing it can also provide great value to clients for the outsourcing arrangement itself. Many of its clients swear by the steep savings and also appreciate the model whereby they get to choose the pricing mechanism, input based or output based, that they would rather have.

 

The oWorkers advantage

We work with employed staff, not freelancers or contractors. While this places greater responsibility on us for our staff, it is also fulfilling to see them grow and prosper. We have been able to create a solid supervisory team only with frontline staff who have grown into these roles. Some have even left us to take up managerial assignments with other companies. We pay social and local taxes for our staff.

We work with marginalized communities and enable some of them to get a foothold in the global digital economy and make a difference to the lives of their families and dependents. Your work will enable us to employ a few more from these communities.

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