Accounting may not be a key skill for you, or you don’t want to focus on anything else other than your core business or simply want to cut down cost – the reason for outsourcing your accounting services could be many and is a good move. You just need to be sure you have thought through the checklist well, before finalizing the vendor. Very basic, though there are points that get missed by many companies while outsourcing their accounting, resulting in a failure. Here are some common ones.
GDPR – is your accounting OSP following this?
Accountants have access to a lot of data on a daily basis. The accountancy outsourcing provider needs to be sure that their processes and systems are robust to comply with the GDPR. The required audit and checks should be in place to ensure there are no loopholes in the compliance. So before you move ahead on further discussions with your vendor, the first thing should be to check their GDPR audit reports.
Missing on your homework
Your final goal, objective for outsourcing accounting and key criteria to choose the accounting outsourcing provider should be clear, documented and well researched. Researched – to be sure that the goal you are setting will be achieved by your objective of outsourcing your accounting and the vendor criteria you are defining is being met by your shortlisted vendors. At each level, you should be evaluating multiple options, even when you are doing your final negotiations with the vendor. Keep doing your homework to be able to present your case better and be sure the accounting OSP (outsourcing service provider) you are choosing is the right one.
Defining ‘Cost’ the decision point
It is fine to keep ‘cost of the services’ as one of the evaluation criteria, but making it the decision point isn’t a smart choice at all. While most of the companies wouldn’t keep it on the list, but they end up choosing the vendor on ‘a comparative lower cost’. It is important to have the exact services you will be getting for the amount in black and white. A lower cost will always mean a few excluded services or a compromise on quality or the OSP’s experience. For example – you may not get some add on services or may be dealing with a junior resource which will eat up more of your time. So while you are saving a little amount, you may be spending more of your quality time in return. Hence be sure to know what your will for a lower price and decide based on the services and experience rather than the cost.
Choosing a ‘Lift & Shift’ model
You want to outsource accounting either as you don’t have skills or you want to cut down cost on this non-core skill. To be sure you get the right skilled people working for you at the right price it is important to know your accounting outsourcing service provider’s expertise. What type of associates and what skilled will be managing your accounting should be your question.
You don’t want to become part of a lift and shift model which shifts all your accounting services to an offshore location to help you cut cost however not necessarily these outsourced location will have people trained to be able to manage accounting for you without errors. So your team ends up managing them indirectly making them spend their quality time on it anyway.
Trust the documentation, Not words
When outsourcing, the access to data is no longer restricted to only company employees and the vendor’s employees will be able to view the same. Storing and processing of sensitive data, and protection of proprietary information becomes challenging. Every OSP will tell you they will ensure data security but breaches happen. Don’t they?
As a client you need to dig deeper to understand the exact processes they follow to ensure data security and confidentially. Have the process documented, involve your IT security guy and ask the OSP to make tweaks to incorporate the suggestions. Know the implemented security controls and protocols for data security and put them as part of the legal and contractual agreements.
Mis-alignment of Requirements
Outsourcing Accounting is a serious decision and all checks need to be in place before deciding the vendor. It is essential that you align your requirements with the partner vendor’s capabilities. Issues arising because of legal and contractual agreements not being comprehensive can cost your company more time and money. It is also important to agree on the tracking and evaluation mechanism beforehand so that the performance and errors can be checked at the right time.