Accounting outsource

Trends in Small Business Financial and Accounting (F&A) Outsourcing
For the past couple of years small businesses started using accounting outsource services like accounts payable, account receivable, and general bookkeeping services. As they started seeing business benefits beyond cost savings now they started outsourcing other higher-value accounting projects like accounting and financial process innovation, real-time accounting integration, budgeting and forecasting. Some small businesses are considering outsourcing their entire accounting and financial operations to outsource vendors. Increasing confidence in accounting outsource providers skills, availability of tools and technologies, and accounting process standardization are making the shift for the small businesses on outsourcing higher-value accounting projects.

Small Business accounting outsourcing maturity

Both the accounting outsourcing buyer and the provider relationship is matured for the past several years. Now several small businesses are considering their accounting outsource providers as the strategic partners. They are not using the accounting outsource providers just to save cost but to introduce innovation and efficiency in their accounting and financial business processes. Small business Accounting outsource providers have been continuously improving their service offerings using both technology and accounting business process reengineering. These accounting outsource providers have been working with several small businesses and CPA firms for several years. Each small business has its own accounting software packages and use different accounting processes to record their business transactions. By working with the small businesses the accounting outsource providers learned to standardize and reuse the accounting process improvements across different vertical domains like retailing, manufacturing, and service based industries.

As the accounting outsource providers gain accounting business knowledge for a particular vertical industry, now they are started marketing their services to other small businesses on that business domain. For example accountings outsource provider gained significant knowledge on various real estate accounts and financial transactions started marketing to other real estate companies. As they gain accounting process experience naturally they are finding their own niche in vertical business domains to sell their services.

Financial Accounting Integration
Financial accounting business processes integration is another important trend in small business accounting outsourcing started happening. Most of the small businesses have been using more than one software package to mange their financial and other business data:


Accounting software like QuickBooks, Sage and Netsuite
ERP systems like Epicor and IQMS
CRM software like Microsoft Dynamics CRM and Onyx CRM software

Small businesses use many other homegrown software tools and technologies to manage their day-to-day operations. All these software are running in silos, and small business owners have difficult time in consolidating all their business data. They need the integrated view of all the data to produce various reports and to set strategic directions for their company. They’ve two choices to integrate all their financial and account data:


Upgrade from different software technologies to use enterprise software like SAP or Oracle to mange all their financial data and business transactions.
Develop custom interfaces using in-house IT team to integrate all their software systems
Outsource their financial and business data management

Among the three choices, outsourcing is the cost-effective choice for the small businesses. Small businesses are already outsourcing their general bookkeeping, accounts payable, and accounts receivable tasks to outsource vendors. It is logical step to outsource integrating various accounting software systems to a qualified outsource vendor.

Need for Financial Accounting Integration in Small businesses
For decades, most of the small businesses have been developed stand-alone accounting applications to automate specific accounting and financial tasks. This type of stand-alone applications provide benefits only to specific departments within a small business but fails to give a complete picture of their business to the management. For example, the financial transactions in the accounting software package will give the detailed picture of the financial status of the company. But often small businesses need to analyze trends to see where improvements can be made in customer service, sales, and payments. Most of the small businesses are manually mining the data from different software sources to produce the reports for the management.

Following are some of common problems you see in small businesses:

Change of customer data in CRM but it doesn’t show up in their accounting software
When orders are taken by the sales department it has to be reentered in the accounting software
Salespeople couldn’t see how many orders are already shipped to the customer and how many of them are already paid by the customers.

Now this is where the technology savvy accounting outsource providers can step in to help the small businesses in achieving their goals. The accountings outsource providers write custom interfaces to retrieve the data from different sources to produce various financial reports needed for the small business management’s team. Developing custom interfaces may not be cost effective for some small businesses. In this case accounting outsource providers with offshore presence can use their offshore locations to manually key the data from one software to other. This helps the small businesses in achieving their business goals without costly software upgrade or in-house IT team.

Outsourcing in CPA Firms
CPA firms serving small businesses have been outsourcing tax and other general accounting services for some time. Now these CPA firms are considering outsource providers for other higher-value accounting services. CPA firms can leverage their relationship with small businesses and help them in outsourcing their higher value accounting projects. For example projects like real-time accounts integration needs process knowledge specific to a small business, IT skills, and accounting process standardization skills. CPA firms may not have all the skills needed for the real-time account integration projects. They can act as a liaison between the small business owners and outsource providers in outsourcing real-time account integration projects.

CPA firms that partner with outsource providers gain a competitive advantage over those that don't. By aligning with an accounting outsource provider, an accounting firm can virtually tap into several different small business markets without making a heavy investment of time and capital. This means the CPA firm minimizes its risk while maximizing its potential for significant market gain. Currently many small CPA firms are not embracing these types of projects for their small business customers, but this trend is happing in several big accounting firms. As the need increases for accounting integration projects in small businesses, more small business focused CPA firms will start partnering with accounting outsource providers.