A outsourcing of sectors and services is often the solution found by companies to solve problems, improve the quality and efficiency of management and
invest in the future. However, outsourcing a sector always involves choices, dilemmas, advantages and disadvantages, and financial management is no different.
That's why today we're going to explain that consists of financial outsourcing and the possible advantages and disadvantages involved. Read to the end and find out if outsourcing finance is a good alternative for your business!
Financial outsourcing
Most growing small and medium-sized enterprises (SMEs) reach a point where they need to pay more attention to the financial sector as a way of ensuring sustainable growth. At this point, the main question is: should you hire a specialized professional, create a sector solely responsible for financial management or outsource the service?
To make the best possible decision, you first need to understand what financial outsourcing is and what the possible advantages and disadvantages of outsourcing are.
outsourcing. Outsourcing basically consists of assigning activities related to financial management to a specialized company.
Normally, financial management companies carry out the basic routines of the financial sector, such as fiscal and tax management, audits, payroll management, cash flow management, accounts payable and receivable management and monitoring performance indicators. There is also the possibility of contracting services tailored to your business model.
Process analysis, for example, can correct errors and result in changes that will save important resources. The production of management reports, another solution offered by outsourcers, helps the company to monitor its performance in detail and can provide insights into opportunities to increase growth and profit.
Many companies also offer management tools in their packages that modernize and help with routine company activities, improving process efficiency.
Advantages of outsourcing
Now that you know the basics of how financial outsourcing works, let's move on to the main advantages and disadvantages!
Focus on the company
To outsourcing financeThe first immediate advantage for your business is the freedom for managers and employees to devote themselves to the most important activities for the company. The responsibility and pressure of being in charge of financial routines can suck up an employee's working time and make them less attentive to other fundamental activities, such as customer service and team management.
Reducing costs
Especially for SMEs, outsourcing is often cheaper for the company than creating a finance department or even hiring a professional
exclusively to perform this function. There are also many situations in which a specialized company finds ways to save money that would go unnoticed by untrained people or without the resources available due to specialization.
Technology and innovation
Another great advantage of relying on a company is that you don't have to worry about using technology and innovation to benefit your business. Companies specializing in financial management take care of using this type of tool to their advantage and provide training courses and incentives for innovation to keep their staff up to date. This is an advantage hardly ever enjoyed by small companies that hire a professional or set up their own finance department.
Disadvantages of outsourcing
Check out the main disadvantages associated with outsourcing.
Control
In any outsourcing, the contracting company loses, at least in part, control over the routines and activities carried out. However, this doesn't mean that you won't have access to the information you want and will lose control of the sector altogether. It just means that you will have a more peripheral view of the activities.
This is one of the main reasons why large companies set up their own financial management departments. So, when outsourcing a service, it's important to get to know the company you're hiring well and only close a deal if the company is truly trustworthy.
Additional costs
Although it's not very common, it can happen that unexpected expenses arise when you start outsourcing.
In general, this is due to situations in which the contracted company does not yet have in-depth knowledge of the contracting company and in the course of the processes comes across unexpected costs.
Unpredictability
Another problem that, however difficult it may be, must be remembered is the unpredictability involved in relying on another company. This becomes a problem as changes in the management of the contracted company interfere with the provision of services for your company, which can have an impact on costs and the quality of services.
In today's article, we look at what the financial outsourcing and the main advantages and disadvantages of hiring this type of service. Now that you're informed, it's time to assess whether or not outsourcing is a good deal for your company! To do this check out our other blog posts for even more information!
CLM Controller offers a financial outsourcing service and can help you with this decision. For more details click here.
