Choosing the Right Model for Outsourcing Your Backoffice Accounting Services
Large accounting firms are increasingly opening offices oversea to solve their capacity and capability challenges. If you are a small/medium sized accounting firm and you want to take a similar approach to optimizing your client accounting services, you have three options:
- Build and manage your own overseas team yourself, similar to what the large accounting firms are doing
- Contract with a business process outsourcing company who will then take responsibility for one or more of your accounting processes
- Partner with a vendor (like Accsurant) to build and manage an overseas extension to your current team (the Team Extension Model).
Building and Managing Your Own Overseas Team
Most large accounting firms are choosing to build their own dedicated overseas teams. It’s a good option when you have the required internal resources to start a new operation from ground zero. You’ll need to hire a management team to build the new practice, and it will take time for the overseas practice to become operational. This approach requires a large investment up front, and so is not without risk, and you’ll need to have enough business volume to justify the ongoing operational costs. COVID-19 has made this option much more challenging.
Outsource to a Business Process Outsourcing Company
Completely outsourcing one or more business process may be an option if you want to save money on low skill tasks like Accounts Payable or Accounts Receivable. The outsourcing company provides the whole team and will work to your requirements. Once you are up and running you will experience minimum interaction with the team.
This can work if you are clear on your requirements when establishing the initial contract and the processes you are outsourcing are sufficiently cut and dried. This can also be attractive for a firm that needs to ramp up a capability quickly, e.g. a firm that suddenly landed a big project with a limited team already in place. However, in my opinion this is yesterday’s model. I will argue that a team extension model, over time, will better optimize profitability. Automation can provide as great or greater savings than cost arbitrage for repetitive, low skill business processes. And resources allocated to simple business processes are unable to take on more complex financial tasks if the need arises. Business process organizations are not structured to grow with your business from a skillset standpoint.
Partner to Build and Manage a Team Extension Model
The “team extension model” refers to the augmentation of an existing in-house back-office accounting team with resources possessing similar expertise. This model lets you emulate what large accounting firms are doing at a fraction of their cost.
With the team extension model, you save time on the hiring process and save money by hiring an equally qualified accountant from India or the Philippines. You retain full management control over the tasks and team. The outsourcing company is responsible for recruiting staff and administrative support. At Accsurant we also provide a process optimization and technology team to support the extension team at no additional cost.
Usually, an extension team can also be described as a cross-functional one. Every member of the group can have different functional expertise, but they will still be working towards a common goal. An Accsurant cross-functional team is self-directed, multi-disciplinary, creative, and multi-tasking.
At Accsurant, we design a model where the only person you need to talk to is the dedicated team’s lead, who you interact with on a daily basis. You don’t have to solve any of the problems on your own. The extension team, over time, will gain knowledge and improve their skill sets. Furthermore, as a dedicated team, the transfer of expertise remains safe. Over time, the extension team gets trained to more complex analytic and accounting work, freeing your own resources to spend more one-on-one time with your clients.
Large accounting firms can afford to offer advisory services because most of the back office work is assigned to an extension team oversea. By choosing an extension team model, you will be able to do the same with minimal initial investment.
Yann is Accsurant’s president. With 20 years experience and six different technology startups behind him, Yann has a proven track record in developing innovative solutions based on his technology and financial acumen.