What is Knowledge Process Outsourcing and how can it benefit your customers?
If you’re a successful partner at your practice then you understand the importance of knowing your customers. You also know that CPA firms are being tasked with delivering more value to their clients. This means shifting your relationship from “transactional services” to becoming a “trusted advisor.” Covid-19 now makes this more important than ever. Accounting Knowledge Process Outsourcing, or KPO, is one of the most important tools available to give you the time to do this.
What is knowledge process outsourcing (KPO)?
Traditional business process outsourcing supports important, but non-essential services. Knowledge process outsourcing supports processes requiring more in-depth knowledge, analysis, and expertise in complex areas like accounting services. KPO involves processes that demand advanced information search, analytical, interpretation, and technical skills as well as some judgment and decision making.
Business Process Outsourcing
Knowledge Process Outsourcing
Centered around low-level processes
Staff with skills and judgement
Centered around high-level processes
Data/transaction processing in an accounting system is not knowledge process outsourcing. Financial statements (balance sheet, P&L, change in equity statements, notes to financial statements) are examples of KPO. They require an accountant with specific skills, and although these tasks are repeatable, they will be very different for each client. An automated bank reconciliation process may also benefit from KPO. There are many different elements of the automatic bank reconciliation process that can produce errors, that will require an accountant to double-check mistakes and fix them. That’s definitely not a task you want to tie up your own resources on.
Assessing Your Readiness
In a previous article ( COVID-19 is Accelerating Digital Transformation in Accounting ) I discussed the need for accounting firms to work on a workflow process roadmap before implementing a digital transformation plan. Likewise, looking at your Culture & Mindset, Company Technology and Expertise can be helpful before starting a KPO initiative.
Culture & Mindset
As everyone is rapidly learning, you need to change your mindset when you work remotely. Your management style and work policies will need to change. You need to understand how you plan to serve your client remotely and plan to spend more time spend in front of the client using video conferences or phone calls.
Most accounting systems have migrated to the cloud whether people are aware of it or not. Accounting services are time-sensitive, and there is a need for these systems to be up and running 24/7. Is your existing platform adequate to promote your new business model? How can technology enhance your customer’s experience.
You need to understand your needs in terms of client support, evaluate your staff’s skillset, and identify who has the potential to be billed at a higher rate for client-facing activities. In the evaluation, billable hours and costs per FTE are part of the analysis. Once you identify your low billable activities, automate or outsource them at a lower rate.
Benefits You Should See
- Focus on high-value services. As an accounting firm offering outsourced accounting services you need to grow your client base and increase your client-facing advisory services. As a result, you face a capacity and capability challenge. A knowledge process outsourcing team solves this problem. Tasks such as accounts payable could be done through automation or a combination of automated software and a virtual team to support the process. As a result of the introduction of a virtual team, you can reassign your existing accountants to spend more time with their clients. The virtual team can scale up as you start to delegate more tasks: financial statements, vouchers and resource allocations, CC reconciliation, balance sheets, etc.
- Scalability and Adaptability. When most of your outsourced service group staff is an in-house team, scalability becomes a big challenge. If you suddenly grow and need a larger workforce within your outsourced accounting department, it can take up to three months to hire a new employee. Also, a new hire needs time to settle within your firm, and it could take them an additional six months to reach their peak performance. With a knowledge process outsourcing partner, they always have a resource ready to be deployed when needed. In my experience, the right KPO partner should anticipate the accounting firm’s needs through the use of productivity dashboards and regular account reviews.
- Access to the latest technology. Regardless of the accounting technology stack you use we build a team with the skills to work that platform. Knowledge process outsourcing will not work unless you implement a good business process workflow platform in addition to your existing accounting systems. The other component is to completely automate some transactions like AP or AR and use a virtual outsourcing team to support the automated solution where there is a need for human interaction. Last but not least, you need to implement a set of dashboards to monitor your virtual team performance as well as predict future needs.
Our KPO Experience
For the past 20 years, we’ve provide KPO teams to Fortune 500 companies to support their back-office operation: Procurement, project management, decision science support. The model we’ve developed is based on placing a dedicated virtual team lead who learns the business, then builds out the necessary processes, team and technology. Twenty years later, we have some leads managing over a hundred analysts, engineers and data scientists.
The secret to a successful Knowledge process outsourcing project is patience, partnership, and professionalism. I call it my “3Ps”.
The key to success is to identify the proper team lead. At the beginning of an engagement we spend time with the agency partners to understand their company culture as well as the company vision. Our recruiting team in India then begins the search process. Within a month, we will have typically identified three to four final candidates from a pool of fifteen to thirty. You’ll have an opportunity to interview the finalists, and once you give us the green light to hire a candidate, we retain the candidate as a full-time employee.
From day one, as your new KPO partner, we assign you a US-based account manager and an implementation director. For the next three months, we will have a weekly meeting to prepare the foundation for a successful partnership.
We hire the best accountants in India. Since our accountants are not involved in cross-selling consulting services, they are evaluated solely on their technical skills. In India, a chartered accountant is still a very respected profession. With that respect comes pride and professionalism.
At Accsurant, we pride ourselves on being different from others. For the past twenty years, we have achieved a retention rate of 90% by providing personal attention and transparency through the use of technology. A qualified outsourced accounting team is one of the best investments for your accounting firm or practice. It offers cost savings, scalability, additional capabilities. These benefits can help you concentrate on activities that are more suited to your skillset and increase your profit margin.
You might also be interested in: Why You Should Use Outstaffing not Outsourcing to Grow Your Small/Medium-Sized Accounting Practice
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.