How Outsourcing Can Improve Financial Services for Businesses

Anusree Bhattacharya | March 21, 2022 | 120 views

How_Outsourcing_Can
As a business owner, you may start a business with many goals in mind. Unfortunately, managing finance and accounting are often not things that business owners are fully experienced in. But at the same time, it is important to keep a close check on the numbers.

Not all businesses have financial services outsourcing teams to improve their financial activities and accounting processes or even deploy strategies to expand their financial responsibilities. This is where the role of outsourcing financial services comes into play.

In February 2022, Consero identified the Four Tenets of Finance as a Service (FaaS) as a new standard of service. As a result, FaaS is taking a significant share of the outsourced accounting industry.

To make our business more successful, we built a solution using a best-of-breed suite of third party software applications so our clients have a particular login to access all financial data.”

Bill Klein, the Co-founder and President of Consero Global

Why Businesses Need Outsourcing Financial Services?

When it comes to deploying financial services, outsourcing is considered one of the best decisions because of its numerous benefits. An experienced outsider is more capable of identifying areas that need improvement. This leads business owners and CFOs to focus more on essential activities.

Outsourcing the financial functions of your business to a certified finance management team or CFO can help you gain financial stability. This is one of the most result-driven advantages of outsourcing for financial activities mentioned by business owners who have already outsourced this process. To make their financial and accounting functions better, more and more businesses are hiring accountants and other people to do their financial work for them.

So, the sooner you begin with outsourcing your financial needs, the sooner you’ll reap the benefits of outsourcing financial services. Additionally, you’ll be one step ahead of your competitors. Presently, outsourcing drives functionality, process, planning, and execution transformations. An outsourced team can help build accurate financial strategies and track so you can focus on the growth of your business, including revenue generation. 

Financial services that can be outsourced include:

  • Payroll
  • Financial reporting
  • Tax accounting
  • VAT services
  • Accounts payable

There are numerous reasons why outsourcing financial services is beneficial and a proactive approach to managing your business’ finances. This article is an outline how outsourcing financial activities can help you strengthen your finances and grow faster.

This shifts the burden on to your outsourced services provider for finance, to make sure they have the competence, staff, and systems to provide that service in an exceptional and timely way."

Bill Klein, the co-founder and President of Consero Global

Automating and Improving Processes

With the use of AI and machine learning and other effective strategies, an outsourced finance department can control and analyze processes such as budgeting, collection of data, detailed capital information, and capital flow.  These strategies can anticipate upcoming expenses and keep a backup of data.

According to a study by Finance Monthly, nearly 50% of senior decision-makers in financial services organizations across the U.S. prefer to employ qualified third-party financial experts using technology for solutions, making it the top driver overall. This show important it is to choose a financial services outsourcing company that uses an automated processing solution for your business’s success.

Automatic functions such as automated invoice data capture solutions can help deliver 6x faster than a human capturing the same data manually. This enables teams to focus on higher-priority and value-generating tasks. Similarly, multiple function-specific software platforms, such as Finance Close Automation (FCA) for managing CCR-related activities, Cherwell for reducing operational costs (logistics to analytics), and Fresh works for quality check and asset management, are among the best automation tools that could help streamline your financial activities.


Lower Tax Burden and Maintain Compliance

An outsourced financial team generally stays updated with all tax codes relevant to your business and remains compliant with financial regulations and laws. They practice these to ensure timely payment of taxes happens through accurate tax and return fillings on behalf of your organization.

Next, when it comes to maintaining compliance, it can be a bit challenging when your own team members are working on it. Outsourcing the responsibility can eventually reduce the challenges because outsourced financial experts are well aware of new and changing financial regulations. Compliance includes constant monitoring and a highly-skilled technical workforce.

The following are some of the critical business areas where outsourced finance experts can make a significant difference:

  • Understand regulatory changes
  • Address potential flaws discovered during regulatory audits
  • Employ technology solutions and compliance management systems
  • Complete compliance audits


Reduce Overhead Costs

Outsourcing the financial services of your business will eventually help you focus on one of the core functions—reducing or controlling costs. While working, if the subsequent questions come to your mind, such as

  • Are you working at the most favorable possible cost?
  • Can the currently available resources support new technology to compete against the market competition?
  • Is there any other efficient way to handle financial processes more professionally and quickly?
  • How can we cut down on recruitment and training costs?

Then you should immediately outsource your financial activities.Analysis based on these considerations can also bring efficiency and quality to the business.


Providing Advanced Technologies and Infrastructure

A proper financial institution infrastructure includes a variety of inter connected technologies such as the cloud, AI, machine learning, automation, and others. Such technologies are increasing in importance as financial services are constantly evolving. For example, the cloud is a prime outsourcing model and is becoming increasingly popular. Why? Businesses are looking for better financial operations, and cloud providers offer a trusted platform—hybrid and public that manages financial functions effectively.

Similarly, in financial institutions’ infrastructure, the evolved ones are fully equipped with mobility, modernized applications, high-speed internet connectivity, virtualization, and more. Therefore, financial services outsourcing affords businesses with an opportunity to integrate and manage all services in a hybrid environment uniformly and effectively worldwide.


Steps and Considerations for Outsourcing in Financial Services

As your business understands how outsourcing financial services can bring significant improvements to your financial operations, it is important to follow some of the most effective steps before you begin.


Assess your Needs

The assessment of your needs should be a “quick” evaluation to identify opportunities for your business that can improve your business and drive growth in the future.


Evaluate Potential Outsourcing Partners

A potential outsourcing partner will help your business experience the optimum benefits and advantages of outsourcing. When you evaluate potential partners, make sure to pay close attention to the following parameters:

  • Their experience, abilities, success stories, and reputation are key parameters
  • Determine the hidden terms and costs included in their outsourcing services


Time to Make the Switch

A well-established outsourced financial institution or services provider will assist your business with proper financial aspects, be compliant, competitive, and show the path towards financial growth for the future.


Frequently Asked Questions


What is meant by outsourcing of financial services?

Outsourcing of financial services means when a company hires financial services providers (third party) to manage its financial activities and responsible to drive financial growth.


What financial services can be outsourced?

Financial services such as policy formulation, internal audit, compliance, KYC norms, credit sanction, and investment portfolio management cannot be outsourced by businesses.


What are the risks involved in outsourcing financial services?

Outsourcing financial services can leave businesses vulnerable to new threats and risks. Risks and threats include loss of control, data breach, exposed essential information, dependency, and money loss.

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