Top 10 benefits of outsourcing accounting and payroll

Of all the departments within a business, accounting and payroll is probably one of the few areas where most of the work is repetitive and rules-based. It’s all about data entry, processing, allocation and calculation. Higher level staff and management are obviously tasked with more  involved work such as analysing data, forecasting cash flows and assessing budgets but at the point where money comes in and out of your business, it’s a fairly straightforward process and businesses can benefit greatly from outsourcing this work.

Here are the top 10 benefits of outsourcing these tasks:

1. Cost savings

   As one of the key objectives in any business, cost savings are vital to achieving business objectives… and profits. And with savings of up to 70% on staff costs, outsourcing to international locations such as the Philippines is a strategy that’s just too good to ignore. Salaries are generally lower but by working through an outsourcing provider you’re also saving on overheads such as office space, internet connectivity and all the expenses usually associated with staff.

2. Business efficiencies

   By allocating transactional tasks to an outsourced team, your business is in a better position to maximise the roles of your local team. Local staff can be directed to focus on adding value to the business and working on strategic projects that are designed to grow a business. It also means that they’re not caught up in transactional, low value tasks and are able to take a broader view of your business and focus on important tasks such as managing stakeholder relationships, addressing issues and taking on new business opportunities.

3. Task efficiencies

   When a staff member is focused entirely on a limited number of transactional type tasks, they become super efficient at completing those tasks. There are no phone calls, no creditors to respond to and no other distractions that normally occur in and around the office. The outsourced team soon becomes more efficient at certain tasks than the local team ever were, and that’s the way it should be.

4. System and process improvements

   System and process improvements often come about merely through the actions of outsourcing to another team. It gives businesses an opportunity to look closely at what they do, how they do it and even why they do it. There’s not often time to thoroughly review processes during day-to-day business operations, so outsourcing provides a great reason to reassess, systemise and change, in order to improve efficiencies within the accounts or payroll department.

5. Reduced staff attrition

   Local staff that have been employed in an accounts or payroll assistant role, are usually looking to use it as a stepping stone in their career before they move on or chase a promotion. Businesses are facing high attrition rates as a result. Outsourced teams based in the Philippines experience a much lower attrition rate and staff members are more content to stay in the role. This is largely due to the highly competitive local employment market and the credibility associated with working for a Western company.

6. Ease of recruitment

   Western economies have a relatively mature labour market and unfortunately, jobs such as accounts assistants and payroll clerks are often difficult to fill. Even newly graduated students are looking for more challenge and responsibility in their first job. In job markets such as the Philippines, this attitude doesn’t exist to the same extent and often fully qualified accountants will happily apply for bookkeeping or assistant roles. And as we mentioned earlier, there’s so much more competition for employment that job ads always receive a huge number of applicants.

7. Reduced training time

   Once the initial training and onboarding process is set in place with your outsourcing provider, future staff members are very quickly brought up to speed on job tasks, processes and requirements. The tasks are limited to a select few, so the training is very focused and fast. It’s overseen by a senior manager who is entirely focused on getting them up to speed quickly. The new staff member will also sit within a team of people who are all doing similar roles so it’s conducive to on-the-job learning.

8. Improved accuracy and quality

   Focusing on a limited number of tasks and reducing other distractions, can often lead to improved accuracy in accounting processes. It’s also standard practice to implement a quality assurance program for your outsourced team which is overseen by a senior manager. Performance management and incentive programs are managed by your outsourcing provider in consultation with your business, to further ensure quality at every level.

9. Business continuity

   There are an increasing number of issues that businesses now need to consider when addressing their business continuity plans. Any action that diversifies how and where the business operates will ensure a better chance of business continuity. Remote working via the cloud is standard practice for many businesses today and it’s often best to ensure that staff are in quite diverse locations as well so as to avoid localised issues such as natural events and lockdowns.

10. Increased opportunities

    What sort of opportunities might your business be missing out on, while your local staff are caught up in low value, transactional tasks? There’s a very real opportunity cost for businesses when staff don’t have the time to look up from these tasks in order to take a more strategic outward looking view of the business. It’s only then that they can truly contribute to its growth.

Outsourcing accounting and payroll tasks overseas offers a huge range of benefits for businesses not least of which is savings on staff costs of up to 70%. To find out more about how to scale your accounting firm, read this blog.