The outsourcing of accounting has emerged as one of the smart strategies adopted by businesses across the UK in terms of saving their time, and cuts, and enhancing accuracy in financial data. However, with most major business decisions comes a variety of problems associated with it. Be it issues related to data security, communication, or even loss of control, businesses should be aware of these pitfalls to ensure their successful navigation of outsourcing.
To learn more about the benefits of outsourcing accounting services, check out our detailed guide here.
In this guide, we shall discuss six common challenges of outsourcing accounting and provide you with simple solutions to overcome them easily in your business.
6 Common Challenges of Outsourcing Accounting and How to Overcome?
1. Data Security and Confidentiality Concerns
Outsourcing accounting has been one of the major issues for businesses because of the concern of releasing sensitive financial information to a third-party provider. Handing over confidential information to a third-party provider can be intimidating, especially with increasing cyber threats.
How to Overcome:
- Ensure that the outsourcing company has proper security measures.
- Opt for companies that have ISO 27001 certifications and have GDPR compliance, since the certifications ensure that a firm follows some of the best data protection standards.
- Ask what kind of encryption they follow, what kind of data storage solutions they deploy, and if they have had to undergo any security audit.
- Signing a detailed Non-Disclosure Agreement (NDA) can also add an extra layer of security.
2. Communication Barriers
Effective communication is the key while working with an outsourcing accounting service provider. However, once time zones, language differences, or reporting structures are lousy, the communication flow breaks down and the results cost dearly.
How to Overcome:
- Ensure that from day one, the communication channels are well defined and response times agreed upon.
- You should make use of tools such as Slack, Zoom, or Asana to maintain regular contact no matter where the outsourcing partner is located in the world.
- You can further agree on scheduled check-ins or progress meetings to ensure that both teams are being aligned in terms of objectives.
3. Loss of Control and Visibility
The biggest concern in the outsourcing of accounting services is the potential loss of control over financial processes within the finance area. Businesses often worry they won’t have the same visibility into their accounts when they move them to an external provider.
How to Overcome:
- You can overcome this by choosing a third-party outsourcing firm that gives an individual real-time access to their financial data using cloud-based systems, for instance, QuickBooks or Xero.
- These systems will ensure that you can monitor your finances anytime and anywhere in the world.
- More importantly, setting up recurring financial reporting and regular meetings with your outsourcing partner will keep you on top of their accounts.
For more insights on choosing between QuickBooks and Xero, check out our blog on Xero Vs QuickBooks Online.
4. Integration with In-House Teams
The introduction of an outside team into your accounting processes can lead to integration issues if not managed properly. Different workflows, different software, or even differing company cultures create friction and slow down the productivity system.
How to Overcome:
- Choose an outsourcing partner who will fit your systems and transform themselves to meet your business requirements.
- A structured training process and introduction of the internal team and outsourced team assures easy adaptation by both teams.
- Continual check-ins within teams ensure that everyone is aligned, and the business processes don’t get impacted.
5. Quality and Accuracy of Work
Accounting outsourcing needs that quality to be at the forefront. If the external provider makes mistakes, it can lead to compliance issues, tax penalties, or missed financial opportunities for your business.
How to Overcome:
- Ensure you outsource to a well-established outsourcing provider that has real experience and positive references from clients.
- Set clear Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) to hold them accountable for the quality of their output.
- You would want to do regular performance reviews and audits to continue maintaining high standards and rectify errors quickly.
6. Cultural and Work Style Differences
Work ethics, communication styles, and business practices differ from country to country. It often leads to misalignments, hence affecting productivity and collaboration.
How to Overcome:
- To bridge cultural gaps, invest time in understanding your outsourcing partner’s work culture.
- Regular communication, mutual respect, and clear expectations are essential.
- Cross-cultural training for both in-house and outsourced teams can enhance cooperation and ensure smooth collaboration.
For more insights read our on how to select the best outsourcing partner
Conclusion
While the challenges of outsourcing accounting can seem daunting, they can be easily overcome with the right strategies. From securing data to improving communication and seamless integration, businesses can outsource their accounting functions and enjoy the many benefits that come with it.
As an accounting firm whose services mainly focus on UK firms, MeticMinds helps overcome some inherent challenges by offering bespoke, secure, and reliable outsourcing of accounts according to the precise needs of any business. Using our expertise and client-centered approach, we can ensure that your business remains in control, compliant, and financially sound. Let MeticMinds be your trusted partner for all your accounting needs.