INTRODUCTION TO F&A OUTSOURCING TRENDS
Today, finance teams are constantly seeking ways to streamline operations and gain a competitive edge.
Finance and accounting outsourcing (FAO) is what usually gives them the highest ROI – a powerful solution to optimize financial processes and unlock numerous benefits.
FAO enables companies to leverage the expertise of finance and accounting professionals, reduce operational costs, and enhance efficiency.
Executives can focus on core business functions, access specialized talent, and achieve scalability and flexibility by entrusting their finance and accounting functions to trusted outsourcing partners.
With Exela FAO, we have seen our partners improve their financial management, drive growth, and gain a strategic advantage in their industry.
Here’s a list of some of the latest trends in F&A outsourcing, along with potential ROI for finance teams. Look out for these high-demand activities that modern finance teams want to leverage:
Robotic Process Automation (RPA)
Trend: Implementing software robots to automate repetitive tasks.
ROI: Companies can expect a 25-50% cost reduction in automated processes. Time savings of 20-40% for finance staff, allowing them to focus on higher-value activities.
Cloud-based F&A Solutions
Trend: Moving financial operations to cloud platforms for improved accessibility and scalability.
ROI: 15-20% reduction in IT costs, 30-40% improvement in financial close times, and improved real-time reporting capabilities.
Advanced Analytics and AI
Trend: Utilizing big data and AI for predictive analytics and decision-making support.
ROI: 10-15% improvement in forecast accuracy, 20-30% reduction in bad debt, and faster identification of cost-saving opportunities.
Blockchain for Financial Transactions
Trend: Implementing blockchain for secure, transparent financial transactions and auditing.
ROI: 30-50% reduction in transaction costs, 70-80% decrease in time spent on financial reconciliations.
Cybersecurity Focus
Trend: Increased investment in cybersecurity measures to protect financial data.
ROI: While direct ROI is challenging to measure, it can prevent potential losses of 3-5% of annual revenues due to cyber attacks.
End-to-End Process Outsourcing
Trend: Outsourcing entire financial processes rather than individual tasks.
ROI: 20-30% reduction in overall F&A costs, improved process efficiency by 30-40%.
Data Visualization Tools
Trend: Implementing advanced data visualization for better financial reporting and analysis.
ROI: 15-20% reduction in time spent on report preparation, improved decision-making speed by 20-25%.
Sustainable Finance Practices
Trend: Incorporating Environmental, Social, and Governance (ESG) factors into financial operations.
ROI: While immediate financial returns may vary, companies with strong ESG practices have shown 4-6% higher market valuations in the long term.
UNDERSTANDING F&A SOLUTIONS
Finance and Accounting Outsourcing (FAO) is the practice of delegating finance and accounting functions to external service providers.
Companies opt for FAO for various reasons.
Firstly, it offers cost savings by eliminating the need for an in-house finance and accounting department, reducing overhead expenses associated with hiring, training, and managing a team.
Secondly, FAO provides access to skilled professionals with deep industry knowledge and experience, ensuring accurate and reliable financial processes.
Additionally, FAO enables executives to leverage advanced technologies and tools that may otherwise be expensive or challenging to implement internally.
Numerous areas within finance and accounting can be outsourced to specialized service providers.
This includes bookkeeping and general ledger management, where tasks like recording transactions, reconciling accounts, and preparing financial statements are handled.
Accounts payable and receivable processes, like invoice processing, payment management, and credit control, can also be effectively outsourced.
Other areas, such as financial analysis, tax compliance, payroll processing, and compliance reporting, can benefit from the expertise of outsourcing partners, ensuring accuracy, efficiency, and compliance with changing regulations.
WHY IT MATTERS: 14 CORE BENEFITS OF FINANCE AND ACCOUNTING OUTSOURCING IN FINANCE TEAMS
- Reduction in operational costs by eliminating expenses related to in-house finance and accounting teams, such as salaries, benefits, training, and infrastructure.
- Access to specialized expertise and technology without the need for costly investments.
- Ability to leverage economies of scale and vendor relationships for discounted rates on software, licenses, and services.
- Streamlining of processes through standardized workflows and best practices implemented by experienced outsourcing providers.
- Benefit from improved accuracy, timeliness, and compliance, as F&A outsourcing companies have dedicated teams focused on finance and accounting functions.
- Faster and more efficient financial processes due to access to advanced technology tools and automation.
- Ability to reallocate internal resources and management attention to core business activities, strategic decision making, and revenue generation.
- Allows companies to concentrate on their strengths and competitive advantages.
- Ability to adapt quickly to changing business needs and market conditions by leveraging the scalability and flexibility offered by outsourcing providers.
- Ability to scale resources up or down based on demand, ensuring optimal support for financial operations without the challenges of hiring, training, or downsizing internal staff.
- Allows risk mitigation associated with regulatory compliance, tax laws, and financial reporting by partnering with outsourcing experts who stay up-to-date with industry regulations.
- Improved security measures and data protection through robust systems and processes implemented by outsourcing providers.
- Valuable insights into financial performance, F&A outsourcing trends, and key metrics through advanced reporting and analytics tools provided by outsourcing firms.
- Ability to leverage data-driven decision-making to drive strategic initiatives and optimize financial outcomes.
FROM VISION TO REALITY: EXELA FAO’S IMPACT ON THE SUCCESS OF BIG AND SMALL BUSINESSES
A leading brokerage firm faced several challenges related to its banking workflows and check processing.
With a nationwide presence of 10,000 branches, the firm managed an average volume of 20,000 checks per day.
Each branch had its own local banking relationship and made frequent trips to the bank for deposits.
At their headquarters, 22 employees were dedicated to reconciliation and research tasks.
Additionally, the firm maintained over 1000 banking account relationships with six different banks, involving daily sweep activities and managing deposit windows across multiple time zones.
A key requirement was to trace and detect duplicate checks efficiently.
To address these challenges, Exela provided the firm with a comprehensive solution. This included a Software-as-a-Service (SaaS) application and desktop hardware scanners, enabling retail branches to deposit check payments digitally.
By implementing remote solutions, Exela eliminated the need for travel to any of the 10,000 branches.
The solution offered several features to improve accuracy, such as real-time duplicate check detection and correction, amount validation, autofocus and image capture technology, low confidence CAR/LAR check, RT/DDA validation, and MICR line correction.
Additionally, the firm could benefit from complete dashboard reports, providing valuable insights into deposits and validation files.
Adopting Exela’s solution brought significant benefits to the brokerage firm. Firstly, the solution was bank-agnostic, supporting multiple bank processes and streamlining overall banking workflows.
Additionally, the firm was able to shut down 1000 sweep accounts, eliminating the need for daily trips to the banks.
This resulted in improved efficiency and cost savings.
Notably, there was no increase in staff for cash receipts at the firm’s home office, demonstrating the effectiveness of the implemented solution.
Furthermore, the risk was mitigated through a per-transaction pricing model, offering flexibility and financial security.
Exela Finance & Accounting Solutions (FAO) team of experts successfully addressed the brokerage firm’s challenges by streamlining their banking workflows, improving accuracy, and reducing operational costs.
CONCLUSION: ARE F&A OUTSOURCING COMPANIES WORTH IT?
Businesses must carefully evaluate their specific circumstances and needs when considering to opt-in to outsourced F&A solutions.
Outsourcing F&A can be a strategic move that offers numerous benefits, such as cost savings, access to specialized expertise, improved efficiency, and scalability.
It is particularly beneficial for businesses that lack in-house F&A resources, struggle with complex financial processes, or aim to focus their internal resources on core business activities.
Even organizations experiencing rapid growth or undergoing restructuring may find outsourcing F&A advantageous.
However, businesses with well-established and efficient in-house F&A teams that require direct control over financial operations or handle sensitive financial data may opt to keep their F&A functions in-house.
Ultimately, the decision to outsource F&A should be based on a careful assessment of the organization’s unique requirements, goals, and risk tolerance.
Need help? Get on a call with Exela’s F&A experts today
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DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.
