Many businesses prefer to outsource their back office services such as payroll, CFO functions, and accounting. This is true because back office operations entail a lot of activities that must be done correctly. Another major reason why people tend to outsource is because they think it takes time to generate financial statements, manage payroll, and perform accounting on a daily basis. Businesses also tend to outsource because they feel like a lot of resources will get tied up if they manage back office operations on their own. Most outsourced accounting firms include tax prep for government agencies and advisory among their core services. By relying on them to handle all your financial records, there is a developed synergy between your tax prep and accounting.
- Moreover, the final phase of O2C—revenue recognition—is itself a complex process that’s gotten even more challenging among new accounting standards and regulations.
- Some companies find back office jobs costly since you need to allow a substantial amount of capital for recruitment, salaries, and employee benefits.
- Also, she keeps a calendar of expiration days, and she manages the expiration process.
- Cloud computing provides access to servers, storage, software, data, and applications via the internet.
- A BPO vendor’s expertise can be shown primarily through their approach to their clients.
For example, a growing number of businesses have introduced subscription-based and hybrid pricing models. But many popular ERPs do not support them, or they require clunky, bolt-on solutions. Finance leaders at companies with limited ERPs often find themselves in the position of either saying no to a new and potentially lucrative pricing strategy or committing to managing it with Excel. While legacy systems focus everything around the physical good or, for HR-based systems, around the employee, it has become clear that this model isn’t ideal for organizations with a major services component. The back office plays a crucial role in supporting the front office (think sales/trading desk) by processing the trades made by customers of the bank or for the banks’ own proprietary trading operations.
Global considerations for mid-market companies
It is all about keeping track of financial statements, financial transactions, and financial reporting. Outsource Accelerator lists over 3,000 business process outsourcing companies in the Philippines specializing in back office administration. The Philippines is among the fast-emerging outsourcing destinations in the world ever since its emergence in the 1980s. Their expertise in back office services, as well as numerous other roles, attracts global firms to their shores. Back office outsourcing will allow you to focus on core business activities while leaving other roles to experts who have years of experience in handling such tasks. For instance, many online businesses hire virtual assistants (VA) to provide administrative and customer service assistance without having them physically present in the office.
Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. Legal process outsourcing deals more with delegating legal processes and compliances to legal firms in another area. The type of business process outsourcing can be characterised by their specialisation, location, and size. The recent Clutch survey stated that around 90% of small businesses plan to outsource their services in 2022 due to the efficiency and flexibility that companies get. In general, when we speak of outsourcing, it always entails contracting out parts of business processes to an external provider either domestically or offshore. At the same time, outsourcing opens clients to global trade opportunities.
Time savings
Back office accountants play a pivotal role in ensuring the smooth financial operations of a company. Their key responsibilities revolve around accurate financial data management and compliance. They handle tasks such as recording financial back office accounting transactions, reconciling accounts, and maintaining ledgers. These professionals are entrusted with verifying invoices, processing expenses, and managing payroll, ensuring that all financial entries are precise and consistent.
A team of 10 employees would only cost them as much as a single worker in the US with an equal position. There are many benefits to outsourcing, as well as some downsides and risks. Outsourcing powerhouses like the Philippines and India produce high-quality talents at a lower rate due to their low operational costs and full government support. They ensure the best operational structure, competitive pricing structure, proven processes, and guaranteed results with their operational overseers. Dashboards compile and update your key performance indicators (KPIs) in one place so that business leaders can access any financial information anytime. More and more companies are increasingly seeing outsourcing as a solution to every problem in business operations.
Why do businesses choose to outsource back office services?
Back office employees typically do not interact directly with customers or clients. Instead, they handle internal operations that are often more complex than those handled by front-office personnel who deal directly with customers. Back office is a term used to classify business activities that are not directly attributable to frontline customer support, sales, and services. For the full year ended December 31, 2019, the new standards for revenue recognition will become audit guidance for non-public companies (public companies have reported under these standards since 2018).