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Putting together an optimal finance and payroll department can pose a bit of a conundrum. Although you want to provide the business with strategic support, expertise, modern IT systems, good forecasts and decision support, you probably also want to keep costs down, improve efficiency, and keep your employees happy. An option that more and more CFOs choose is outsourcing all or some of the finance function. So, what are the advantages?
Higher efficiency and lower costs
Working methods and processes of the finance and payroll function are often streamlined through outsourcing. An outsourcing provider that supplies payroll and finance services to several clients builds economies of scale and gains extensive knowledge of the processes. Since an outsourcing provider serve the same solutions and services to multiple companies, an outsourcing provider can make larger investments in, for example, IT and processes. The outsourcing provider can maintain a larger organisation with specialists in different areas and offshore organisations.
Through these learnings and experiences, the supplier builds in-depth knowledge and best practice to manage finance and payroll functions and cover areas like organisation, management, recruitment, IT systems, change implementation, leveraging experience, and ongoing monitoring.
Reduced risk and vulnerability
When companies outsource all or part of their finance function, the supplier guruarantees delivery, meaning that the vulnerability is lower. Whatever happens, it’s down to the outsourcing partner to have resources that have expertise in the area, knowledge of the assignment, and can supply the service on time.
The volume of tasks and resources is rarely static, but this is not something that needs to be considered at all when outsourcing. The resources required for delivering the service is what you pay for, even if it corresponds to, for example, 1.25 employees.
Expertise and quality
Managing finance and payroll is an extensive task, and there are rarely resources to create the perfect department internally. When you outsource finance and payroll function, you choose the skills you need from your outsourcing partner. The consultants at the outsourcing company work with similar issues day in and day out, making them experts in their fields and ensuring good quality. In addition, the consultants usually work according to a quality system where they follow the same methodology in their assignments. Well-established suppliers are also certified and authorised according to REKO, for example.
Flexibility is a common reason why many companies choose to outsource. An outsourced finance function can adapt to general changes more easily than an internal department. The need for resources and skills changes over time, for example, when you make an acquisition, win a large new customer, or maybe lose one. The ability to scale the service up and down means, among other things, that you can increase or decrease the number of resources, adjust skills, and add or remove elements of the service.
Modern IT systems
The most common scenario is that the outsourcing provider supplies the IT systems needed to provide the service. It ensures the most efficient service as the supplier have procedures and system setups in place that are adapted for the purpose. This means that you don’t have to invest time and money in purchasing, developing, and operating IT systems internally.
Time for strategising and core activities
Many CFOs find themselves frequently caught up in operational tasks instead of being able to be proactive and focus on providing critical business support, which should be at the top of their agenda. Outsourcing is a way to free up time for this work and successfully elevate their finance department to version 2.0, with access to digital documents, automated workflows, reliable data, and modern tools. This creates favorable conditions for driving the modern and value-creating finance function.
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