finance and accounting outsourcing increasing among mid-market companies.<\/i><\/p>\n
by rick telberg<\/b>
\nfor the finance executive<\/i><\/p>\n
after years of fear and trepidation, finance managers and accountants are learning how to stop worrying and love outsourcing.<\/p>\n
according to a boston consulting firm, 71 percent of middle-market companies, each with fewer than 5,000 employees, are now outsourcing at least some of their finance and accounting (f&a) functions. in fact, if you\u00e2\u20ac\u2122re sending your tax work to a cpa firm or your payroll to an agency, then you too are already outsourcing.<\/p>\n
cpa firms and finance executives have been reaping the rewards for years. but today, with middle-market companies looking to outsource some core functions, the vista is becoming even broader.
\nthe number one reason for f&a outsourcing? cost cutting, cited by 42 percent of those surveyed by fao research inc. cost cutting was followed by \u00e2\u20ac\u0153lack of internal accounting and finance staff,\u00e2\u20ac\u009d cited by 33 percent.<\/p>\n
middle-market managers also appear to be chasing quality. about 32 percent of the companies surveyed said they outsource to improve the quality of their f&a services. separately, the companies surveyed gave their internal accounting an average grade of 5.89 based on a scale of 1 to 10, with 1 meaning \u00e2\u20ac\u0153extremely poor\u00e2\u20ac\u009d and 10 being \u00e2\u20ac\u0153exceptionally well.\u00e2\u20ac\u009d<\/p>\n
as a result, even the smallest local cpa firms are launching \u00e2\u20ac\u0153rent-a-cfo\u00e2\u20ac\u009d services.<\/p>\n
at the same time, the study found that middle-market companies are apprehensive about outsourcing, particularly about sending the work overseas. forty-seven percent of the survey respondents said they are concerned about losing control of the outsourced process and 37 percent are not especially confident of the security at outsource service providers\u00e2\u20ac\u2122 facilities.<\/p>\n
it appears that today\u00e2\u20ac\u2122s shortage of skilled accounting staff is opening the outsourcing spigot wider.<\/p>\n
\u00e2\u20ac\u0153the outsourcing industry loves a labor shortage,\u00e2\u20ac\u009d fao research chief executive lisa ross said. she added that the current staffing shortage is forcing companies to increase their outsourcing of \u00e2\u20ac\u0153highly transactional\u00e2\u20ac\u009d accounting work, such as payroll, accounts receivable and payable and sox compliance, but warns: \u00e2\u20ac\u0153as the labor shortage gets tighter, this list will likely grow, including more \u00e2\u20ac\u02dcknowledge work\u00e2\u20ac\u2122 functions.\u00e2\u20ac\u009d<\/p>\n
outsourcing remains primarily the purview of larger, publicly traded companies cutting costs to appease shareholders, but ross has been warning that the business phenomenon is spreading to the middle market. she noted that middle-market outsourcing \u00e2\u20ac\u0153is starting to gain more traction, with not only more contracts, but offerings from vendors who might have once thumbed their noses at buyers with less than $10 billion in revenues.\u00e2\u20ac\u009d the report added, \u00e2\u20ac\u0153look for the mid-market to really pick up steam during the next year or two.\u00e2\u20ac\u009d<\/p>\n
[first published by the aicpa]<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"