One of the major factors affecting the viability of an organization is the "accuracy of its financial accounts"
These should be prepared in accordance with the pre-set accounting standards with an aim to reflect the true financial position of the company. This is because the figures written in the financial reports are an essential proof for the "favorable" or "un-favorable" situation of the organization. Though all the sections in an organization are relevant but the financial counterpart is the one that is responsible for managing the sources and application of funds.
Moreover, stakeholders such as employees and investors are the most interested groups in these statistics as they get to know the returns they would be receiving from the efforts and money they put in the concerned organization. However, at times companies decide to hand over this job to some other company, resulting in what is termed as "Financial Outsourcing".
This act involves "asking some other company" to do the accounting, book-keeping or tax preparations on behalf of the concerned company.
The causes compelling companies to shift their financial department to some other group can range from something as simple as "lacking the competency or time to carry out the job on own" to as ambitious as "a greater desire to focus on the core businesses". The success of an outsourced task has to be a two-way process. In other words, both the participants should be committed to produce the desired outcome.
The outsourcing partner for this purpose should be chosen extremely meticulously, as wrong choice will not only be a "cost" borne by the concerned company but it will also affect its "future prospects". This is to say that in addition to paying deserving attention to the two parameters of "costs" and "benefits", (which is almost a norm in any outsourcing task), one should not neglect the potential and ability of the outsourced partner in being able to tackle the accounts efficiently. Improper handling can lead to "over-estimation" or "under-estimation" of the financial strength by the concerned company.
Any of these extremes can be a "lethal" mistake for the organization. Accuracy is a major concern in this transfer of job.
Consequently, screening of the choices available should be done carefully by taking certain parameters beforehand. One of these is "understanding" and "spelling" the very requirements of outsourcing the job. Such an act will keep both the participants "on the same page". Absence of this step can lead to moving of them on different paths, which later will lead to "deviations" of opinions. The outsourcing partner should be equipped with the needed techniques and technologies to make the statistics available at the needed time.
Similarly, the company that is outsourcing the job has to be honest in its approach. "Transparency" in the task of Financial Outsourcing holds the most important place. All transactions, with complete and accurate volume should be made visible to the outsourcing partner to enable it present the actual data for decision-making.
However, the challenges can be easily and "quantifiably" tamed by using the BSC (Balanced Scorecard). In this job, indicators that seem associated with the success of the task are framed under relevant categories. To start with, the perspectives that can be used are- Screening Perspective, Outsourcing Partner capability Perspective, 'Outsourcing Process Assessment' Perspective and Benefits Accruing Perspective.
Screening perspective can be calculated via the indicators like Staff Training and Learning ability, Infrastructural and Technological Competency, Redundancy Factor and Number of support systems. Outsourcing Partner capability Perspective can be evaluated using parameters such as Accuracy Meeting Level, Expectation Fulfillment ratio, Pre-set requirements conformance Degree and Migration and streamline Ease Index. Moving on, the process of outsourcing can be assessed by using metrics like Task outsourcing fraction, On-going accounting savings Percentage, Decision making alignment and Cost Savings ratio. Lastly, one can have the benefits accruing from the outsourcing job depending on metrics like Increase in other activities, Quality Assurance Index, Number of successful projects that occurred because of financial outsourcing and Number of Data security Measures adopted. Capping it all, performance of Financial Outsourcing is possible with similar structuring of pointers that indicate the wellness or "t roubl es"
in the process of financial outsourcing.