6 Outsourcing Mistakes Accounting Firms Make and How To Avoid Them
Are there any avoidable outsourcing mistakes that accountants make? Accounting professionals who successfully predict trends and threads in the accounting industry, are able to plan stronger for long-term success.
Global outsourcing is now a big trend in the accounting industry. And it is well established and well developed. It’s a viable strategy to improve efficiency, margins, and it can benefit CPA’s a lot.
In this comprehensive article, we are talking about avoidable mistakes that accounting firms make while outsourcing tasks in their businesses. Here are 6 most common mistakes and our tips on how to avoid them:
Mistake #1 Your in-house team is not prepared for outsourcing
For accounting firms that want to increase resources, while increasing margins and productivity, good preparation before jumping into “two-office approach” is becoming crucial:
– “Place 1” is onshore, and is primarily responsible for advertising, policy, core service and workflow management.
– “Place 2” is offshore, and is responsible for most of the process-driven and administrative work being undertaken.
How well you interact and coordinate between these two offices will profoundly affect the quality of the execution of your workflow.
It’s crucial to involve your local team right from the start with your outsourcing strategy. If your local team doesn’t understand where outsourcing fits in with the vision of your company, you’ll probably flounder.
You’re making a mistake #2 when you don’t have standardized systems
The members of the offshore team may not be able to meet the standards if duties are assigning ad hoc. So, if three partners have three different ways to do the same job, you’ll only create more uncertainty.
Standardized workflows are the solution. Use a standard framework, it will set out “train tracks” that the team will follow. Also, this is a call for a quality management process during the transition process.
The good news is: it’s not hard to build workflows and systems. Just create and/or update your workflow for the new “reality” that you are entering.
Outsourcing mistakes: #3 when you are outsourcing most difficult tasks from the beginning
When outsourcing, many of the firms including CPAs, are getting excited and blinded at the same time.
As a result, they will pick two or three extremely difficult tasks and outsource them from the beginning. By starting with this strategy, outsourcing seems much harder than it is.
Rather, we suggest to begin with tasks that are fairly simple, process-driven and time-consuming. This way, you can gain some fast wins before complexity grows in your new environment.
You’re making a mistake #4 when you’re not incorporating constructive feedback
While you’re working on several projects simultaneously, It’s easier, as you finish the first one, to just move on to the next one, without giving any thoughts on how the work has been done. Also, as the deadline approaches, when an emergency arises, you’ll probably feel like it’s better to do it yourself instead of delegating it to your team.
But in the longer term, you will fail to understand the full advantages of teamwork if you are unable to delegate work thoroughly and confidently.
We suggest that each workflow needs to include a feedback component to allow good work to be celebrated, and not that good points to be highlighted for improvement. Your new corporate culture should incorporate giving and accepting feedback as a start and as an endpoint for every task delegated to your new virtual team.
Outsourcing mistakes: #5 when you’re not implementing metrics and KPIs
Metrics and KPIs are an objective way of setting goals and tracking results.
In every CPA, KPIs are offering a straightforward answer to the question, “What does good work represent?”. This needs to be implemented before and during the process of outsourcing your tasks to third parties (your virtual team).
Some of the bookkeeping KPIs that you need to track and measure are:
- AP – At least 60% of invoices that are hitting your inbox should be processed the same day.
- AR – Here your goal should be the reduction of debtor days. However, this is heavily dependent on the industry where the clients are operating. The best approach would be to look at what the average currently is, and what it would be reasonable to reduce it to in a specific amount of time.
- By the end of the month, you should have clear bank feed, so you can start reviewing your financials and resolved any uncategorized items.
- No later than 5th in the month, have resolved all uncategorized transactions.
- Between 5th and 10th, have ALL bank/credit/loan accounts reconciled.
- Between 11th and 15th, complete all monthly reports, so you can send them to your clients.
You’re making a mistake #6 when you’re not onboarding your clients right
Some accountants are wondering if their clients will respect global outsourcing as part of their business model.
But here’s the thing: For a fair price, all clients want great results.
Currently, we provide offshore support (virtual bookkeepers) to different companies in different industries. Our experience is that clients are very positive when CPAs are straight to them for every status or change in their business processes. Hence, you need to describe from the start: how and why your new offshore team is bringing value to them.
Whit that in mind, here are the most common mistakes that CPAs are making during the process of outsourcing. Consequently, the question is not whether you need to outsource your tasks to the virtual team or not, but how good are you implementing this process. By knowing what to avoid, you’ll be able to acquire greater success for your firm.
The Next Generation crew takes the time to understand your needs, your people and your company processes at all, so we can provide specific and custom made service for you to succeed. Book a free consultation with our team and let’s build a great collaboration.
That being said we have covered the most common outsourcing mistakes that CPAs are making during the process of outsourcing. The question here is not whether you need to outsource your tasks to the virtual team or not, but how good are you implementing this process. By knowing what to avoid, you’ll be able to acquire greater success for your firm.
The Next Generation crew will take the time to understand your needs, your people and your company processes at all, so we can provide specific and custom made service for you to succeed. Book a free consultation with our team and let’s build a great collaboration.
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