Outsourcing Mistakes to Avoid
Jul 20, 2015
With today’s advanced technologies, many companies are enjoying the benefits of outsourcing. Whether you’re outsourcing your accounting, human resources or IT function if an experienced firm can do it smarter and faster, why not let them do it, right?
Experience has taught us that this theory may have significant truth. However, if you do not completely understand outsourcing and what it entails, success can be hindered. Whether you are new to outsourcing or considering switching providers, it is important to avoid these outsourcing mistakes to ensure a successful outcome.
Internal disorganization. If you are looking to outsource simply because everything is in disarray, it is time to “straighten up your house” first. Using outsourcing as a quick remedy may generate other obstacles which ultimately leads to poor results. Outsourcing the accounting function provides great standardized procedures for the pieces that are being outsourced, but if part of the workflow starts or ends in your office, you must first build your internal workflow to support the outsourced process.
Focusing solely on the price. While outsourcing is generally much more efficient than in-house processing, the old adage “you get what you pay for” is applicable. You should look for cost-effectiveness combined with accuracy, not necessarily cheaper.
Inability to identify your outsourcing needs. In some situations, it is not best to outsource every function. Only those processes outside of your core competencies. For example, a nonprofit that has customized contract billing on a governmental website. Is this something you want to outsource? One wrong entry and your funds could be held up for months. Let the program manager continue to do the invoicing and your outsourcing team can record the receipt of the funds!
Eliminating company guidance. If you choose to outsource your accounting function, you have moved the functional task from your plate onto another. But don’t kid yourself into thinking that you never have to think about it again. Your company must be involved with the numbers on a daily basis. The end goal is to have a clearer picture and be able to make quality business decisions based on real-time data. Communication and collaboration are key to ensuring your objectives and goals are being achieved and this involves internal participation.
Lack of internal processes. Outlining guidelines, processes and procedures are necessary to ensure success. Internally, these procedures must be set in place. If you have major cash flow challenges or a complicated and unique system that requires day-to-day decisions about what to pay and what to hold, outsourcing may complicate your system. If your challenges are a result of poor processes or lack of transparency, having a plan in place will make your outsourcing experience efficient and painless.
Remember the goal of outsourcing is to eliminate inefficiencies and provide clarity to make better business decisions. Taking the time to prepare your organization and avoid common mistakes will make the process much smoother and less costly. Now that you have taken the time to recognize what to avoid, download our presentation on how cloud accounting services can change your business
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