Mike Ford is the President and Founding Member of PBO Advisory Group.
After 35 years in the accounting and finance industry, I don’t necessarily need a crystal ball to know what the future holds—though it would be handy. In 2024 and beyond, there is one trend I predict will continue to influence how accounting services are managed by organizations: outsourcing.
As the founder of a company that provides outsourced accounting and finance services, here are three areas that I expect accounting outsourcing will continue to grow—and why.
Access To Talent
Staffing the finance functions within corporate America is becoming extremely difficult. According to a study by Robert Half, in 2022, 91% of senior managers found it challenging to find skilled finance and accounting talent, with the hardest areas being planning and analysis, accounting payable/receivable/bookkeeping and budgets and analysis.
The turnover rate is high within the accounting and finance department due to many factors, including the desire to work remotely, burnout, lack of flexibility and little variety of work being just some reasons.
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As reported by the Wall Street Journal, U.S.-based accountants are leaving their jobs in unprecedented numbers. While the exact number of accountants leaving to work for outsourcing firms isn’t known, the heightened response to outsourcing companies’ recruiting efforts tells us that skilled professionals who service businesses are looking for a change, including a variety in assignments, flexible hours, competitive compensation and locations they desire.
By utilizing outsourced professionals, from staff accountants to CFOs, businesses can build a team to support their needs.
Organizations are finding that they don’t need full-time employees (or the salaries, benefits and bonuses that go with them) for many of their accounting needs. If you haven’t yet explored the outsourcing model for accounting, now may be the time.
It definitely doesn’t take a crystal ball to know that security and data protection are growing needs as bad actors get more sophisticated with their nefarious ploys. According to a Boston Consulting Group report, the financial services sector is 300 times as likely to be targeted by a cyberattack as other sectors. Financial information is valuable to cybercriminals, so many focus on getting access to businesses’ financial information across all industries and are excellent at finding system vulnerabilities.
No matter the size or revenue of your company, cybersecurity surrounding your accounting and finance operations should be top of mind.
Again, outsourcing can play a role in ensuring your accounting systems and sensitive data are protected. As more security is developed, criminals’ abilities to find weaknesses continue to grow. An outsourced cyber professional or company can ensure your business has constant access to the latest security offerings with seamless integration while freeing up your employees to focus on day-to-day operations, planning and compliance.
Technology improvements are continually available to further automate and streamline the accounting process; however, many businesses fail to continually upgrade their systems. Knowing when to integrate updates and how to do so seamlessly is a critical area that can be outsourced. By doing so, you’ll have access to highly skilled experts whose sole focus is upgrading accounting systems.
In recent years, cloud-based accounting has revolutionized the way accounting and financial tasks are managed. And accounting is a crucial area of business for such automation.
From helping determine what foundational system(s) you need to what, when and how to update, an outsourced technology consulting team can provide efficiencies in less time than an in-house staff that is also burdened with multiple other responsibilities.
It’s important, however, that the outsourced technology team you select to help with your finance functions be staffed with accounting professionals who understand the unique functions and processes of today’s accounting department. According to a 2020 survey by Sage, technological literacy is one of the top skills needed by accountants today.
Making The Decision To Outsource
If you are considering outsourcing some of your company’s finance and accounting functions or your entire department, you need to take a critical look at your organization’s people, processes and technology. What is going right in the accounting department, and where can you improve? Does your current staff have the availability and the skills to make the needed changes, especially while continuing to do their current job?
Answering these two questions will give you a good starting point. If the answer to the second question is “Yes, my staff has the skills and the time,” then outsourcing may not be your best option. If you find a void between what needs to be done and your team’s abilities, then outsourcing could be the most viable route for you. A third response could be “I don’t know what we need,” and then you should secure a third party to assist you with evaluating your needs and developing your road map for change.
If you decide to outsource, look for a company that has expertise in the specific areas in which you need help. Most outsourcing firms focus their service offerings on specific business areas, so you might need multiple partners.
Ask for referrals from your peers for firms that provide outsourced accounting resources, cybersecurity support and/or technology consultants. Research and meet with several firms. Ask about their approach to providing services.
Most importantly, ask to meet the team assigned to your organization to determine whether the proposed outsourced individual/team is a good fit with existing staff and with your company culture. Make sure to set clear expectations on delivery. Request frequent status reports from the outsourced firm to ensure it is meeting expectations. If it is not, don’t hesitate to let it know.
Outsourcing appears to be working as evidenced by its continued growth. It leads to greater efficiencies and may lower costs, and you don’t need a crystal ball to know that’s what all organizations are striving for in 2024 and beyond.
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As an expert with extensive experience in accounting and finance, I can confidently analyze the key concepts discussed in the article by Mike Ford, the President and Founding Member of PBO Advisory Group. With over 35 years in the industry, his insights provide valuable perspectives on the future of accounting services, particularly focusing on the trend of outsourcing. Let's delve into the three main areas he highlights:
Access To Talent:
- The increasing difficulty in staffing finance functions within corporate America is supported by data from a Robert Half study in 2022, where 91% of senior managers found it challenging to find skilled finance and accounting talent.
- The turnover rate in the accounting and finance department is addressed, attributing it to factors like the desire to work remotely, burnout, lack of flexibility, and limited variety of work.
- The Wall Street Journal is cited to highlight the unprecedented numbers of U.S.-based accountants leaving their jobs, emphasizing that outsourcing firms are actively recruiting skilled professionals seeking a change in assignments, flexible hours, competitive compensation, and preferred locations.
- Outsourcing is presented as a solution for organizations to build a flexible and diverse team, addressing their accounting needs without the commitment of full-time employees.
- The article emphasizes the growing need for cybersecurity and data protection, citing a Boston Consulting Group report stating that the financial services sector is 300 times as likely to be targeted by a cyberattack as other sectors.
- It argues that financial information is valuable to cybercriminals, making businesses in all industries potential targets.
- Outsourcing is positioned as a strategic move to ensure accounting systems and sensitive data are protected, with the ability to integrate the latest security offerings seamlessly.
- The article discusses the continuous availability of technology improvements to automate and streamline the accounting process.
- Businesses are urged to upgrade their systems, and the critical area of knowing when and how to integrate updates is suggested to be outsourced.
- Cloud-based accounting is highlighted as a recent technological advancement transforming how accounting and financial tasks are managed, with the recommendation to seek expertise from an outsourced technology consulting team staffed with accounting professionals.
Making The Decision To Outsource:
- The article provides guidance for organizations considering outsourcing, advising them to critically evaluate their people, processes, and technology.
- It emphasizes the importance of identifying areas for improvement and assessing whether the existing staff has the skills and time to make necessary changes.
- If a void is identified, outsourcing is presented as a viable option, and the decision-making process is outlined, encouraging organizations to secure a third party for evaluation and road map development.
In conclusion, Mike Ford's article outlines a compelling case for the continued growth of accounting outsourcing, supported by evidence, data, and a deep understanding of the challenges and opportunities in the industry.