Because we are active in the sector, more specifically in outsourcing accounting, tax and financial procedures, we have ideas and convictions that naturally come from Albieri and Associates’ experience throughout the last 5 years.
We’ve had the opportunity to socialize with hundreds of professionals from different levels, specialties and sectors of the economy, and this great human and technical material motivated us to put some of the main points down on paper that, in our view, revolve around the topic of outsourcing.
I hope everyone can take advantage of our reflections and reports.
We believe that the main point of uncertainty that managers face concerning the issue of outsourcing is responding to the following questions by the company’s executive team: “Do we really have to spend money on this? Can’t we solve the problem internally? What are the risks to workers?”
Well, the best scenario of course is that we can solve everything with the resources we have in-house without having to procure service providers and without having to compromise the department’s budget.
Nevertheless, over the years, we’ve seen that the most successful tax, accounting and financial departments feature a culture of perpetually utilizing third parties. In other words, the company and its professionals deal naturally with the issue of dividing activities and responsibilities by using service providers.
When I say successful, I refer to points such as:
Completing closures within aggressive time frames;
Delivery of consistent and revised supplementary obligations within the legally mandated time frames;
On-going initiatives that generate results for the company, whether related to time and money saving measures or engaging the internal staff;
High-quality information produced in the department.
As such, what is the equation that these companies see in outsourcing accounting, fiscal and financial activities and in consistently adopting this practice? The answer seems simple, but clearly does not depend on a single factor:
Factor 1 – Operational Flexibility
Departments I would mark as successful adopt a strategy of having 15 to 30% of their staff outsourced. This practice provides managers with an enormous amount of operational flexibility. It’s much easier to phone a service provider and request to switch out an in-house tax employee for an outsourced one or for an accounting professional than having to involve your internal HR, initiate a selection process, dismiss an employee etc. In addition to this advantage, there is also the option to decrease or increase staff whenever it’s necessary, because this procedure is part of the service provider’s role.
Factor 2 – Budget Flexibility
Budget flexibility is considerable. When required, breaking an outsourcing contract is practically immediate and hardly ever involves any penalties. Building a good contract that protects the company from these circumstances is a great tip for those working with third parties. I’d like to point out the following items that lend greater flexibility to the process:
Lack of penalties;
No minimum terms or previous notices;
Ability to increase or decrease the outsourced staff at any time. This dynamic also helps protect in-house employees, because during a time of crisis or in case of budget cuts, third parties are the first to be affected, followed by employees.
Vacation and holiday season
A good contract for outsourcing procedures within the accounting, tax and financial departments provides a constant staff. For example, if an outsourced worker has to go on vacation, suffers a health problem and needs a leave of absence or goes on maternity leave, the SLA is obliged to promptly replace the professional who will be absent from the team.
Another point commonly observed, particularly for contracts that involve more than 6 people in the same department, is the assignment of what we call an employee “back-up”. This is the assignment of an additional professional to the staff. Their role is to gain experience on the routines and internal procedures in order to fill-in on holidays, absences and other day-to-day events.
Engagement of the internal staff (transactional services)
Another rather positive point in outsourcing is focusing its use on activities called transactional, or better, those activities that do not involve strategic knowledge concerning the business or any decision-making. Some examples of these procedures include:
Entering invoices into the company’s systems; Accounting reconciliation procedures related to the initial cross-checks and verifications, with the analysis and decision to make adjustments remaining with the company;
Billing routines;
Generating ancillary tax obligations;
Paralegal activities and others.
Through this approach, the company’s internal staff can dedicate themselves to more technical analysis and strategic decision-making, creating greater motivation and commitment from the employees who, in this situation, will no longer be “drowned” in operational procedures.
Oxygenation: benchmarking and market practices
The movement of third parties in the company inevitably renders a comparison with similar situations already experienced by these professionals in other customers and environments. This comparison is heading towards a positive questioning of the status quo of some procedures that will often provide new ideas and the consequent improvements in the activities carried out internally.
In the next article you can take a look at some of the points related to the labor issue, and try to respond to the question: what to outsource?