Key parameters to derive maximum value from finance and accounting outsourcing engagement

Cost reduction and cost savings have traditionally been the factors driving companies to outsource their finance and accounting (F&A) functions. Their focus has now moved beyond cost and labor arbitrage to process efficiency, standardization and innovation. They are looking to leverage their finance and accounting outsourcing (FAO) function for their key business decisions and drive maximum value from their outsourcing partners. The demand for FAO is witnessing a positive trend, driven mainly by the Telecom, Software / High Tech, Media and Publishing, and Retail/Hospitality sectors.

FAO encompasses outsourcing a wide range of transaction and judgement intensive activities, ranging from:

Procure to Pay functions:

receipt and scanning, payments and remittances, and travel and expense claims

Order to Cash functions:

manage and process - collections, disputes and deductions, maintain customer master data, and manage sales orders

Record to Report:

intercompany accounting, transaction processing, fixed assets accounting, and cash management

Controllership:

regulatory/statutory reporting, management reporting, financial planning/analysis and internal auditing

Transformational:

financial process consulting, supporting innovation roadmap, and change management

Many F&A activities are still being managed in-house by several Fortune 500 companies. They outsource primary transaction intensive activities such as accounts payable, accounts receivable, payroll and general accounting. However, with suppliers building their capabilities in offering end-to-end services, they are increasing their level of outsourcing. The focus has now shifted to judgement-intensive activities such as financial planning and analysis, budgeting, and forecasting.