Controllers Council recently held a roundtable panel discussion entitled, Learn How Controllers Can Leverage Outsourced Accounting, presented by Scrubbed.
Panelists included Brenna Albert, VP Global Controller at Medline, Tina Tan, CFO at The Sights Group, Rodelyn Lumbao, Controller at 2GO Advisory, and MJ David, Director Client Services at Scrubbed.
Following are key takeaways to this discussion. If you are interested in learning more, view the full roundtable panel video archive video here.
What are the pros and cons of internal staffing vs outsourcing F&A?
Tina: With internal staffing, you keep control in-house. You ensure deeper business knowledge and allows seamless communication. However, it’s costly, harder to scale and requires ongoing recommend efforts. Outsourcing F&A on the other hand lowers costs. It provides access to specialized expertise and offers flexibility to scale the downside, less direct oversight, potential communication gaps, and security risks. So, I see companies use a hybrid model whereby they keep strategic finance roles in-house while outsourcing transactional tasks like payroll and tax compliance. The rate approach really depends on the business size, priorities and industry needs.
MJ: From my experience, would add that outsourcing also allows companies to quickly scale their operations without the need for long-term commitment to new hires. So, it’s particularly useful when you need specialized skills, or when there’s a fluctuation in workload, like during the peak periods or special projects. So while in-house teams are great for strategic and core functions, outsourcing can really help with efficiency and cost management, especially for non-core tasks like bookkeeping or financial reporting.
Which functional areas are most effective for outsourced accounting?
Lyn: From my experience, it really depends on what the company needs at that time. But for us, we’ve done outsourced bookkeeping, accounts payable, accounts receivable, and FP&A. We’ve been outsourcing a portion of our accounting for about a year now. I guess what we’ve kept is if we have any direct communications to our partners, vendors or customers, we kept that in-house, but for the most cases, most accounting functions, we’ve outsourced.
Tina: in my experience, when I was part of financial management, we’ve outsourced payroll processing because, it requires the compliance with tax laws and employee benefits. So outsourcing payroll reduces errors. It ensures timely payments and helps us stay compliant with regulations. The other thing that we’ve outsourced is audit support and internal control. I have also seen startup companies outsource the CFO level expertise to gain strategic financial guidance without hiring a full-time executive, because they can be costly. Sourcing dysfunction allows the startups to focus on core operations.
Brenna: We do have a very large offshore office who supports our US accounting and finance, finance processes, as well as our global consolidation. And then we’re starting to evaluate and derive the strategy for the rest of the international businesses. We’re also implementing a global risk and control matrix around core things, like the financial close, journal entries, one over one reviews, valency reconciliations, et cetera, even in the small entities. So, I would say we have a pretty extensive offshore team covering all the core processes. We think about the core processes like AR, AP, credit and collections, payroll, also core financial accounting in various areas. But we also have a strong offshore presence in areas like technical accounting and external reporting, because even as a private company, we do have lender financials and certain obligations that exist today. So, what I would say is the model really varies depending on the process and the team.
Are there certain types or sizes of companies that make outsourcing or offshoring more relevant?
MJ: In my experience, outsourcing or offshoring tends to be most relevant for companies that are either scaling rapidly, looking to optimize costs, or trying to access specialized talent that they may not find it locally. Fast-growing startups often turn to outsourcing because they need to scale their finance and accounting functions quickly without the time or resources to build an in-house team from scratch. So, it gives them flexibility and speed. And then mid-size and multinational companies benefit as well, especially when they operate in multiple geographies and need round-the-clock support, or want to consolidate back-office operations for efficiency. then in terms of industries, industries with high transaction volumes, complex reporting needs or seasonal spikes in workload also benefit. But really any company that values flexibility, access to talent and cost efficiency can find outsourcing to be a smart solution.
Lyn: I’ve worked for different industries in the past, medical device, other services, investment, e-commerce, and to be honest, I think any types or sizes of companies, as long as they need help, can benefit from offshoring talent
Tina: From my public accounting experience, I’ve seen a lot of different type of companies benefiting from outsourcing or offshoring. Start-up and small businesses lack the resources for full-time specialized staff; therefore, they outsource IT support, customer service, bookkeeping, which allows them to focus on growth without the heavy overhead. I see from the technology and software firm sector, they frequently outsource software development, quality assurance, etc. Companies in manufacturing, supply chain, they outsource logistics, procurement, supply chain management so that they can streamline operations and reduce costs. With healthcare and medical services, hospital and clinics, they outsource administrative tasks, medical billing, even remote healthcare services to improve and focus on patient care. For e-commerce and retail sector, they outsource customer support, digital marketing, fulfillment services, just to scale operations and enhance customer experience. I believe that outsourcing and offshoring is more to scale efficiently, reduce costs, and access specialized expertise.
Please share an example of how outsourcing or offshoring was more effective than internal staffing?
Brenna: Obviously derivatives and hedge accounting is a pretty common thing I’ve seen in practice. I would give another example where outsourcing XBRL for SEC registrants and filers. Early days of XBRL and many moons ago, I was in the trenches manually coding things in XML and putting brackets and slashes and all that stuff in there, kind of before lot of this automation took place. And now we fast forward a few years later, and this is one of the most efficient things that a company can fully outsource. You just need to understand enough about the taxonomy, the structure and the intention of the tagging to be able to review intelligently and have confidence in the completeness and accuracy. But that’s an example of where it really makes sense in my mind for nearly every company to fully outsource something like this.
Tina: In my experience, when I used to be part of a finance team, we outsourced our AP and AR because we were expanding into multiple states. We were also faced with complexities and challenges with the state regulations; therefore, we’ve outsourced that to service provider and even with financial close and reporting, we were always struggling with the long financial close cycles, causing delays in reporting and decision making. By outsourcing all these three functions, we were able to streamline invoice processing, improve our flow visibility and enhance vendor relationships with the multi-states that were been expanding, we were able to ensure accuracy in reporting state by state. We were able to avoid penalties. We were able to free internal teams and just focus on our scaling operations instead of the administrative burdens. And with the financial close and reporting, we were able to finally close some of the years that were behind.
Lyn: An example that was more effective is basically when we had part of our accounts receivable in-house. If there’s a turnover, you would have to spend time to train which would cost more time and higher costs to hire somebody new and do the training. But what I liked about offshoring and outsourcing is that once they learn the task, they can train each other. So, it saves me time and money from training somebody if we were to hire somebody internally.
To learn more about outsourced accounting, view the complete webcast here.
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