What Is Accounting BPO?

Osmand Vitez
Osmand Vitez
Businessman with a briefcase
Businessman with a briefcase

Business process outsourcing (BPO) is a process where a company farms out certain functions to a third party. Accounting BPO is often a common part of this process. In this scenario, a company will outsource its administrative functions that involve all activities regarding financial recording and reporting. Many benefits are inherent in this process, chief among them the ability for a company to remain focused on its core responsibilities. The market for accounting BPO often depends on the local city or region in which a company resides and the available accounting resources.

Outsourcing business processes start with researching available third-party companies. Accounting BPO research can be a tedious process. Companies must find an accounting partner that is both capable of handling all required accounting tasks and has the proper education or certification. Many accounting firms offer multiple services; companies must be careful to not select one firm for multiple services as this can result in violation of proper accounting principles. Small businesses will not often have this problem as they do not meet the capital requirements for inclusion under major government regulations on accounting services.

Most companies use accounting BPO for the same types of functions. For example, general accounting, taxes, and billing may all fall under a company’s outsource process. These accounting activities typically involve the most amount of time and greatest need for professional input. Companies that engage in highly technical activities may include more accounting activities in their outsource processes. The accounting activities and cost for the outsourcing service are often the two major determinations for this process.

Cost consideration for accounting BPO is usually the biggest concern for this process. Companies must weigh the possibility of hiring an individual directly for completing activities against the cost of an outsourcing service. Hiring employees often requires more administrative work, especially in regards to human resource paperwork. If a company wishes to have full focus on its main business activities, hiring an accountant is not typically the best option. Hiring nonessential personnel outside of individuals who affect the production process results in more nonessential activity management.

In most cases, few firms actually engage in accounting BPO activities. This reduces competition and may result in higher costs for companies hiring these services. Geographical constraints also play a role in this engagement, often as a negative factor. The inability to consistently meet and discuss accounting activities with the BPO service may be prohibitive for businesses. These factors must have acceptable answers prior to companies engaging in accounting BPO.

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      Businessman with a briefcase