8 Finance Outsourcing Predictions for 2017 and Beyond
Improving effectiveness while being able to reduce costs is what every chief financial officer (CFO) seeks in the contemporary economic climate. Companies have started considering service providers as an extension of their own enterprise. More number of organizations are taking the outsourcing route to meet complex functions such as financial analysis and planning, financial closure, and reporting. As per the World Retail Banking Report, close to 77% of the retail banks outsource at least one part of their business operations.
Finance service providers have prudently equipped themselves with the essential factors required to meet the challenges of a CFO's added responsibilities. They are expected to implement finance transformation that drives improvements in efficiency and control while being able to deliver value across the entire business.
Finance Outsourcing Trends That Are Here to Stay
Maintenance of books of accounts and financial reports consume time. As accounting is critical to the financial success and stability of a business, increasing number of companies across the world are looking to entrust this task to efficient and reliable third-party service providers. Some of the most popular trends in finance & accounting to look forward to in 2017 include -
Rise in Demand for Finance and Accounting Outsourcing
The demand for finance and accounting outsourcing services will go up in 2017. CFOs of most companies are looking at reducing costs drastically. It has been seen in the past that the finance and accounting functions not only reduce costs but also proves to be an effective cog in the wheel of a company. Demand for finance outsourcing services will go up across most industry verticals, in the America and Europe regions.
Outsourcing Entire Finance Functions
There will not just be an increase in the number of tasks being outsourced. Companies will look to outsource their entire global finance related functions to providers of finance and accounting services.
Complex Functions Will Be Outsourced
2017 will see the finance and accounting outsourcing market mature completely in terms of capabilities and delivery. Earlier, companies used to outsource basic functions like accounts payable, accounts receivable, etc. Now, going forward in 2017, we will see companies outsource more complex functions like financial planning and analysis, financial closure and management reporting.
Change in Focus
Apart from focusing only on cost savings, companies will also focus on process improvement and business transformation. CFOs will want to move from a fixed-cost working structure to a variable cost working structure. Most of them will opt for a unit transaction pricing structure to reduce their back-office costs.
Exploring New Working Models Will Be a Reality
In addition to this, CFOs will also be interested in gain-sharing working model, wherein service providers will be able to get a share of the gains their clients upon delivery exceeding expectations. If service providers are ready to reduce the cost of their services, they will stand a chance to get access to a part of the gains made by their clients. Most CFOs are liking this model of working and 2017 may witness this trend coming into full effect. To make this model work successfully, service providers will have to focus on eliminating unwanted processes, improve efficiency, reduce costs and aim for business transformation.
Consolidation of Business Operations
In 2017, companies with multiple businesses and finance operations will expect service providers to help them consolidate their finance and accounting operations at one place for better management and lesser costs. They will also look at service providers to standardize processes so that there is less business complexity. This will help in achieving reduced error rates and automating some transactions which do not need much human supervision.
Focus on Business Process Utility
This will be in demand in 2017 as companies will expect service providers to comprehensively manage service solutions which would include the best people, best processes, and the best technology and know-how. A packaged solution is something that companies will be interested in. Some functions that fit in this model are rules-based functions like reconciliation, expense claims processes, invoice processing and so on.
Increased Focus on Regulatory Compliance
While companies will be expected to comply with regulatory compliance, there will be added focus on certain regulations like the EU's MiFID II law, which will require investment firms to certify and confirm that their trading algorithms will not disrupt markets. However, this compliance may come into effect from January 2018.
Whether you are a large company with multiple finance and accounting operations, or a mid-sized company with only one critical finance function that you want to outsource, look no further. Contact us today to get started with outsourcing your financial service operations to us, we at Flatworld Solutions will be glad to assist you.