Outsourcing financial services

Businesses now a days have to deal with complex financial issues and for many, especially Small and Medium sized Enterprises (SME), it can be difficult to do every business related function in-house. For many businesses, outsourcing financial services, not only saves money, but also provides access to professional expertise, that may be difficult or costly to build up in-house. However, there are many businesses offering outsourced financial services and it is important to pick not only the right firm, but also the right services to suit your financial outsourcing needs.

Which financial services to outsource?

For many SMEs accounting and bookkeeping services are prime areas slated for outsourcing. In fact, outsourced bookkeeping is the biggest demand for SMEs. By using outsourced financial services, management or business owners are able to concentrate on their core business. Many outsourcing firms now offer a whole range of financial services that go beyond just accounting, bookkeeping and management of accounts. Other services can include payroll, tax accounting, invoicing, pension plan management and more. Therefore, it is important to first identify your needs, before contacting a firm.

In the UK, the body that regulates the financial services industry is the Financial Services Authority (FSA). The FSA maintains the FSA Register, which lists all approved financial services firms. The authority also has a very informative website, where additional help and information can be found, including FSA outsourcing regulations: www.fsa.gov.uk

Another good resource to consult when looking for possible outsourcing firms, is the National Outsourcing Association (NOA). Their web-site, www.noa.co.uk, not only gives advice and news on the outsourcing industry, but also a list of firms. When choosing a firm, find out about the company’s track record, recognition by or membership in professional organisations and who their clients are. This should give you a good indication as to whether an outsourcing firm is suitable or not.

Managing the outsourcing relationship

Although outsourcing can help businesses by cutting costs and providing professional services to businesses, there are also pitfalls. After identifying which areas of your business you want to outsource, and you have selected an outsourcing firm, you will then need to sign an outsourcing contract or agreement. Before doing so, look at the Chartered Institute of Purchasing and Supply (CIPS) web-site, www.cips.org, as they offer guidelines on outsourcing and a contract guide for outsourcing agreements. A contract is a contract, so it makes sense to take some time to make sure you are signing the right document.

As with any business relationship and a contract to supply services, outsourcing is a long-term process. Businesses should understand that time should be spent to find the right partner, before signing a contract. The outsourcing relationship should be considered something long-term which can be allowed to grow. To get the most out of outsourcing financial services, there should be someone in charge of managing the outsourcing relationship. This will also ensure that you get the most out of outsourcing. Privacy and data protection are also issues to be considered, as the outsourcing firm will be dealing  with your company's confidential and sensitive financial information.

If you would like more information on Wilkins Kennedy's outsourced services, or would like to discuss in more detail your outsourcing needs, please contact our team of outsourcing experts.