Sunday, August 3, 2008

Five Guidelines In Selecting Your Outsourcing Bookkeeping Partner

Outsourcing refers to the practice of transferring day to day process of a business to some external service provider. It rose to prominence as a business strategy in the early 1980's when some European airline companies began transferring part of their back office function to New Delhi. The guiding force behind such a strategy then was to reduce labor costs. Outsourcing in today's context is however, necessitated not only by cost consideration but also other specific advantages like flexibility and scalability of operations etc. And as more and more companies join the fray, it is natural that there has been exceptional increase in the number of vendors undertaking such services.

It therefore becomes very important that outsource of critical functions like accounting be done with utmost care The most important point in this regard is identifying the right outsourcing partner. Policies and practices that the outsourcing partner follow, impact the companies business directly. Therefore extreme caution should be practiced by the companies while deciding on their outsourcing partners. Never should such a decision be taken in a rush.

The following pointers should be taken into consideration while selecting your partner:
  1. Company's experience is direct pointer to its capabilities. Information relating to their total client base and kind of projects handled by them can give a clear idea of their real standing in the market. It is always prudent to check on the references provided by the company.
  2. To have a clear idea of the people running the business it is always advisable to ask for a profile of its director, the key persons etc. Also their qualifications should be taken into consideration to judge the level of professionalism that can be expected.
  3. The best way to judge the capability and genuineness of a company is by checking whether the company measure in expectations of its clients. It is thus the best way to gauge the company's credentials.
  4. To get an idea of outsourcing partner's abilities in bookkeeping, it is always advisable to test him on files that have been already completed. This way their skills can be directly tested.
  5. Once credibility about the competencies of the outsourcing partner has been established, assessment should be made about their capabilities, factors like proper infrastructure facility, number of staff etc that are directly involved with completion of the project should be checked. Here once again client reference plays an important role.
Once the credentials and capabilities of the vendor are established, it is necessary to establish that the outsourcing partner shares the same business objective as that of the company. This is important because communication becomes really easy once the objectives and strategies of the outsourcing company are shared by the outsourced vendor.

Bookkeeping is an important business function. Outsourcing such a key function is a decision that can have huge implications on the business. Both the outsourcing company and the vendor company will be venturing into a strategic relationship that affects both their businesses directly. But the element of risk lies more for the company that undertakes to outsource its books of accounts. It should therefore make the most informed decision to minimize the risk and benefit from it.

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1 comment:

shubh said...

Thanks for providing me valuable information. I think inspite of outsourcing book keeping work from the best source, one needs to be extra careful. Seeing the importance of accounts and possibilities of errors, it is always advisable not to solely depend upon service provider. To know more about outsourcing book keeping services, may also be a good source.

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