(c) South Africa Institute of Chartered Accountants. Contact SAICA for permission to reproduce this article., Finance Function

Is Business Process Outsourcing The Way To Go In Business?

By Johann Kunz

Finance and accounting play an important role in business by supporting core revenue generating activities across the span of any business.

As a business grows or changes over time, its requirements for the finance and accounting functions may change due to a number of reasons. In some instances these functions can become too expensive and inefficient – maybe due to fragmented functions, increased complexity, legacy systems, tenure of staff and lack of best practice and specialisation.

Or as time passes, process scope creep may occur, leading to control failures. A prime example is when circumstances justify a change in the process or not using it for a specific reason or time – and this practice becomes the norm.

Acquisitions may require companies to consolidate their accounting platforms and standardise procedures, often across several geographies. These exercises, and business peaks and valleys, require flexible and experienced accounting employees, which may simply not be available.

Business process outsourcing, or BPO, enables companies to overcome all these challenges and more through interventions such as outsourcing certain finance and accounting activities to lower cost offshore locations, often through an outsource service level agreement that structures and standardises the required processes. These services can be provided across multiple finance platforms, geographic locations and functions.

Finance and accounting outsourcing typically starts with the more repetitive, process driven, transaction based processes, and then evolves to the more critical processes as the client feels more and more comfortable with this approach and it starts to deliver the anticipated results. Finance and accounting outsourcing is becoming one of the many BPO strategies available to an organisation to make it more competitive.

Johann Kunz is the MD of WNS Global Services.

This article was originally published in the June 2013 issue of Accountancy SA.