The benefits and drawbacks of finance and accounting outsourcing Research Paper

The benefits and drawbacks of finance and accounting outsourcing - Research Paper Example Outsourcing of core business activities was seen to be trend of SMEs however it is evident that today even larger organizations outsource their core functions as these activities are seen to be burden for the management. In the present business or corporate world competition has increased thus the managements are more inclined in utilizing their time for the business and competitive strategies thus they find outsourcing a feasible option however before making any such decision both the pros and cons of outsourcing core business activities like accounting/finance must be analyzed and then it should be decided whether to keep them in-house or outsource. Considerations for Outsourcing Finance/Accounting It is not just burden of working and maintaining records that has to be considered before making the decision for outsourcing there are mixture of risks and rewards involved that must be analyzed. First and for most criteria has to be the cost analysis the cost maintaining a finance depa rtment keeping in view all the expenses like training, salaries, office space, benefits, equipment and software would have to be compared to outsourcing keeping in view that same targets are to be achieved thus the related costs of outsourcing along with in-house operations must be recorded and documented (Jayamalathi, Magiswary, Dr. Murali, & Noreen, 2009). In case of finance department being outsourced decision regarding the access of records has to be made that how the relevant data would be delivered, who would be accessing the company records and in what format they would be presented to the outsourcer. All these factors have to be discussed in outsourcing agreement so as to be clear and whether they would be comfortable as it should not be impeding their regular course of business. It has to analyze the level and range of services that the outsourcer would be offering they should be less than what the company maintains in-house. Deadlines are important for finance and accounti ng as the relevant records are required from time to time thus it had to be made sure as how the resources would be allocated in order to ensure that the deadlines are met. In choice of outsourcer it has to be focused that whether his working style could be integrated into the culture of company otherwise data integration would be an extra burden over the company (Tejaswini & Rajiv, 2010). Company records are the critical factor for working and operations thus it often seen that management is not comfortable in sharing the information and the internal data even with the outsourcer thus it has to be considered the level of services required and decisions to be made regarding the data that would be shared with the outsourcer. Pros and Cons of Outsourcing Finance/Accounting Pros mostly can be said to be the reasons or the benefits for which the small and medium sized companies chose to outsource their finance/accounting departments (Yunus, Ren, & Jing, 2005). Cons can be said to be the risks that may cause to avoid the decision of outsourcing. Following are the pros and cons of outsourcing discussed: Pros of outsourcing Financial saving is most lucrative advantage that the SMEs focus on due to their limited financial resources thus