There comes a point in the life of every growing business when its administrative functions can no longer be handled by a multi-tasking manager without negatively impacting the core business. Those whose talents and expertise built the core business must be allowed to return to that role, and a decision must be made to either outsource some back office functions or add full-time specialists to the staff.
For small and medium-sized enterprises (SMEs), the most cost-effective choice is usually to outsource. An array of business process services — including bookkeeping, accounts payable/accounts receivable, payroll processing, data management and human resources activities — are available to supplement the SME’s resources.
Once you’ve decided to outsource, you’ll need a step-by-step plan to ensure that you choose the right provider and work effectively with it.
1. Gather information from employees. They know better than anyone what’s really needed to support daily operations. They’ll also work better with the outsource partner when they feel they’ve been a part of the process.
2. Identify tasks to be outsourced. Top of the list should be those activities which take the most time and contribute least to value generation. As well, consider those specialties which current staff are least familiar with and most in need of improvement.
3. Think about how outsourcing will affect workflows. You wouldn’t want to jump into outsourcing as an immediate solution to work overload, only to find that costs or inefficiencies have actually increased in the long run.
4. Research providers. Ask industry colleagues for referrals, check testimonials and meet with your short list to get a good feel for what each company offers. You’ll be looking at range of services, quality of service, experience, track record, contract options and service costs. If possible, sign up for a free trial or assign minor tasks before you commit to a full-on outsource partnership.
1. Make a transition plan. This should be a collaborative effort between you and your outsource provider, not just a piece of paper they hand you and you have to follow. Focus on a customized solution that meets the needs of your business.
2. Set up the governance process. You want to be sure that your standards and procedures are followed by the outsource company.
3. Prepare for threats. Outsourcing involves commercial, legal and financial risks. You should know how you’re going to deal with a crisis before it happens, not when you’re in the middle of it.
1. Maintain communication. Keep processes running smoothly by regular, two-way communications. The sooner problems are addressed, the less damage they’ll do.
2. Monitor performance. Don’t blindly trust that your outsource company is performing all the functions agreed on, while maintaining your standards. Also, how is it integrating with your in-house functions?
Working with a back office outsource provider is not only a great way for SMEs to cut costs and labor. It’s also a partnership that can help your business grow. Xendoo’s financial experts can offer insights and strategies for improving the bottom line, reducing taxes and scaling your business. Of course, we also take all that bookkeeping busywork off your plate, and let you get back to doing what you do best!