Small and medium-sized businesses (SMEs) have been working with accountants and fiduciaries regularly for many years. With the emergence of new business models and the trend to outsourcing administrative functions, the role of the traditional accounting firm is changing. Some have evolved to become experts in providing support services, managing and running integrated financial functions, IT systems and service processes.

You can still find traditional accountants and fiduciaries. Typically their job involves doing their clients’ bookkeeping, recording transactions on the basis of receipts collected through the course of the year, and preparing their annual accounts. They’ll give advice on tax matters, fill out tax returns, help draft employment contracts, advise on business valuations, and support clients with succession arrangements.

But this profile is changing. No longer content to just have their accountant do their bookkeeping, many clients seek a broader range of corporate support services. In other words, they want to outsource all the associated financial processes and have them automated and linked into the IT systems that these days form the core of an accountant’s or fiduciary’s business. Clients are looking for ways of reducing the additional administrative burden, particularly in labour-intensive areas such as human resources.

In addition to outsourcing [1], offshoring [2] is also becoming a popular option. For example, medium-sized Swiss businesses are delegating trade receivables to a shared service centre (SSC) [3] in Poland or commissioning a partner company in Hungary to handle their expense accounts. Experience from combined outsourcing/offshoring projects suggests that simple workflows involving the processing of large volumes of transactions are particularly good candidates for transfer abroad. In such cases processes can be reduced to a small number of steps and are relatively easy to standardise.

[1] Outsourcing involves contracting out business processes to an external partner who delivers the outsourced services in accordance with agreed service levels and costs. The term ‘outsourcing’ merely refers to the fact that services are delivered by a partner outside the organisation, regardless of whether the process takes place within the same country or from one country to another.

[2] Offshoring is the process of relocating tasks to another country where costs are lower. It can involve farming out functions to an internal unit or to an external partner (outsourcing).

[3] An SSC is a separately resourced central unit providing and managing all types of processes within or outside an organisation. The goal is to deliver defined services to agreed levels of quality at agreed costs. It involves removing repetitive, shared services to free up human resources in the business for value-adding work. Shared services centres exploit scale effects and potential for configuring processes more efficiently.

Many aspects to consider when outsourcing

The problem is that the options for shifting services to faraway countries are particularly limited for SMEs. Unlike large companies, many of their processes have not yet been standardised to any great extent, and involve too low a volume of transactions. For outsourcing or offshoring to work, there are many different factors that have to be considered. It rarely makes sense to farm out processes without at the same time redesigning them and incorporating the support of modern information technology.

First you have to thoroughly analyse the processes you’ve previously handled yourself. Processes that look straightforward at first glance often turn out to be very complex. In most cases it’s not possible to outsource the entire process. Instead the work has to be reallocated between the client business and the accountant-fiduciary providing the corporate support services. This means that appropriate interfaces have to be defined.

If you’re farming out the management of trade receivables, for example, you have to decide who’s going to sign off incoming invoices, where these invoices will be collected and electronically scanned, and who will be responsible for assigning them to the relevant accounts. You also have to decide on the frequency of payment cycles, and when preparations for each payment cycle will have to be complete. Precisely how the new demarcation of tasks and the interfaces between the client and the SSC or provider will be defined depends on a whole host of additional parameters, including the question of which people are given the authority to sign. Ultimately the matter of how and by whom payments are signed off can’t be decided without also considering related process such as cash management.

A qualified corporate support services provider charged with running your processes will have the relevant expertise in automation, evaluating IT solutions, process design, documentation and archiving. They will also be able to help minimise the risks on both sides. Certain questions have to be asked in the course of planning outsourcing or offshoring, including:

• Have all the prescribed and necessary security measures been defined and implemented (at both the client company and the SSC/external provider)?
• Have all the relevant legal requirements been met in terms of internal controls, data privacy and information security (at both the client company and the SSC/external provider)?
• Are IT platforms and servers housed at a location where they’re safe from physical damage? When and where will data backups be made? How many?

In addition to supplying an IT platform with automated processes, a reputable provider of corporate support services will also make sure that the outsourcing remit is clearly formulated and properly documented, and that the platform meets the relevant legal and regulatory requirements. It will also make sure its work for the client is subject to a system of internal controls.

A conscientious provider will also systematically monitor regulatory, technological and industry developments so that it can alert clients in good time and help them respond to any upcoming changes if necessary. This is real added value. It’s what distinguishes a reputable operator from mass providers and technology companies that are only geared to processes and only do what the client instructed them to do at the time the outsourcing arrangement was defined. This is crucial, because one of the main reasons SMEs farm out part of their work is because they don’t have the relevant know-how or resources.