Business Process Outsourcing benefits accounting firms & clients. (Marketing).

A buzzword in corporate America for increasing profits and reducing costs is Business Process Outsourcing (BPO). Basically, it means outsourcing critical non-core activities to providers who can achieve results at a lower cost.

Accounting is the fastest growing segment of BPO. Starting

Currently, the major processes being outsourced include accounts payable, accounts receivable, payroll, financial statement preparation, expense reporting, fixed asset reporting and tax compliance and reporting.

A trend in accounting outsourcing is the alignment of accounting firms with third-party providers. The third-party providers offer cost effective, high quality accounting and back office services.

CPA firms that offer outsourced accounting services gain a competitive advantage over those that don't. And those that align with a third-party provider for these services, rather than trying to build a BPO service function internally, have an even bigger edge.

By aligning with a third-party outsourcer, an accounting firm could rest the demand for outsourced services in its market without making a heavy investment of time and capital. This means the firm minimizes its risk while maximizing its potential for significant gain.

CPA firms also consider aligning with an outsourcer because of client requests. If a company's accounting firm cannot provide the desired services, the company may look to other accounting firms, or directly to outsource providers.

Another advantage of outsourcing routine accounting functions to a third-parry provider is to free up firm resources for consulting, tax planning, succession planning and other lucrative services.

Rehmann Group, one of the largest accounting firms in Michigan, is optimistic about growth potential in this market. According to Jim Carpp, head of outsourcing practice at Rehmann Group, the market for accounting outsourcing is expanding because of the savings realized by clients. Utilization of updated technology support, which otherwise may have been cost prohibitive, is another benefit to the client.

Patricia Resner, CPA, of Plante & Moran, LLP, Ann Arbor, sees accounting outsourcing as a growing area especially among mid-sized companies wanting to focus on core competencies while at the same time reducing costs. According to Resner, small businesses and start ups who don't want to invest in building separate accounting departments are also a growing segment in this market.

Being able to cost-effectively offer clients outsourced accounting services therefore gives a CPA firm an edge over competitors. At a minimum, it becomes a tool to strengthen relationships with clients and keep them from switching to other firms.

About the Author

Ramit Arora, an accounting student at Eastern Michigan University, is currently working as an intern with Bosch Corporation. Contact him at arorar1@online.emich.edu.