How Tech in Accounting Outsourcing Works?

The accounting industry has undergone massive changes over the past few decades thanks to advancements in technology. 

Once upon a time, it was dominated by manual processes and paperwork, now, accounting relies heavily on software, automation, and data analytics.

Gone are the days where accountants are drowning in piles of papers just to get work done, which in return adds to their stress that can lead to productivity issues.  

Thanks to this technology-based shift, it has enabled accounting firms to improve efficiency, lower costs, and provide more value to clients.

Moreover, with the rise of the Outsourcing industry as an effective business strategy, the Outsourced Accounting services has emerged as a go-to solution to achieve scalability despite the uncertainty of the economy.

Outsourcing accounting functions to specialized firms has exploded in popularity due to its cost savings features. Similarly, the impact of technology is more apparent in Accounting Outsourcing as it utilizes more tech to enable quality assurance and foresight to ensure compliance to partner company standards. 

Outsourced accounting involves handing over your company’s accounting functions to an external specialized firm. Rather than managing books and finances in-house, you leverage an outsourcing provider’s expertise, technology, and infrastructure. 

Typical functions that get outsourced include bookkeeping, payroll, tax preparation, financial reporting, and auditing. Leading outsourced accounting firms have global teams working remotely and leveraging automation to provide round-the-clock services. 

They use cloud-based accounting platforms to centralize processes and provide real-time visibility. Data analytics help derive insights from financial data. Outsourcing accounting provides access to enterprise-level tech stacks suitable for organizations of any size.

With technology, it makes outsourcing a viable and smart business strategy, because it provides more capabilities to remote staff which can be accessed by SMEs at an affordable cost. 

Here is an overview of the key technologies transforming accounting outsourcing to help you understand how Outsourced Accounting services can help your growing business.

Cloud Computing

The first one is, Cloud computing, this technology enables outsourced accounting firms to centralize processes and share information seamlessly across locations and teams. Rather than having data stored in different systems and physical servers, cloud-based platforms integrate everything into one system that can be accessible from anywhere. This will  be a future-proof strategy also for your data as physical storage has the potential to make it inaccessible.

On the other hand, the leading accounting software like QuickBooks Online and Xero provide access from any device. This gives outsourced teams the ability to handle books for clients from anywhere in the world. Cloud also dramatically reduces infrastructure and IT costs for outsourcing firms.

Data Analytics 

The second one is business intelligence and data analytics tools, these technology-driven tools have become essential for outsourced accounting. This is due to its advanced reporting dashboards that provide insightful visualizations of financial and operational data. Outsourcing providers run analytics on client data to detect inefficiencies, forecast more accurately, and deliver strategic insights.

The popular analytics platforms like Power BI, Tableau, and Looker integrate with top accounting software to enable easy connections to data sources to build reports, dashboards, and models tailored to each client’s needs. The ability to derive actionable intelligence from financial data adds tremendous value.

Process Automation 

The third is the Automation of repetitive, rules-based accounting tasks which improves efficiency and reduces errors. Robotic process automation (RPA) technology mimics user actions to handle high volume tasks like transaction processing and reconciliation. This frees up human staff for judgment-intensive work.

Some RPA tools like UiPath and Microsoft Power Automate integrate with accounting software to streamline workflows. Outsourced accounting firms use intelligent process automation to achieve higher capacity. It also ensures consistency in execution.

AI and Machine Learning

The fourth one is the most obvious emerging technology, Artificial intelligence (AI). This tech takes automation to the next level, through self-learning algorithms that study patterns in data to make predictions, identify anomalies, and drive optimizations. AI chatbots handle customer inquiries to improve service levels.

Machine learning algorithms help detect potential fraud based on patterns. Natural language processing extracts unstructured data from documents and emails to auto-populate accounting systems. AI augments the capabilities of accounting staff to leverage technology to improve their analytical skills.

Blockchain 

The fifth technology is Blockchain, it represents the future of accounting and auditing. This distributed ledger technology provides tamper-proof transparency for transactions. The shared ledger is updated through consensus which builds trust and accountability.

Blockchain-based accounting would provide real-time financial reporting. It would also help confirm the validity of transactions during audits. Major accounting firms are already piloting blockchain solutions. It has the potential to prevent fraud, errors, and discrepancies in the books.

Cybersecurity 

The last one is Cybersecurity, with increased reliance on technology comes the risk of cyberthreats. Accounting systems contain highly sensitive client data making them targets for attacks. Outsourcing providers must invest heavily in cybersecurity to keep financial data secure.

Solutions like multi-factor authentication, end-to-end encryption, VPC networks, firewalls, and antivirus software help secure cloud accounting platforms and internal systems. Backing up data offline adds another layer of protection. Cybersecurity is a top concern when choosing outsourced accounting partners.

The Right Tech Stack 

Accounting outsourcing relies on a stack of integrated technologies to deliver high-value services, enable quality assurance and develop foresight to target KPIs.

The popular tech-based solutions include:

• Cloud accounting platforms (QuickBooks Online, Xero, Sage)
• RPA and automation (UiPath, Microsoft Power Automate)
• Analytics and reporting (Power BI, Tableau)
• Document management (Box, Dropbox, Google Drive)
• Email and communication (Slack, Zoom, G-suite)
• Security (Okta, Duo, Trend Micro)

Well-designed tech stacks allow seamless flow of information between tools. This is essential for managing workflows efficiently. The stack must have built-in automation, collaboration, and security.

Outsourcing providers stay on top of the latest innovations. They continue to evaluate and adopt cutting-edge solutions to improve service quality. The combination of top talent and the right technology stack is key to success.

Conclusion 

Technology has transformed accounting from manual processes to data-driven strategic insights. It enables accurate books, real-time reporting, analytics, and increased efficiency.

This forms the foundation of modern accounting outsourcing. Software automation, AI, and the cloud allow outsourcing providers to handle accounting for any type and size of organization. 

Outsourcing also provides access to enterprise-grade tech stacks. For small businesses, this brings sophisticated solutions that would be costly to implement in-house. 

As technology innovations continue to shape the evolution of accounting outsourcing, it is also crucial to find the right outsourcing partner that will provide strategic advice beyond bookkeeping. Once found, they become a valuable member of your team.