The reasons for outsourcing real estate accounting are plenty, the salient ones being:
- Harnessing the expertise of specialists in that field
- Better risk management
- Improved customer experience
- Improved company performance
- Freeing up internal resources
- No hassles in maintaining a non-core department
- Lower regulatory costs and time saving
- Substantial monetary savings
But when is the right time to outsource? The answer lies in the same reason why companies outsource in the first place.
Every company is looking to improve productivity and profit while lowering costs. With the outsourcing model, a real estate company can allow the BPO to handle either part or all of its accounting demands. This especially works when companies outsource the more mundane or routine chores of accounting – bookkeeping – and focus on their business and those parts of the accounting that serve as information for decision making.
Different companies outsource for different reasons and these reasons drive the decision to outsource and when they choose to outsource.
Take for instance the problem of maintaining in-house accountants or an accounting department. The biggest problem is training, losing and re-training accountants. If one leaves, finding the replacement and bringing them up to speed loses a company valuable time and money. Secondly, scaling manpower based on the ever surging and pitching of the business is tedious, and tasks not just the management who needs to maintain the staff but also the staff who need to cope with massive work fluxes. Their time would be better served when focussing on the company’s core projects.
Companies who face such issues find outsourcing convenient because the company being outsourced to has trained, qualified and degreed staff on hand to cope with such situations. Additionally, them being instructed by their experience in the field with multiple and various clients, they bring to the table the consequent derived knowledge.
Another major concern is the costs. When outsourcing the service provider is already equipped with the right people and infrastructure. So the fee structure they propose is much lower than the costs a company incurs when maintaining in-house staff. Even if companies are paying a fee equivalent to an in-house employee, when they outsource they still gain by lower regulatory costs because programs like social security, medicare etc. don’t have to be extended to contract based outsourced service providers. This is another substantial cost saver.
When one talks of efficiency provided by BPOs, apart from the actual skill they provide in the work, the contractual agreement signed between both parties ensures protection by means of setting the basic level of the standards expected, and rewarding incentives or penalising accordingly. This additionally removes complacency and replaces it with a stronger drive to deliver quality.
As mentioned earlier, companies can choose to outsource a part or bulk of their accounting. The usual functions that are handled by service providers are bookkeeping tasks like lease administration (negotiations, renewals and restructuring), lease-based financial model development and maintenance, CAM audits and reconciliations, due diligence, research functions, and related corporate real estate finance and accounting.
Depending on the company’s needs, these functions can be altered or added to, to encompass the gamut of accounting solutions required.
In conclusion, it is important to note that while the benefits of outsourcing the accounting (or bookkeeping) work remain the same, the seemingly “big” shift in transferring data and other migrations required to begin outsourcing work may seem daunting in the beginning, but actually serve a more long term success model of quality, savings, client experience and company performance. They do the prosaic parts of accounting, you handle the engaging bits!