Trends like the Great Resignation have led to businesses and its leadership scrambling to identify the best solutions in order to ensure business continuity and to manage risks while ensuring that the best possible support is available as well as optimize Finance function's costs. Globally, there has been an increase in the usage of Outsourced Finance Partners. Large global conglomerates have reached a point of maturity in extracting value from outsourced services or having their own shared services setup as Centres of Excellence. While the Small and Mid-sized Businesses (SMBs) have been taking measured steps and tapping into Finance outsourcing for niche requirements. However, SMBs need to strategically approach and implement solutions to manage disruptions in the workforce ecosystem. Access to knowledge and technology, operational flexibility, global talent pool and finally cost benefits are seen as the main reasons for this increase.

Organizations recognise that it is possible for outsourcing and shared services to go beyond transactional/operational services to achieve productivity gains and establish fresh revenue streams. Further, the business's capabilities get significantly augmented by implementing innovative practices through creative methods of implementing standardization and automation, and assuring world-class performance.

SMBs are increasingly looking to leverage outsourced solutions and engaging solution partners spanning across various processes in finance and accounting. For instance, companies initially start their outsourcing journey by outsourcing only one or two of its transactional processes like accounts payable or accounts receivable, but today CFOs are seeing that the Finance and Accounting Outsourced space has matured and they are exploring opportunities and dependable solution partners for outsourcing high-impact and tactical functions like financial planning and analysis, management reporting and financial closure amongst others.

In the last few years, newer pricing models such as full-time equivalent (FTE) pricing combined with transactional pricing for any quick ramp in capacity requirements to manage seasonality, are also becoming prevalent. Although the majority of engagements are fixed-price or price-per-FTE based, with the Solution Partner expected to streamline and standardize accounting processes, organizations are looking to Solution Partners for value-added and transformational services. The use of SLAs is also evolving, buyers stipulate a number of service levels, and as a relationship matures, the type of service levels used are streamlined accordingly. Finance and Accounting Outsourcing (FAO) customers have learned that the success of a service from an FAO Solution Partner is directly proportional to the continued input and guidance of the customer's finance team. As a consequence of this, some contracts provide for gain-share mechanisms, as well as bonuses for high performance.

This engagement model here is significantly different from a typical finance and accounting outsourcing arrangement. The regular finance Solution Partners provide skilled people. However, in this engagement model, when a client migrates, they outsource not just talent but the systems and end to end processes as well. Certain processes within finance and accounting that are moved to this model are rules-based processes such as reconciliation, invoice processing and expense claim process amongst others.

Different engagement and pricing models are increasingly becoming prevalent for outsourcing finance functions. Each has its own advantage and disadvantage and it is critical for a business to understand how it can maximize the benefit from such solutions. For small and mid-sized businesses, it is important to carefully consider all of the options before choosing the best model for their needs. Whichever model is chosen, it is important to ensure that the Solutions Partner is experienced and possesses the necessary domain knowledge, has success stories, and that they understand the unique needs of the business. When done correctly, outsourcing finance activities can result in greater efficiencies, improved focus on core business areas, and substantial cost savings.

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