Monday, May 11, 2009

The Overseas Struggle

TAD has prided itself that all work we perform for our clients is performed by employees located in the United States. But, we are starting to feel resistance from potential as well as current clients that are seeking to weather the financial storm, and find ways to further cut costs. Even though we are capable of saving many firms 30 – 50% off their current accounting costs, many companies are seeking even greater savings, and yet, not sacrificing quality accounting. The real question: Does outsourcing some functions make since if it further saves the client money, over the fact that you once again have the potential for a qualified US worker to lose their job or potential job?

As an Operations Officer, this is a question that cannot be ignored; furthermore, if I plan to keep my company advancing into the future, I also cannot ignore the increased reliance on overseas functions within my industry. Outsourced accounting is in its infancy, and as it grows through toddler to maturity, we are going to see more work that is shipped overseas. Some will be performed by accounting groups that are at the peak of professionalism, others, not so much. I believe that we will see a backlash not unlike the software industry has seen with outsourcing to India. Nothing raises a person’s ire off the charts than when they have technical issues that are addressed by someone reading a script and whose accent is very thick. On the accounting side, the largest issue that I have heard addressed is the time difference. While you are sleeping, they are working. If you have issues, they are dealt with when you wake up, but not by the India team until the evening. So it can be 48 to 72 hours sometimes before issues are fixed.

In May, TAD began to test a relationship with CVR to address another issue that has slowly been arising, and that is how to best take care of the quickly growing Spanish Speaking market. Our idea is to partner with CVR and provide accounting services through their accounting firm, and we act as the gateway, working with the client of the sales tax and payroll side. So far the relationship has been progressing steadily, with some testing coming along very positively. During this testing I started to wonder, what if we were to outsource some of our data entry to CVR? What are the positives: They are in Central America, they have been in the accounting business for many years, but even larger, and they fall within the Central time zone. Work done by CVR is done during my work day, so errors that arise are easily addressed and fixed quickly.

What does all this mean? From my view point it means that TAD is continuing to look forward and discover additional ways to save our clients cash flow while delivering a product. More importantly, from an operations viewpoint, we are keeping a watchful eye on the competitor, and creating game plans that keep our firm in business and not shelved away. Overseas outsourcing cannot be ignored, companies that do so might find themselves out priced and out serviced.

For the meantime, TAD is keeping its accounting processes US based, and will always keep the compliance part of the business in the US. Tad will also continue to test data entry functions with our Spanish partners to keep focused on the future, unlike the dinosaurs, we would rather not find ourselves extinct.

Scott West / COO

Tuesday, May 5, 2009

The Future of OutSourced Accounting

I was speaking to one of my competitors, he has turned into a pretty good friend, and the subject of our company’s futures came up. The discussion was lively both of us sharing ideas, coming up with new ways to better serve our clients, but also trying to lay a road map for the next five years. Our decision, the future was pretty bright.

The topic of outsourcing payroll truly spurred this conversation. I can still remember graduating college, and the company I worked for absolutely refused to outsource payroll. It was a violation of privileged company information. What if they sold employee information? What if our competitors were able to get this information and use it against us? Five years later, they were on the band wagon, and would never dream of bringing the processes back in house. What changed? What finally made them realize this was the right thing to do? I think it was time.

Although they could have outsourced payroll processes long before they did, they needed time to make sure the processes truly were secure. To verify that the company was going to be in business now and into the future so once the processes were turned over, they would not need to be concerned their data was sitting in an unstable company. I believe this same test is now happening with outsourced accounting.

Although there has been outsourced accounting companies offering services for many years, companies are just starting to realize there are truly stable, well formed businesses providing a quality service for a reasonable price. And I believe company management is finally starting to see, these businesses have a true investment in providing a professional, quality based service. Business owners are getting a taste of how outsourced accounting companies provide a true team based accounting process.

There are many quality firms to choose from, TAD being one of those. And while all of our accounting processes from data entry to the financial package creation are done by US based accountants, other companies can provide outsourced solutions that include India based data entry to financial preparation by trained accountants in China. Some company’s are new, while others, like TAD, have been in the business for 14 years or more. TAD and its competitors are always looking for new ways to build security into the service, so the client at all times understands their financial health, is our financial health. In order to provide this comfort the industry is building new access platforms, security is invested in, and partnerships with larger software firms are beginning to flourish.

I believe that the outsourced accounting market will be larger than the outsourced payroll market. Companies will over the next few years quickly embrace the fact their internal accounting department is the only revenue neutral department in the business. They will see outsourcing is beneficial, as the accounting teams are trained, and instead of a few employees, they have access to an entire team of trained accountants and CPA’s.

When the businesses begin to realize outsourced accounting firms like TAD, see their client’s financials as the lifeblood of not only their firm but the client firm, and working with each other as teams is the most beneficial way to perform accounting, the floodgates will open, and our industry will flourish.

Scott West / COO