Friday 3 December 2021

Implementation of the project of outsourcing of accounting

Life and the crises accompanying the last decade have made significant adjustments to this idea. Nevertheless, the accounting outsourcing market is growing. In this article, we will look at an example of a small but developed manufacturing company that has adopted a strategy of optimization and focus on core business processes. Its management has been eyeing external services for a long time and finally decided to implement a project to switch to outsourcing accounting.

What leads firms to search for external alternatives?

Accounting by a third-party operator can be implemented in several ways. The simplest of them is when an entrepreneur only creates his business in the form of an individual entrepreneur or a legal entity. At this point, he may decide that accounting and reporting will be conducted by a small firm, geographically close, the prices for whose services are acceptable. In recent years, entrepreneurs when starting a business easily accept the idea of outsourcing accounting. The situation is much more complicated for a company that is not the first year on the market and has already gone through several stages in its development, coming close to the so-called "Youth".

Emergence and development of the idea of outsourcing

The project of transferring a number of subjects of an operating company, which consists of several legal entities and individual entrepreneurs, to outsourcing is always a unique and risky event. Repeatedly I had to make sure: if the customer's management treats the task of switching to accounting support as a simple one-act event, he will fail. On the contrary, when the decision to provide accounting services to the organizations that are part of the company is of a political nature, when the management team realizes that this is a multi-stage process that requires a comprehensive study and analysis of business processes and risks, the chances of success are significant.

It is necessary to distinguish the reason from the reason for the transition to external accounting services. The reason may be the initiative dismissal of the chief accountant or a fundamental decision on it by the management after fines or other losses. But the reason always lies in the general strategic line reflected in the economic policy of doing business. And it cannot be independent of long-term plans in the field of management systems. The advantages of accounting support for medium-sized businesses are obvious.

  • The ability to focus the management team (primarily the GENERAL and financial directors) on the development of basic business processes and management efficiency.
  • Management of risks associated with state control by transferring them to a service provider specialized in accounting and taxation.
  • The possibility of real savings on the management resource and in terms of labor costs and costs: space, equipment costs, personnel costs, etc. are saved.
  • If we consider the accounting of the enterprise from the standpoint of the key criteria for the supporting processes implemented in the average statistical division of the business, then we need to remember that accounting exists in three guises: managerial, financial and tax. 

By the way, financial accounting in many companies is gradually "dying out" in favor of tax accounting. For these three accounting subsystems, the important are:

  • reliability;
  • timeliness;
  • security of recorded information.

Sooner or later for every company there comes a time when the management must answer the question: how to raise the manageability of the business (including in finance), while improving the reliability, timeliness, security of accounting information and reducing costs? With the strategic understanding of this issue, accounting outsourcing appears "on the horizon" as an expected solution that can satisfy the given conditions. The initiator of such a decision can and should be the financial director, who is the main stakeholder.

I frankly urge mid-sized business leaders to abandon the idea of outsourcing accounting and tax accounting if cost reduction comes first. Accounting support by a third-party contractor in this case will bring insignificant benefits, and the problems of the organization may increase. This should be very well thought about (at the strategic planning session), because even if it seems that the main thing is to improve the quality of management, and the business is unstable, the first idea will easily be discarded, and you will choose what is cheaper.

Cost reduction, and often indirect, is a bonus in an environment where accounting outsourcing is performed by an operator gradually becoming a partner organization. Such an outsource is in close contact with the CFO, continuously improves the quality of its services and literally relieves him of the "headache" of the accounting routine. For a step towards accounting support, management and the business itself must mature.

The moment of conditional transition from "Childhood" to "Youth" is very convenient in all aspects of the company's life cycle. Revenues are still increasing, profits are actively increasing, but the risks of tax losses are increasing many times over. However, competitors and financial intermediaries (the same banks) are beginning to tighten. The need for high-quality financial management is becoming higher, and full-time professional accountants are becoming more expensive.

A separate topic for reflection is the opacity of accounting data of Russian firms. This is the scourge of domestic reality, which has quite understandable reasons in keeping the country in the state of a raw material appendage with all the ensuing consequences in the form of corruption and a parallel economy. Nevertheless, tax savings are becoming more and more ephemeral, and with the intransigence of a strategic decision, the safest sequence of the first stage of the transition to outsourcing of individual accounting sectors and further to comprehensive accounting services can be chosen.

Transfer of personnel accounting and payroll of all subjects of the company.

Access to accounting support of individual entrepreneurs operating in the us no, ENVD modes.
Transfer to accounting and tax support of legal entities that are part of the company and are the most transparent and simple.

How does the accounting transfer project begin?

The start of the project for the accounting support of the enterprise by a specialized organization is given by the LPR on the basis of the strategy. It is good if the company is already implementing a process management model based on QMS or 200. 

The strategic decision should be preceded by an analysis of the business model with a clear separation of management processes in the field of finance, personnel and accounting support. An example of this separation of several groups of processes is given below. Based on the isolated security processes, a primary risk analysis is performed.

It is risk and its key factors that are the engines of the idea of accounting outsourcing. Based on the results of the risk analysis, the General Director (key owner) instructs the CFO or development director to develop a concept and feasibility study for the accounting outsourcing project. In parallel, an initial analysis of proposals from outsourcing organizations present in the market is carried out, and the formed concept is presented to the head of the company. 


As a rule, the financial director himself is appointed as a project manager, and the LPR acts as its curator. If the company's directorate also includes a development director, in whose department the project activity is performed, then he can act as a curator of the project, but only if his status is equal to or higher than the financial director.

Singling out BP management and support related to finances, personnel, accounting (click to enlarge)
It is advisable to develop a project charter. Practice shows that the charter is not always prepared, which causes particular regret, because this micro contract with the project manager is a powerful help in implementation. A project launch order is generally not issued due to confidentiality considerations. After all, the company employs chief accountants and accountants of the subjects, who are waiting for either a reduction or, at best, a transfer to a company that provides accounting and tax support.

In our example, the customer's company includes several legal entities and one individual entrepreneur. It must be remembered that in medium-sized businesses, the idea of outplacement (support for dismissed employees in employment) has not yet taken root, and, no matter what we say, the mostly uncivilized approach to the termination of labor relations remains. Therefore, emotions, risks of loss of information and premature departure of accountants and personnel service specialists do not allow to openly implement the first phase of the project.

On the other hand, based on universal ethics, of course, it is necessary to inform accountants and other employees who are concerned by the issue as soon as the contract for accounting support of individual entrepreneurs, LLCs that are part of the company is signed. But that's a long way off. 


If process management has not yet been implemented in the company, the financial director will have to paint all the functions of the subordinate department with the allocation of accounting and reporting functions, according to which a transfer plan for accounting support will be formed. Below is an example of such a dissertation of the main functions of accounting and financial management.

In the example presented, there are a number of functions that the CFO has identified as possible for transfer for accounting support and maintenance, but which will have to be performed either jointly or with the direct participation of full-time employees responsible for:

  • the reality and accuracy of the credentials checked with the company's counter parties;
  • tax modeling and planning of the activities of the entire organization;
  • work with credit institutions on the issues of obtaining and servicing bank loans to business.
  • Finally, you need to approach the decision to launch a project event, and then move on to planning. To do this, a project management team is formed (in a special confidentiality mode). It can include, in addition to the chief financier: HR Director (HR Manager), Business Analyst for Organizational Modeling, Risk Manager, Chief Accountant (in some cases). A typical plan of activities for the project initiation stage usually includes several mandatory items.
  • Development of the concept of the project for the transfer of accounting to outsourcing on the basis of risk analysis in the field of accounting support of activities.
  • Initial analysis of market offers and formation of a brief feasibility study of the project.
  • Presentation of the idea and feasibility study to the company's management.
  • Making a decision on the start of work on the project.


Planning an Outsourcing Project

Initiating an accounting outsourcing project for a manufacturing company with about 300 employees and developed regular management takes approximately two weeks. The idea needs to mature and the project management team be ready to get to work. Project planning takes a little longer, provided that the main market operators have already been initially considered at the initiation stage. This refers to the analysis of sites, acquaintance with the history of activities, methods of accounting work, standard offers.

The planning phase begins even before a decision is made on the project. The overall plan for the project in the head of its manager should arise by the time the teamwork begins. This is facilitated by the initiated negotiations with potential partners-outsources. It's not hard from the first steps to ask for a favor to help convince management of the reasons for choosing them as contractors for outsourcing services. You can ask for more information about how they work with similar clients. Usually, responsible employees (managers, middle managers of outsourcing companies) go to this kind of contact.

Here the rule is simple: communications should be immediately built with potential partners comparable in scale of activities, structure, staff with your enterprise. 


The main task in such negotiations is to make sure of the experience of the other party, of the willingness to confidently lead you through all the difficult places, and they, I assure you, are. Of course, you need to be ready to share introductory information that is not a trade secret. For example, send counter parties a standard application of the established form (a sample is given below) and examples of submitted financial statements.

Example of an application to be sent to a candidate organization for accounting outsourcing 


Even at the planning stage, I propose to limit the circle of interaction with representatives of outsourcing organizations to no more than three. It is better to choose among the leaders of the accounting support market, and without regional reference, since modern technologies make it possible to build work on accounting services for organizations remotely. On the basis of negotiations and discussions of the procedures for the transition to accounting, the picture of the composition of the work is formed by itself. After that, it is important to competently build a hierarchical structure of the project's work, as elements of the upper level of decomposition for the IMR, it is advisable to choose elements of organizational change operations, for example:

  • management of the project of outsourcing of accounting;
  • division of the business model into sectors (tasks remaining in the finance department and in the personnel management department, and functions, tasks transferred externally);
  • selection of outsourcing services provider;
  • managing the risks of outsourcing;
  • analysis of economic efficiency;
  • description of outsourcing processes;
  • communication in the project;
  • staff reduction;
  • test period of the project;
  • adjustment of processes;
  • completion of the project.

What to consider when choosing an outsource?

When accounting for LLCs and individual entrepreneurs, the accounting methodology has significant differences from accounting actions in relation to legal entities, especially if the latter are on the OSNO. In the case of outsourcing of accounting and tax accounting of enterprises on the USNO, the accounting procedures are simpler than for the OSNO, therefore the price is justified lower. However, in both cases, the CFO has about one set of concerns. In addition, the forms and methods of providing services by accounting sectors differ. In particular, in the payroll and personnel accounting sector, an independent service for the maintenance of personnel accounting is allocated. All this requires a differentiated approach to risk assessment. The following is a list of typical accounting outsourcing risks for the three service options.

What questions should the project manager answer when selecting candidates for the provision of business accounting services?

  • The maturity of the outsourcing company, as evidenced by its age. As a rule, professional experience is fully developed already in the 5th year of activity.
  • What is the scale of the outsourcing company and the level of its management, does it correspond to the format of the customer?
  • How reliably and qualitatively will the outsource be able to protect the customer from sanctions? Does the company have an internal audit system for the accounting actions of specialists? It is desirable that the control system within the outsourcing company be two-tier.
  • Does a potential contractor use know-how, patented solutions for quality control of accounting support and maintenance?
  • How strong is the institution of tax advocacy for an outsources?
  • Does the outsource carry out a preliminary express audit and under what conditions?
  • Does the outsourcing company promise to provide assistance in tax planning based on the possibilities of the current legislation and under what conditions?
  • What responsibility does the company declare in the event of sanctions from the supervisory authorities for the period when the support was carried out? Is the activity of the outsourcing business insured and for what amount?
  • Does the operator of outsourcing services provide a personal manager for prompt interaction with responsible representatives of the company and outsources specialists in certain accounting sectors?
  • Does the service organization have a courier service?
  • How is the confidentiality of credentials, the availability of electronic and "paper" documentation ensured?
  • A set of these items forms a modern "entrance ticket" to the market of outsourcing services in the field of accounting in Russia. But all this is no longer enough for partnerships to arise exactly as every CFO wants them to be. 

The outsource must:

provide you with access to an accounting database in which records are kept 24 hours a day from anywhere in the world;

prescribe the conditions that you will pay only for the work done, the price should be transparent;
not to "freeze" the quality of accounting services, but to continuously progress on their improvement.
Guarantees must be prescribed:

  • preservation of the accounting base;
  • confidentiality of accounting and related information;
  • financial responsibility for mistakes made by the outsources.
  • этап выбора партнера-аутсорсера
  • The stage of selecting an outsourcing
  • partner during the implementation of the project (click to enlarge)

With the choice of a partner for external accounting, you should not rush. The risks are too great, and a lot needs to be discussed during the negotiations. 


Usually this stage takes 2-3 weeks. On the Gantt chart presented above, you can find an abundance of tasks that are recommended to be solved before the responsible step of choosing and concluding a deal.

An important role in this series is played by a comparative economic analysis of the costs that the business really incurs today for the selected accounting functions, and the cost of services offered by candidates.

Below is an example of an estimated calculation of the costs of performing the functions of the accounting department and the personnel department, which the company is going to transfer to the side.

Fine-tune comprehension for partner selection

In task management (a methodology that I try to adhere to, see The Special Project "Business in Russia")there is a good rule for choosing a responsible resource for the task: the presented decomposition of the solution of the key task should appeal to you. It's simple, it's not easy to execute.

The cost of external accounting services is usually formed in the final commercial offer, in response to your filling out a questionnaire in the format provided by a potential contractor. The question is, who to choose if all three outsourcing companies are about the same level, with approximately the same client base, with similar sites and even with close arguments? Our comparative costs for the same composition of functions, as we remember from the last section, are 254,866 rubles per month. Is the amount of the cost of services a guarantee of the long-term success of outsourcing? No, it isn't. Cheaper service can relieve us of the "headache", and expensive, on the contrary, add.

In order to get a clear idea, a feeling that it will turn out with this candidate, and with others it will be more difficult, it is necessary to analyze the past interview-negotiations, preferably by audio recording. And also you need to spend quite a lot of time analyzing additional services and services that outsources provide on a paid basis or include in the cost of the main outsourcing product. 

Time for negotiations and analysis of services must be included in the project budget. Below is an example of an extract from the audio protocol of a conversation with a very professional operator of accounting outsourcing services from Moscow.

The number of conversations, interviews, negotiations with a good candidate for outsourcing should be at least five. This gives a lot of information for the correct decision-making. You begin to imagine how the work of the service operator is structured, how experienced he is, how he is ready to proactively help you bypass the difficulties. And such subtle points are important not only regarding the standard accounting procedures and preparation of accounting statements, but, first of all, from the standpoint of numerous nuances, from which the sense of professionalism of the outsource is formed.

At the end of this process, it is advisable to ask colleagues from a company specializing in accounting outsourcing to get acquainted at least partially with internal regulations, rules for the provision of accounting services, the final version of the contract, in which the appendix on additional paid services of the operator is important. Based on this document, another hidden cost analysis is needed. Let's consider an example of such a document.

When these actions are performed, the question of choosing a partner will largely be decided. It remains only to work out the form of the contract, prescribing in detail the procedures for implementing the service, to clarify the calendar schedule of the project. At this point, the third stage of preparation for the implementation of the project can be completed.

Implementation and closure of the project

The longest period of time in the project of implementation of accounting support and maintenance is occupied by its actual implementation in cooperation with the contractor. It cannot be said that the initiative is completely on the side of the outsourcing company. The project team has a lot of work to do. And often it begins with the clarification of the tax and legal model of activity. In many cases, the outsource offers to perform an express audit at the negotiation stage as an additional service. This helps the future performer of external accounting to better understand the specifics of the business, the level of organization of accounting, the tax planning system that have been in force so far.

Stage of implementation of the project of transferring the company's accounting to outsourcing

In addition, the results of the express audit form almost 100% of the TK for reformatting the tax and legal model of doing business. And this already carries a good potential for additional income for the performer. And the argument of the new partner is "ironclad": "Here we can save on taxes, but here we cannot. We just need to change the order, the form of transactions, the accounting policy." In fact, for the customer's money, the contractor insures himself and him against future financial losses. I think this practice is normal.

The project implementation stage is divided into the following task blocks:

Creation of a new or updated tax and legal model.

  • Correction of the model of business processes of financial management, personnel management and collateral processes, the owner of which becomes an external operator, despite the fact that a number of accounting functions may remain with the customer.
  • Implementation of the parallel accounting stage (during the test period), which lasts from 1 to 3 months, depending on the number of accounting sectors and economic entities transferred to the external operator.

The completion of the project of transferring accounting to outsourcing has its own special specifics. At the first step, it is important to make sure that the real economic effect of outsourcing corresponds to the planned one. It is specified how it was possible to cope with the first wave of risks associated with the organizational gaps that have arisen, the complication of functional transitions, and, most importantly, with the hidden and obvious opposition of personnel. 


Before the closure of the project, it is not too late to make adjustments to the composition of the accounting work remaining with the customer, to identify the hanging functions and tasks that were missed during the inventory of the model "as is". Planned layoffs and transfers are also carried out here. It takes time to complete all the work on the project – approximately two weeks.

As we can see, a seemingly small project when laying it out into components in time requires 4-5 months of intensive work of the project team, to which it is desirable to connect the responsible employees of the executor from the second stage. 


The costs of the project should include the additional amount of severance payments for the accounts being dismissed and the tests to which the company's corporate culture is subjected.

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