Value Smart

What is BPO? Unpacking Business Process Outsourcing

By Willie van Dyk on July 10, 2021

What is BPO (Business Process Outsourcing)?

Business Process Outsourcing is the process of contracting certain business tasks or operations to a third party supplier.

The concept and practice of BPO first arose when soft drink companies commissioned third party suppliers to carry out their operational functions. Today, BPO has evolved to include all industries and almost all business functions.

Why has BPO become so popular?

The reason that BPO has extended to include multiple industries and roles is that Business Process Outsourcing allows a company to continue to run with its entrepreneurial speed and agility without having to wait to reach a mature stage where in-sourcing such functions would be financially viable.

In other words, you don’t have wait until you can employ a professional – or even an entire department – to perform specific functions within your business.

Can I outsource my financial processing functions?

With technology enablers like the internet and #cloud accounting software, we’ve seen an increasing trend by companies rather to outsource than in-source various aspects of their financial function to make use of the benefit associated with business process outsourcing.

Benefits of outsourcing:

• Access to highly skilled resources

• Cost saving advantages: works around needing full-time employees

• Increased efficiency

• Allows you to focus on core areas of your business

• Save on infrastructure and technology costs

What financial processes can I outsource?

By outsourcing some of the processes listed below, you can use the time that you would have spent trying to process and record your financial information all by yourself and rather, focus on the strategic direction and growth of your business.

CFO Services 

• Management accounts
• Budgets and forecast
• Business valuations
• Process optimization
• Cash flow planning and execution

Compliance Services

Accounting
Payroll
Bookkeeping
Tax
Financial statements
Company secretarial service

When you’ve decided to outsource any (or all) of financial processes, it is very import that you partner with a reputable business process outsourcing partner to ensure business continuity.

What should I consider when choosing a business process outsourcing partner?

1. Before signing a contract make sure that the vendor is reliable.
Ask for their qualifications and check to see if they are registered with reputable industry bodies, for example, the South African Institute of Professional Accountants. This is especially important if you are looking for assistance with Tax, make sure that the vendor is registered as a Tax Practioner.

2. Make sure that the cloud accounting technology’s functionality is suited to your specific business needs.
Feel free to ask for a demo or propose scenarios to your vendor so that they can verify that the solution is a good fit for what you want to accomplish.

3. Find out if their resources are trained and have the necessary skills.
You are always allowed to ask these questions and, in my opinion, you should be wary of any supplier who avoids answering these questions.

4. Make sure that you get a signed service level agreement that outlines each of the parties’ roles and responsibilities.
The last thing that you want is to receive inadequate service and then get served a huge bill. Make sure that you know what you are paying for, what you should receive and what you need to supply to gain the maximum benefits from your future relationship.

5. If pricing is one of your main motivations for outsourcing, make sure that the vendors pricing structures compares well to the market. This, of course, goes hand-in-hand with point number four. Cheap is not always better. Once you know what is included and excluded in each package you are researching, you will have a better basis for comparison.

6. Establish clear lines of communication to ensure that there are no delays when urgent matters arise.
Watch out for strict clauses that stipulate time-frames for turnaround on answers.

Want to know more about Business Process Outsourcing? Or how ValueSmart can empower you to make better business decisions? Feel free to complete the form below with your query, and we’ll be in touch in no time.

What should I consider when choosing a business process outsourcing partner?

1. Before signing a contract make sure that the vendor is reliable.
Ask for their qualifications and check to see if they are registered with reputable industry bodies, for example, the South African Institute of Professional Accountants. This is especially important if you are looking for assistance with Tax, make sure that the vendor is registered as a Tax Practioner.

2. Make sure that the cloud accounting technology’s functionality is suited to your specific business needs.
Feel free to ask for a demo or propose scenarios to your vendor so that they can verify that the solution is a good fit for what you want to accomplish.

3. Find out if their resources are trained and have the necessary skills.
You are always allowed to ask these questions and, in my opinion, you should be wary of any supplier who avoids answering these questions.

4. Make sure that you get a signed service level agreement that outlines each of the parties’ roles and responsibilities.
The last thing that you want is to receive inadequate service and then get served a huge bill. Make sure that you know what you are paying for, what you should receive and what you need to supply to gain the maximum benefits from your future relationship.

5. If pricing is one of your main motivations for outsourcing, make sure that the vendors pricing structures compares well to the market. This, of course, goes hand-in-hand with point number four. Cheap is not always better. Once you know what is included and excluded in each package you are researching, you will have a better basis for comparison.

6. Establish clear lines of communication to ensure that there are no delays when urgent matters arise.
Watch out for strict clauses that stipulate time-frames for turnaround on answers.

Want to know more about Business Process Outsourcing? Or how ValueSmart can empower you to make better business decisions? Feel free to complete the form below with your query, and we’ll be in touch in no time.