Many companies struggle to process their financial transactions effectively. Slow or erroneous processing has the potential to impact your analysis and forecasting; therefore, optimally maintaining financial records is an integral part of finance and accounting. However, making financial information easily accessible to key stakeholders through collecting, recording, processing, and presenting financial data collected from multiple sources is not the only objective of a record-to-report (R2R) process solution. Also important is ensuring data accuracy and the highest standards of compliance.
Recognising these challenges in financial transaction processing, many companies have turned to record to report process outsourcing as a strategic solution to enhance efficiency and maintain focus on their core business functions. However, the key to successful outsourcing lies in selecting the right partner, a process that hinges on asking them the right questions before finalising any agreement. Before we delve into the critical questions that will guide you in choosing the right R2R process outsourcing partner, let’s briefly examine the steps involved in the R2R process. This will not only provide clarity on what the R2R process entails but also assist you in understanding the depth of expertise required from an outsourcing partner, ensuring they can effectively manage and streamline this complex process for your business.
What are the steps involved in R2R process?
R2R is a complex process not just limited to recording and reporting. Lying within these two terms is a process that includes:
- Data Extraction:
Your financial data comes in from multiple sources and systems spread across the organisation’s expanse and tech stack. The first step is data extraction from primary data sources. Such financial information can include revenue, sales, orders, invoices, payment recipients, etc.
- Data Collection:
Not all data is important for a particular report. The next step, therefore, is identifying the correct data to collect and representing this data in a standardised manner that is easy to understand. Think of this as a stage where all necessary data is now available in a manner that can be used optimally.
- Closing:
The general ledger is now closed for a specific amount of time on a monthly, quarterly, or yearly basis. At this point, it includes accounts reconciliation, entry adjustments, and ensuring the general ledger is accurate and has the most updated information.
- Data Analysis and Reporting:
This precedes the R2R services team, ensuring that all the recorded data is accurate. Once the team is assured that the data is clean, this data is harnessed to create specific reports that convey your company’s financial health. Stakeholders often pull this data into pre-built dashboards that deliver more meaningful insights.
The complexity of this process means companies will have to invest in a skilled team of R2R experts who can bring more value to this whole process. They also need to invest in the necessary technologies to automate specific repetitive tasks of the record to report process. In order to circumvent these challenges, an ideal solution will be to partner with a record-to-report process outsourcing partner.
However, how do you pick the right partner offering reputed R2R services?
Questions You Must Ask Your Outsourcing Provider
To choose a record to report process outsourcing partner who is perfectly aligned with your financial reporting needs, you must ask the following questions:
- What is the size of the provider’s R2R team?
It is imperative to ask this question to discern the provider’s ability to scale on demand.
- What is the level of familiarity of the service provider with R2R?
By 2028, the market size of the global finance and accounting outsourcing marketing is expected to touch $57746.96 million. Outsourcing is big business, and many providers offer a bouquet of services that cover the length and breadth of F&A, including R2R services. But you are only interested in record-to-report at this point in time. Make sure your provider has in-depth expertise in this specific service area. Ideally, you must partner with a company that has been in the R2R domain for many years, which means its accountants know its complexities and can navigate these easily.
- Has the provider delivered financial recording and reporting services for companies in your domain?
Experience is one thing, but it doesn’t matter if the provider hasn’t worked with companies in your domain. Every company will have unique R2R needs; the provider you work with should have experience satisfying these needs.
- What is the cost of the record to report process solution?
Outsourcing helps you benefit from labour arbitrage, but although it is more affordable than in-house R2R expertise, you must make sure that the affordability is enough for outsourcing to make business sense.
- What are the qualifications of the provider’s accountants?
The R2R accountants assigned to your project must have excellent accounting and reporting experience and be well-versed in every area of R2R.
- What are the communication skills of the provider’s R2R professionals?
As a UK-based company, you will need professionals who can communicate effectively in English. Ensuring your outsourced R2R team is well-versed in the language will be a big plus.
- What is the tech stack used by the outsourcing provider?
This is an essential question as the provider must be comfortable working with the reporting tools you are using in-house or must be able to add more efficiency to R2R by harnessing the power of newer and more outcomes-focused tools. For example, the use of reporting tools that can deliver more analytical insights.
- What kind of collaboration tools does the provider leverage?
Harnessing the power of an outsourced team of R2R accountants is a collaborative effort between your internal team and the outsourced professionals. For this to happen, they need to leverage the right tools to help them manage work more effectively between them.
- How does the record to report process outsourcing company stay updated with the latest information?
One of the key reasons why you outsource is to move from a traditional legacy approach to R2R to a more modern and efficient approach. For this to succeed, your outsourcing provider must be able to keep up with the latest developments in the field to ensure your reporting doesn’t fall behind and meets industry standards.
- What is the provider’s approach to data security?
The average data breach cost for UK businesses is £3.2 million. Your business doesn’t want to be on the wrong end of the fine. This is why you must know the provider’s security protocols to keep your data safe and secure. Get rid of any doubts, and get written assurance regarding data security.
- How often do they communicate updates to their clients?
A system must be in place where you are regularly updated about work status and know its completion stage at all times.
- Does my company still retain complete control over the reporting work?
Companies are always concerned that outsourcing will mean they relinquish control over specific accounting work, but partner with a company wherein you can still define the strategy for workflow, and your word is the last word on the quality of work.
- What are the success metrics of the association?
Ensure you identify critical success metrics that will help you evaluate the performance of the R2R services provider. The provider should also sign off on them before the work begins.
- Can you add more services to the working arrangement if you want to outsource other activities such as accounts receivable, accounts payable, and more?
This question serves a dual purpose. You will know whether the provider has expertise in other aspects of finance and accounting and whether the provider has enough capacity to scale and take up more work whenever you want.
Asking Questions to the R2R Expert
The above are not the only questions you must ask your potential record to report process solution provider, but they should be enough to give you clarity on the expertise and experience of the provider and the process they follow. QX has a proven track record of delivering R2R services that significantly improve organisation’s financial processes, and we have the added advantage of having worked with companies across domains.
Contact QX to know how we can help you move the needle on R2R efficiency.
Originally published Jan 26, 2024 05:01:11, updated Feb 06 2024
Topics:
Finance & Accounting Outsourcing, Record-to-report cycle
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