In a business world marked by uncertainty, month-end and year-end accounting challenges have remained a constant. The resolution of the recent political season and the Federal Reserve’s lowering of interest rates may have given organizations an overall renewed sense of optimism and the momentum to tackle those challenges. However, the complexity and volume of financial tasks during these periods can overwhelm even the most seasoned accounting teams, placing intense pressure on those that may lack the necessary resources. In this article, we explore how outsourcing accounting functions may provide a viable way to alleviate that pressure.
Month-end and year-end closing processes are universally required for organizations of every size and industry. So, too, are the challenges associated with finalizing financial records, preparing reports, and managing compliance with regulatory requirements on a daily basis. These tasks necessitate meticulous attention to detail and a comprehensive understanding of evolving financial regulations. The sheer volume and complexity of the work required of an accounting team can be mindboggling when viewed holistically.
Time constraints are one common concern. Most organizations must meet strict deadlines or face consequences that include steep financial penalties. When pressed for time to close the books quickly, factors such as human error, employee burnout, and lack of oversight become critical.
Limited resources can also contribute to month-end and year-end pressures. Many organizations simply lack the necessary staff or experience to efficiently manage an often-daunting volume of accounting tasks. The current shortage of accounting talent, coupled with the costs of hiring and training new employees, has exacerbated staffing concerns.
Finally, ensuring compliance with ever-changing regulations and maintaining accuracy is a constant challenge. For example, several new accounting standards are effective for 2024 financial statements for nonpublic entities, and mandatory in Q1 of 2025 for public entities. These changes demand rapid adjustments and a proactive approach to regulatory compliance. The incoming administration may also bring about changes to financial reporting that accounting teams must quickly address.
Regardless of the obstacles, it is imperative for organizations to provide accurate and timely financial reporting that helps avoid penalties for non-compliance and provides a clear picture of the organization’s financial well-being. When adhering to month-end and year-end requirements becomes overwhelming, leaders may seek help.
The decision to supplement current accounting operations can be inherently challenging. It’s important to realize the effect that a team of accounting professionals, along with a best-in-class process leveraging the appropriate technology solutions, can have on an organization in key areas, including the following:
The potential benefits of outsourcing are compelling; however, transitioning to an outsourced model involves evaluating other critical factors.
Outsourcing accounting and financial functions can present numerous advantages, but achieving the best possible collaboration requires attention to certain key considerations.
For example, the choice of an outsourcing firm can significantly impact the quality of the services provided. It’s essential to carefully evaluate firms, looking for one with a proven track record and industry-specific experience.
Data security is a major concern throughout the business world. To protect against breaches and unauthorized access, an outsourcing firm must have best-in-class data security measures in place to protect the organization’s sensitive financial information. Technology alone is not enough; processes that safeguard data must be implemented as well to promote the best possible outcome.
Finally, an outsourcing model requires clear communication channels between the organization, the outsourcing firm, and any internal or external auditors. This is especially critical for setting expectations that may prevent misunderstandings and facilitate the preparation of complete and timely reports. Using cloud-based communication platforms like Microsoft Teams can help maintain clear and consistent communication with your outsourcing provider.
Organizations that outsource finance and accounting functions during month-end and year-end closes can gain a strategic advantage. By alleviating the pressures associated with these critical periods, focus may shift to opportunities for growth and innovation. When navigating a shifting business environment, outsourcing may emerge as a powerful tool to enhance efficiency and drive strategic initiatives.
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