90% of CFOs are outsoucing accounting processes to combat shortage

A recent survey reveals that 90% of Chief Financial Officers (CFOs) are now outsourcing at least some of their accounting functions. This statistic, emerging from the 2024 Finance & Accounting Talent Market Outlook report, signals a sea change in how financial leaders are addressing persistent staffing challenges.

The move towards outsourcing comes against a backdrop of an increasingly dire talent crunch. The survey found that 83% of senior leaders reported a talent shortage in 2024, a significant increase from 70% in 2022 and 63% in 2020. This escalating problem has left many organisations grappling with unfilled positions and overworked staff.

So why are CFOs turning to outsourcing in such numbers?

What’s driving the change?

The reasons are multifaceted but compelling. Cost savings stand out as a primary driver, with the report suggesting that strategic use of outsourcing can save organisations as much as 50% compared to the cost of a US-based full-time hire. Beyond financial considerations, outsourcing offers access to a global talent pool and the flexibility to scale operations up or down as needed.

The functions being outsourced vary, but certain areas stand out. Cash application leads the pack, with 65% of CFOs outsourcing this function. Accounts receivable follows at 48%, while accounts payable rounds out the top three at 31%.

These areas, often considered non-core but essential, are prime candidates for external expertise.

Perhaps the most telling statistic is that 90% of CFOs who outsource report that they can easily find qualified accountants when they need them. This stands in stark contrast to the 100% of CFOs who don’t outsource and say they cannot easily find qualified accounting talent. The difference is stark and speaks volumes about the effectiveness of outsourcing as a strategy to address the talent shortage.

However, outsourcing is not without its challenges. Concerns about quality control, data security, and maintaining company culture are all valid considerations. Successful CFOs are finding ways to mitigate these risks through careful vendor selection, robust service level agreements, and maintaining strong communication channels with their outsourced teams.

How will this shape finance teams?

As outsourcing becomes more prevalent, it’s reshaping the structure and focus of in-house finance teams. Many organisations are finding that outsourcing routine tasks frees up their internal talent to focus on more strategic, value-adding activities. This shift is transforming the role of finance from a purely operational function to a more strategic business partner.

With transactional tasks increasingly handled by outsourced teams, in-house finance professionals are being called upon to provide deeper business insights, engage in forward-looking financial planning, and contribute more directly to strategic decision-making. This evolution is driving a change in the skill sets sought after in finance departments. Alongside technical accounting knowledge, skills such as data analysis, business acumen, and strategic thinking are becoming increasingly valuable.

The landscape is further complicated by the advent of artificial intelligence and automation technologies. These tools have the potential to dramatically increase efficiency in many accounting processes, from data entry to complex reconciliations. As these technologies mature, they’re likely to accelerate the shift in focus for finance teams, potentially reducing the need for certain types of outsourcing while increasing demand for professionals who can interpret and act on the insights these technologies provide.

However, the report indicates that many CFOs are taking a cautious approach towards AI in accounting functions. While some organisations are already leveraging AI-powered automation in areas like accounts payable, many are still in a “wait-and-see” mode. These CFOs express interest in learning from early adopters before implementing AI solutions themselves, reflecting a prudent approach to what represents a significant shift in how financial processes are managed.

This cautiousness is understandable given the critical nature of financial data and processes. CFOs are weighing the potential benefits of AI – such as increased accuracy, faster processing times, and the ability to handle larger volumes of data – against concerns about data security, the need for oversight, and the challenges of integrating AI systems with existing financial infrastructure.

Despite this caution, the potential of AI in finance is clear. As one respondent to the survey noted, “It is helpful with some of our AP functions; just need to find the time to evaluate it for other areas.” This sentiment reflects a growing recognition that AI and automation will play an increasingly important role in finance departments of the future.

As we look to the future, it’s clear that outsourcing has become more than just a stopgap measure – it’s a critical strategy for CFOs navigating the ongoing talent shortage. The high adoption rate suggests we may be witnessing a fundamental shift in how finance departments operate and are structured.

Comments are closed.