Outsourcing can lower costs, reduce personnel hassle, and now, through Web technology, provide 24-hour-a-day access. Galan Entertainment Inc., in Venice, Calif., has outsourced its accounting work to Licker & Ozurovich, of Los Angeles, for three years. But it recently joined the ranks of companies that not only outsource traditional accounting functions, such as accounts payable, but now also have access to an intranet that allows them to input data and access reports, such as financial statements and cash flows, online.
“Sometimes I need a report immediately,” says Yogini Purohit, Galan CFO and COO. “I am now capable of getting access to that information with a few keystrokes. It cuts down on turnaround time.”
Brian Regan, a partner in LOR Management Services LLC, the division of Licker & Ozurovich that handles the Web-based accounting transactions, says very few accounting firms offer this type of outsourcing as an exclusive service, especially to small and midsized businesses. LOR also is moving into “application hosting,” in which LOR will do all of a company’s back- office accounting, including buying and hosting all the software. “Our clients don’t want to have to make the investment in upgrading software all the time,” Regan says.
He adds that companies respond with varying enthusiasm to the Web-enabling features. “Companies in the new media business, fast-growing companies, tend to appreciate the value right away,” he says. “So do companies that have been growing fast on the front end, in sales and marketing, but that have not necessarily addressed growth on the back end.”
Web-based technological innovation is making outsourcing more attractive to larger companies, says Regan. “We are currently pursuing a new business opportunity with a Fortune 300 company that is actively looking to outsource its entire accounts payable function, which is now handled by a staff of 100-plus,” he says. While LOR’s business base is concentrated in Southern California, the Web enabled it to expand to the Midwest and the East Coast. Other niche process outsourcing firms include SourceNet, CorpCare, The Capstone Group, AuditForce, and CollecTech.
Outsourcing accounting saves clients from 10 to 20 percent on their accounting costs, says Regan, depending on the number of transactions they do a month and the number of locations they have. And in Galan’s case, he said, it cut the company’s personnel needs in half.