Finance and Accounting Outsourcing: How Call Centers in the Philippines Are Becoming Strategic Finance Partners

Finance and accounting (F&A) is the backbone of any successful organization. It is the function that ensures the accuracy of financial reporting, the efficiency of financial processes, and the availability of financial insights to support strategic decision-making. However, for many companies, the F&A function can be a significant cost center, and it can be a challenge to attract and retain the talent needed to run a world-class F&A operation. This is where F&A outsourcing to the Philippines comes in. By leveraging the country’s large pool of highly-skilled and certified accountants, companies can transform their F&A function from a cost center into a strategic asset.

According to a report by PwC, the global market for F&A outsourcing is expected to reach $65.3 billion by 2025. This growth is driven by the increasing need for companies to reduce costs, improve efficiency, and gain access to specialized expertise. The Philippines has emerged as a global leader in F&A outsourcing, with a long history of providing high-quality services to some of the world’s most demanding companies.

Philippine call centers have evolved far beyond their traditional role as providers of voice-based customer service. They have become sophisticated BPO providers with deep expertise in a wide range of back-office functions, including F&A. They have invested in the latest technologies, such as robotic process automation (RPA) and artificial intelligence (AI), to automate and streamline F&A processes, and they have built a large and highly-skilled workforce of certified public accountants (CPAs) and other finance professionals.

The benefits of outsourcing F&A to the Philippines are significant. In addition to cost savings of up to 50-70%, companies can also achieve significant improvements in process efficiency, data accuracy, and compliance. They can also gain access to a level of expertise and technology that would be difficult and expensive to replicate in-house.

The Evolution of F&A Outsourcing

F&A outsourcing has evolved significantly over the past two decades. In the early days, it was primarily focused on transactional processes, such as accounts payable and accounts receivable. However, as the capabilities of BPO providers have grown, the scope of F&A outsourcing has expanded to include more complex and strategic functions, such as financial planning and analysis (FP&A), treasury management, and risk management.

This evolution has been driven by a number of factors, including the increasing sophistication of BPO providers, the availability of new technologies, and the growing demand from clients for more value-added services. Leading Philippine providers have been at the forefront of this evolution, continuously expanding their capabilities to meet the changing needs of their clients.

A Comprehensive Suite of F&A Services

Leading Philippine BPO providers offer a comprehensive suite of F&A services, covering the entire finance and accounting value chain. These services can be broadly categorized into three areas:

1. Procure-to-Pay (P2P): This includes all of the processes involved in procuring goods and services, from creating a purchase order to making the final payment. Key P2P services include:

• Vendor Master Data Management: Creating and maintaining accurate records of all vendors.

• Purchase Order Management: Creating and managing purchase orders.

• Invoice Processing: Receiving, validating, and processing invoices.

• Payment Processing: Making timely and accurate payments to vendors.

• Travel and Expense (T&E) Processing: Processing employee expense reports.

2. Order-to-Cash (O2C): This includes all of the processes involved in receiving and processing customer orders, from creating a sales order to collecting the final payment. Key O2C services include:

• Customer Master Data Management: Creating and maintaining accurate records of all customers.

• Sales Order Management: Creating and managing sales orders.

• Billing and Invoicing: Creating and sending invoices to customers.

• Cash Application: Applying customer payments to outstanding invoices.

• Collections Management: Following up with customers on overdue payments.

3. Record-to-Report (R2R): This includes all of the processes involved in closing the books and preparing financial statements. Key R2R services include:

• General Ledger Accounting: Maintaining the general ledger and all subsidiary ledgers.

• Fixed Asset Accounting: Tracking and depreciating fixed assets.

• Intercompany Accounting: Reconciling transactions between different legal entities within the same company.

• Financial Close and Consolidation: Closing the books at the end of each period and consolidating the financial statements of all legal entities.

• Financial Reporting: Preparing financial statements in accordance with Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).

In addition to these core services, many providers also offer a range of specialized services, such as tax compliance, treasury management, and financial planning and analysis (FP&A).

“The conversation around F&A outsourcing has changed. It’s no longer just about cost savings. It’s about transformation. It’s about how you can leverage the expertise and technology of a specialized provider to create a more efficient, more effective, and more strategic finance function. The Philippine providers who are leading this conversation are the ones who are truly adding value to their clients’ businesses.” – Ralf Ellspermann

Building a World-Class F&A Outsourcing Operation

Creating a world-class F&A outsourcing operation requires a unique combination of talent, technology, and process excellence. Leading Philippine providers have developed a set of best practices in each of these areas.

Talent is the foundation of any successful F&A operation. The Philippines has a large and growing pool of highly-skilled and certified accountants. The country produces over 10,000 new CPAs each year, and many of them choose to build their careers in the BPO industry. This provides a rich source of talent for F&A outsourcing providers.

Technology is a key enabler of efficiency and accuracy in F&A. Leading providers have invested in a wide range of technologies, including enterprise resource planning (ERP) systems, RPA, and AI. These technologies are used to automate manual processes, reduce errors, and provide real-time insights into financial performance.

Process excellence is the glue that holds it all together. Leading providers have developed a set of standardized and optimized processes for each of the F&A functions they support. They use a variety of tools and techniques, such as Six Sigma and Lean, to continuously improve their processes and to ensure that they are as efficient and effective as possible.

Case Study: Transforming the Finance Function of a Global Retailer

A global retailer was struggling with the cost and complexity of its F&A operations. The company had a decentralized finance function, with each of its country operations having its own F&A team. This resulted in a lack of standardization, a high level of manual effort, and a lack of visibility into the company’s overall financial performance. The retailer decided to outsource its F&A operations to a Philippine BPO provider.

The BPO provider implemented a solution that included a centralized F&A team of 200 professionals who were responsible for all of the retailer’s F&A processes, from procure-to-pay to record-to-report. The provider also implemented a new, cloud-based ERP system and a suite of RPA and AI tools to automate manual processes.

The results were transformative. The retailer was able to reduce its F&A costs by 40% and to improve the accuracy of its financial reporting. The company also gained real-time visibility into its financial performance, which allowed it to make more informed business decisions.

The success of the engagement led the retailer to expand its partnership with the BPO provider. The outsourced team grew to 500 professionals, and they took on additional responsibilities, such as FP&A and treasury management. The BPO provider became a strategic partner, helping the retailer to transform its finance function and to achieve its business objectives.

“The global retailer case study is a powerful example of the transformative power of F&A outsourcing. By partnering with a specialized provider, the company was able to create a world-class finance function that was more efficient, more effective, and more strategic. It’s a testament to the power of strategic partnership.” – Ralf Ellspermann

The Future of F&A Outsourcing

The F&A outsourcing landscape will continue to evolve, driven by new technologies and changing client expectations. Several key trends will shape the future of F&A outsourcing in the Philippines.

The adoption of AI and machine learning will accelerate. AI-powered tools will be used to automate more and more of the manual tasks associated with F&A, freeing up finance professionals to focus on more strategic activities. Machine learning algorithms will be used to analyze financial data and to identify trends and patterns that can be used to improve business performance.

The focus on data analytics will intensify. Finance professionals will be expected to have strong data analytics skills, and they will be responsible for providing real-time insights into financial performance. This will require a new set of skills and a more sophisticated approach to data management.

The demand for strategic advice will grow. Clients will increasingly look to their F&A outsourcing providers for strategic advice on a wide range of issues, from M&A to tax planning. This will require providers to have a deep understanding of their clients’ businesses and to be able to provide proactive and value-added advice.

 

The Benefits of F&A Outsourcing to the Philippines

The Philippines has become a global leader in F&A outsourcing for a number of reasons. The country offers a unique combination of cost, quality, and scalability that is difficult to match.

Key Benefits:

• Cost Savings: The cost of labor in the Philippines is significantly lower than in developed countries, which can result in cost savings of up to 50-70%.

• Large Talent Pool: The Philippines has a large and growing pool of highly-skilled and certified accountants. The country’s education system is aligned with the needs of the BPO industry, and there is a strong culture of continuous learning.

• English Proficiency: The Philippines is the third-largest English-speaking country in the world, which makes it an ideal location for serving English-speaking markets.

• Cultural Affinity: The Philippines has a strong cultural affinity with the West, which makes it easy for Filipino professionals to work with their counterparts in North America and Europe.

• Government Support: The Philippine government is a strong supporter of the BPO industry and has created a favorable business environment with a variety of tax incentives and other benefits.

By leveraging these advantages, companies can achieve significant improvements in their F&A operations while reducing costs and freeing up internal resources to focus on more strategic initiatives.

A Strategic Partner for Financial Excellence

F&A outsourcing to the Philippines is a powerful and cost-effective way to transform the finance function. By leveraging the country’s large pool of highly-skilled and certified accountants, companies can create a more efficient, more effective, and more strategic finance function. Leading Philippine providers have developed a set of best practices for building and managing world-class F&A outsourcing operations, and they are continuously innovating to stay ahead of the latest trends in the industry.

For companies looking to reduce costs, improve efficiency, and gain access to specialized expertise, the Philippines offers a compelling solution. It is a country that understands the importance of financial excellence and is using that understanding to create a new and more effective approach to F&A outsourcing.

References

• PwC. (2024). “The Future of Finance.”
• Deloitte. (2024). “Global Outsourcing Survey 2024: Multidimensional sourcing.” 
• McKinsey & Company. (2024). “The Future of F&A Outsourcing.” 
• EY. (2023). “The Future of the Finance Function.”