The market demand for business process outsourcing (BPO) has significantly increased over the past few years. The Finance BPO market is anticipated to grow to USD 405.6 billion by 2027, according to research. Since BPO has a place in almost every industry, including private equity portfolio companies, this should not be shocking. One of the many reasons why PE firms choose to add Finance-as-a-Service to their portfolio is that it makes managing finance and accounting easier. We must look more closely at business process outsourcing (BPO) and attempt to explain how such services might benefit your PE firm in order to fully comprehend how outsourced accounting functions with BPO.

BPO accounting: What does that mean?

Private equity is subject to a wide range of financial regulations and has many responsibilities. The finance and accounting staff in your portfolio are under tremendous pressure as a result of this. They need to be completely in control of all cash flows within the business, but they also need to be up to date on rules and market conditions for BPO Company. Staying current with pertinent information shouldn't be a problem with the development of information technology. However, if your portfolio company does not devote enough human resources to the financial division, things may gradually deteriorate. The need for market relevance has never been greater, and with subpar financial reporting from the accounting team, a private equity firm may eventually experience lower ROI.

Outsourcing (BPO) streamlines and strictly regulates the entire process. Every business that provides Finance-as-a-Service is constantly searching for the best financial talent on the planet. They don't need to be physically located in an office, so this is possible. For these companies, remote work is now the norm. Although this multinational company may employ various business models, it will work to provide the best customer experiences while maintaining competitive prices.

How is your portfolio's financial management handled by BPO accounting?

The quality of the services may differ depending on whether you choose to work with an offshore or local BPO company, but the business process is almost always the same. Your BPO partners will take care of your accounting rather than hiring and managing internal financial staff. These businesses typically provide bookkeeping, payroll processing, tax planning and returns, management of payable and receivables accounts, bank reconciliation, and financial reporting services. Having such services available when you need them can help your PE portfolio greatly while also eliminating the need to manage and hire financial management teams. You could think of it as a type of process automation.

What advantages does BPO accounting offer?

Reduced demand for additional human resources within your portfolio company is the first immediately apparent benefit. With outsourced solutions, scaling is not a problem because resource allocation is adjusted to the business's current requirements. Having a professional manage your finances makes wealth management much simpler. Asset management is made simpler by outsourced finance, which offers 24/7 support. This gives your PE firm and your portfolio company more time and room to scale up and grow.