As the debate between outsourcing and in-house property accounting heats up, several factors come into play that might sway your decision. One crucial aspect to consider is the level of financial control. This term refers to how much oversight and command you have over your finances and accounting practices. It’s vital to consider because it directly impacts the accuracy, reliability, and security of your property accounting. 

This article explores this topic to uncover why financial control is pivotal. It provides detailed insights and information on maintaining financial control, whether you choose outsourced or in-house accounting.

Levels of Financial Control and Oversight in Both Models

When it comes to property accounting, financial control, and oversight can vary significantly depending on whether you opt for in-house accounting, outsourced accounting, or a hybrid version. 

Financial control encompasses everything from daily practices to strategic financial planning and reporting. The level of control you maintain over these processes can significantly affect your business’s financial health and compliance with regulatory standards.

In-House Property Accounting

Financial control and oversight are typically more hands-on and direct in the in-house accounting model. This approach allows businesses to maintain a close watch over their financial operations, with the potential for higher levels of customization and immediate oversight. 

Take a look at the breakdown of the levels of financial control in in-house property accounting:

  1. Direct Oversight: You have direct oversight of your accounting staff, processes, and systems. This proximity allows for real-time monitoring and adjustments.
  2. Customization: Financial processes and reports can be tailored specifically to the business’s needs, requiring a more nuanced approach to property management.
  3. Immediate Access to Financial Data: Having an in-house team means access to financial information is immediate, facilitating faster decision-making.
  4. Control Over Staff: You are entirely responsible for recruiting, training, and managing accounting staff. You can easily shape the team’s skills and culture directly.

Outsourced Property Accounting

Outsourcing property accounting introduces a different level of financial control characterized by reliance on external expertise and systems. While direct oversight may be reduced, outsourcing can offer specialized skills and potentially higher efficiency. 

Here are key aspects of financial control in the outsourcing model:

  1. Dependence on External Expertise: Financial control is exercised through the selection and agreement with the service provider. This indicates reliance on their expertise for accurate and compliant accounting practices.
  2. Standardized Processes: Outsourced services often use standardized processes and reporting, which can ensure consistency and reliability.
  3. Periodic Reporting and Communication: Oversight is maintained through scheduled reports and ongoing communication.
  4. Reduced Direct Staff Management: While direct control over accounting staff is relinquished, this can free up resources to focus more on core business activities.

Best Practices for Maintaining Control in an Outsourced Model

Maintaining control in an outsourced model is important to ensure that the quality of services meets the company’s standards and that the partnership delivers on its promises. This control is essential for managing the quality and efficiency of the outsourced services safeguarding data security, managing costs, and confirming that the outsourcing partnership aligns with the company’s strategic goals.

Here are some best practices for maintaining control in an outsourced or hybrid model:

  1. Understand Data Regulations and Vendor Operations: Familiarize yourself with the regulations in the offshore provider country and how the company manages data to ensure compliance and security. Specifically look for partners that are SOC 2 compliant and operate from an ISO:27001 office. 
  2. Demand Transparency: Ensure that the outsourcing partner clearly demonstrates the value they deliver. Look for providers that are currently serving your peers and are aware of the requirements in your sector, such as multifamily, student, etc.
  3. Set Goals and Track Quality: Share your key performance indicators (KPIs) with the vendor and regularly review metrics to ensure they meet those standards.
  4. Implement a Governance Model: Establish a framework for managing the outsourcing relationship, including clear policies and procedures.
  5. Choose the Right Service Provider: Select a partner based on their real estate track record, expertise in your sector, and ability to meet your specific needs​​.
  6. Manage Organizational Change Effectively: Be prepared to handle changes within your organization that result from outsourcing. Partnering with an offshore provider will allow your internal team to focus on core business activities, while any vacancies that arise may be filled offshore or onshore as you proceed. 
  7. Ensure Proper Skills and Manage Risks: Ensure your team and the provider team have the necessary skills and collaborate together to manage any potential risks associated with the outsourcing arrangement.
  8. Measure and Evaluate Performance: Regularly assess your outsourcing partner’s performance to ensure that they are meeting your needs and making necessary adjustments.

The Final Verdict

Maintaining financial control is essential for business success in property accounting, where the choice between in-house and outsourced models presents unique challenges and opportunities. 

The insights provided underscore the importance of strategic oversight, whether managing your financial operations directly or leveraging the expertise of external partners like EXO Edge. 

Adhering to best practices, such as working with a provider experienced in offshore real estate support that works with other property management companies and adheres to the highest level of data security (such as SOC 2 and ISO:27001), can solve the complexities of outsourcing without sacrificing control.