Both accountancy and business outsourcing are industries that can sometimes be guilty of using lots of jargon and acronyms, which can make things much more challenging to get to grips with if you’re considering outsourcing some of your accounting services for the first time.
In this article, we break down some of the most used abbreviations and other jargon, along with relevant examples, to provide a useful accounting outsourcing glossary for businesses to use. This will come in handy if you’re a firm considering outsourcing – and just as helpful when speaking to your clients about what’s being delivered and why.
Jump to:
Using technology to perform specific tasks or functions automatically - without needing manual human intervention. In outsourced accounting this could mean using an AI tool to automatically match invoices with payments, speeding up the process and reducing human error.
When a business contracts out a specific task or process to an external service provider. For example, an accountancy firm might outsource routine tasks like year-end accounts or tax preparation to a trusted partner – freeing up their in-house team to focus on growing the accounting client base, or delivering higher-value advisory services.
This refers to when a business outsources a certain function or service with the goal of reengineering these processes or workflows to transform performance.
This means handing over internal tasks - like bookkeeping, payroll or admin - to an external trusted partner. These aren’t client facing functions, but they keep the business running smoothly behind the scenes.
This refers to the process of comparing processes or performance to a specific standard or metric. This could be past performance KPIs, industry standard metrics or a direct comparison with named competitors.
Choosing an outsourcing solution or combination of solutions based on the needs of the business. For example, this could include offshoring i.e. outsourcing certain functions to a service provider based in another country.
The plans that your business makes to help prevent and manage/recover from any potential threats to the company. Disruptions like cyber threats, data breaches or operational issues could affect outsourced operations or functions.
A way to plan ahead so you have the people and resources needed to meet demand. Say you're approaching the January tax rush – outsourcing tasks like data entry or tax return prep can give your team the breathing room they need to manage the load.
This refers to a business’s approach to transitioning through change, whether that is the company’s goals, processes, structure or technologies, and can include the transfer of services from in-house to outsourced.
This means outsourcing some services or functions to cloud-based service providers. For an accountancy firm, this could mean that they outsource some client tasks and services to an external accountancy business that uses cloud-based solutions to keep all financial and other data securely online and accessible 24/7, wherever they are based.
This is when a business keeps some of a particular business function in-house, but outsources other parts of that function to an external provider. For example, an accountancy firm may outsource bookkeeping services and year-end accounting tasks for some of their clients, but keep value-added services such as offering actionable business insights based on the client’s financial data.
This refers to a business’s responsibility to ensure that they, and any partners that they outsource to, are compliant with all relevant laws, regulations and guidelines.
These are your firm’s key strengths and strategic advantages – the things you do best that set you apart. Outsourcing non-core tasks lets you focus more on those areas that drive the most value for your clients.
This refers to a business ensuring that any outsourcing partner they work with has a corporate culture that aligns with their own for a smooth transition and ongoing communication.
The tools, measures and protocols taken by a business and any outsourcing partners to protect data from unauthorised access, theft or corruption. Any outsourcing provider you work with should take data security seriously – and show you how.
The process of forecasting and planning for the peaks in demand, often running alongside capacity planning, and is essential when considering outsourcing at busier times for the business.
This refers to the process of assessing a business before either a) purchasing it or b) partnering with it for a purpose such as outsourcing some services. The due diligence process will look at various aspects the business in question to check areas such as legal compliance, risk, assets and liabilities, helping you decide if they’re the right fit
This is when you agree to an outsourcing contract with a partner where the amount of money paid and scope of work for the outsourced service are set, so the agreed sum won’t be exceeded.
Outsourcing your customer-facing related services. In outsourced accounting, for example, this could mean that direct client communications are also outsourced to the partner, along with back-office functions.
Outsourcing every aspect of a specific business function to be handled by a trusted partner.
This refers to a service model that is designed to ensure the services can be delivered effectively and seamlessly across different countries, time zones and teams. This is often a strong consideration when offshoring.
This refers to a form of outsourcing when the partner is tasked with performing specialised and knowledge-intensive tasks and processes that require a high level of expertise, things like tax planning, audit work or financial forecasting. This frees up the business to focus on their core competencies, operational priorities and growth.
This is a type of outsourcing support where a business will task their partner to deliver certain processes, services or functions with the aim of improving operations, efficiencies and reducing expenses.
This refers to business activities or services that are secondary or supportive functions and do not form part of the core competencies of that company - like payroll, admin or data entry. Some businesses may choose to outsource these functions to free up their in-house team to work on core activities instead.
In outsourcing, offshoring refers to outsourcing tasks, activities or services to an external provider who is based in another country. For example, an accountancy firm could have an offshoring partner to handle certain tasks for clients, such as bookkeeping, payroll or preparing tax returns.
A formal contract between a business and their outsourcing partner, which specifies terms and conditions and the scope of the agreed work - helping protect both sides and setting expectations from day one.
A business audit that assesses existing practices, activities, processes, workflows and services to determine their potential suitability for outsourcing, along with forecasting the tangible benefits for the business. This may sometimes be referred to as an outsourcing feasibility study.
This refers to assessing how well the outsourcing relationship is meeting the intended goals and objectives.
This refers to how prepared a business is to be able to outsource activities to an external partner. It can refer to anything from the infrastructure of the business to the practical processes and even the mindset of the company and staff.
A plan developed by a business to define how they will use outsourcing to achieve certain objectives that are part of the overall company strategy. For example, this wider objective could be something like facilitating organisational change, increasing efficiencies or making cost savings.
This refers to the standards, measurements and any key performance indicators (KPIs) that are used to assess the performance of the outsourcing partner. In the instance of outsourced accounting, this could include metrics such as client satisfaction and retention, task completion rates and the effectiveness of communications.
Podsourcing® refers to outsourcing tasks or activities to a specific external team or ‘pod’ of specialised staff who offer a consistent, high-quality and joined-up service, as the team stays the same and has a complementary combined skillset.
Outsourcing a specific, time-limited project with clear deliverables - such as a system migration - where the partner is responsible for managing and taking ownership until it’s complete..
The process of managing a business’s assets and other resources in a way to support the company’s strategic goals. This may include outsourcing as a way to facilitate meeting these objectives.
This refers to the financial advantages that a business can gain through scaling their operations, which is often accomplished through outsourcing.
Using outsourcing services as a way to achieve certain strategic goals for the business, such as meeting growth targets or making cost savings. For example: freeing senior accountants for advisory work, or expanding your capacity without hiring in-house.
In outsourcing, this refers to a plan put in place to transfer services or activities from in-house to the outsourcing partner as smoothly as possible, minimising any disruption of service.
We hope that you’ve found this outsourced accounting jargon buster helpful. You can find more useful content for accountancy firms on our blog.
