How to choose an outsourced back office provider

We sell this service, so read this the way you would read anything written by a supplier. What follows is the list we would want someone to use on us, which is not quite the same as a neutral one, but it is more useful than most of what is published on the subject because it includes the questions we find awkward.

Most comparisons of back office providers turn into a feature list. Everyone does bookkeeping, payroll, accounts payable and reporting. The list tells you nothing, because the difference between providers is almost never what they do. It is what happens when something goes wrong.

Ask what happens when your person is away

This is the first question and it sorts the field faster than any other.

Every provider assigns you someone. The question is what exists behind them. Ask directly: if the person who runs my account is ill for two weeks, who does the work, and how do they know what to do?

Answers worth having describe a second person who already knows the account, and written processes that person works from. Answers to worry about are a promise that it never happens, or a description of a pool where the work goes to whoever is free, which means a stranger starting from nothing every time.

Attrition in this industry is real and no provider avoids it. The ones worth hiring have designed for it instead of hoping.

Ask who can see what

You are about to give someone access to your bank feeds, your payroll and your customer records. Ask how access is granted and what it is limited to.

Good answers are specific and slightly boring: access requested per system rather than handed over in bulk, read only where the work allows it, the person who prepares a payment run is not the person who releases it. Ask what happens to that access the day someone leaves their company, and listen for whether they have a process or an intention.

If you are in a regulated industry, ask what they will not take. A provider that wants all your data is easier to work with and worse to be a client of. The better answer is a list of what they exclude before it ever leaves your systems.

Ask how the work is documented, and ask to see it

Every provider says the work is documented. Ask to see what a process document looks like. Not yours, since you do not have one yet, but any anonymized example.

What you are checking is whether it is written for a person who does not already know the answer. A real one has the exceptions in it, because the exceptions are where handovers break. A sales one has a numbered list of the happy path and nothing else.

This also tells you who owns the documentation. If it lives only with the provider, then leaving them means starting over, which is a cost you should know about on day one rather than in year three.

Ask what drives the price

Nobody in this market can publish a real price list, because the same job is a week in one business and a month in another. That is fair. What is not fair is a number with no explanation behind it.

Ask what would make the price go up, and what would make it go down. A provider who has thought about it will name the drivers: volume, how many systems are involved, how tangled those systems are, the coverage hours you need, and how much you want them to own rather than support. A provider who cannot answer is either guessing or plans to renegotiate later.

Also ask what happens in month three if the scope turns out to be twice what everyone assumed. The answer you want is that they tell you early. The answer you get sometimes is silence and a bigger invoice.

Ask how you would leave

This is the awkward one and the most revealing. Ask what happens if you end the engagement in six months.

You are listening for four things: how much notice is required, whether you get the documentation, whether access reverts to you cleanly, and whether anything is built inside a system only they can operate. That last one is where people get caught. Work automated on the provider’s own tooling can be excellent until you want to move, at which point you discover you were not buying a service, you were renting one.

None of this means a provider should make leaving painless as a selling point. It means they should be able to describe it without changing the subject.

Three answers that should worry you

A guarantee of a specific saving before anyone has looked at your systems. Nobody can price your back office off a discovery call, and the number is either marketing or the opening of a renegotiation.

Certifications that do not exist. There is no such thing as being HIPAA certified: the Department of Health and Human Services says in its own FAQ that it does not endorse or recognize private certifications of Security Rule compliance, and that such a certificate does not absolve anyone of their obligations. A provider claiming it either does not know their own compliance position or is counting on you not knowing yours.

Client names used without evidence of permission. If a provider drops other clients’ names into a first conversation, assume they will drop yours. Some firms publish case studies with consent and that is fine. Listing logos in a sales call is different.

What this is really a test of

Every question above is asking one thing in different clothes: does this work survive the individual doing it?

A provider who has genuinely answered that will have written processes, a second person who knows your account, access that is granted narrowly and revoked cleanly, and a price they can explain. A provider who has not will have a very good account manager and a quiet dependency on them staying.

The second kind works well right up until the week it does not, and that week is rarely convenient.