The Internet is responsible for a lot of incredible things, including the boon of BIG. Big data, the Internet of Things, and big finance. Big finance is a relatively new concept, and no it’s not a direct reference to banking or Wall Street. Big finance refers to the services financial companies, CPAs and others are able to provide businesses because of the Internet. It’s the automating of financial services that were traditionally done by employees; it’s the solution to complex tax problems and dealing with huge amounts of money. Big finance is the software that simplifies some of the most complex financial issues CEOs deal with.
Big Finance Simplifies Complex Tax Compliance Issues
Before Big Finance, CEOs relied on payroll and human resources to solve their corporate tax and compliance issues. Unfortunately, these two departments are so different many tax credits (which effectively save the company money) are overlooked, and human error can result in a lack of compliance (and IRS fines).
Outsourcing to big finance companies is the solution. Services such as ADP Tax and Compliance offer solutions that “are designed to help minimize employment-related tax and payment compliance risk and help improve process efficiencies, while also helping to reduce taxes and other expenses.” Also, the service complements your existing payroll, HR and ERP systems, effectively solving the miscommunication errors that are rife between those departments.
What’s more convenient is that a CEO doesn’t have to meet with an accountant or take any sort of face-to-face meetings. Big finance is all about getting things done quickly and efficiently, so you can get back to the day-to-day functioning of your company knowing that your health care, employment tax, tax credit, wage garnishments, unemployment claims, and more are dealt with using a simple module. This eliminates the issue of payroll and HR not melding minds, which ensures you’re guaranteed every tax credit you’re owed.
Big Finance is Outsourcing
Although big finance can be provided via an application or cloud-based SaaS, it’s essentially outsourcing complicated financial issues to trained professionals and automated systems. Even if you purchase a financial module or application for personal use, this is outsourcing the process to the application itself or you may find the big finance solution is provided by people, such as an accounting company or freelance CPA.
Here’s some financial services you can outsource:
- Human capital management
- Payroll services
- Talent management
- Human resources management
- Health care, including the Affordable Care Act
- Benefits administration
- Time and attendance management
- HR business processes
- Payment solutions
- Accounting
- Tax preparation
- Legal services
- Debt management (check out 10 Questions about our Broken Financial System to learn more about the growing debt problem)
Don’t Outsource Too Much
Jonathan Cooper-Bagnall, the head of global sourcing at PA Consulting, lamented to the Financial Times that companies are no longer seeing the value in “megadeals,” and are rather looking to build many outsourcing relationships with lots of small contracts.
“In the past,” he said, “financial services companies were happy to sign megadeals, where they hosted all infrastructure, applications and application development over to a single provider for one big fee.”
Of course, this is still done today, but more companies are seeing the benefit in spreading outsourcing thin. Unfortunately, even if this saves money, it does have the drawback of creating communication rifts (much like the rift you’re trying to avoid between your HR and payroll departments). There are more benefits in choosing a single company to manage most of your big finance needs.
Big finance essentially provides risk mitigation. It’s a way to ensure your money is protected, handled legally, and compliant with the tax code. Because the tax code routinely changes, you could be missing out on credits available to you because of your hiring practices or something else. When it effects your bottom line, it should be a top priority and that’s why big finance will continue to grow as a service.