Preparation of accurate and compliance based financial statements are critical for every business as if your financial documents are not clear and inaccurate then it is hard to take smart financial decisions based on them and the chances of fraud and non-compliance become high which can lead to further financial damage, taxation issues and involve complex legalities in future too.
Accounting is an important part of your business but is it so important that you should handle it in-house, hiring an expert at a high salary and providing other benefits? Or outsource the accounting work from a well experienced accountancy firm?
The answer depends on the nature of your business activities, level of your business and company’s goals.
If you’re a medium to large enterprise having a number of branches, high volume of transactions, a large number of staff and premises, fixed assets and stock or warehouses, doing intra-group complex activities, a large volume of credit customers and credit suppliers, large volume of banking transactions, have national and international presence, cross-borders transactions then it’s advisable and more cost-effective to have in-house Finance and Accountancy team which should be highly qualified such as CPA, ACCA, CA, CMA, and have a years of experience and diversity of background so have cross-border accountancy, tax and laws updated knowledge but still for many reasons you need local firms and local accountants or taxation support so 100% might not be feasible to dependent on the in-house accountancy team.
But if you have a reasonable volume of transactions, a start-up or a small and growing organization, then you will be unable to make it through a simple accounting spreadsheets, for instance outsourcing accounting and bookkeeping function to a reliable finance and accounting service provider, will be the more cost-effective solution for the following reasons:
Cost becomes a big concern when it comes to business decisions especially for an administrative function like accounting and bookkeeping service as hiring an employee requires major funds and requires justifiable returns. When you outsource accounting spreadsheets work, you only pay for the services what you need, so any additional cost of hiring, fixed salary, sick leaves, annual Leaves, medical insurance, computer equipment and software, perks, pensions etc. and other benefit schemes can be avoidable and it’s also cost-flexible as when the business grows you can extend your service by paying a little more without increasing liabilities.
2.Quality Assurance and Accurate Accounting Record:
Outsourcing from an experienced accountancy firm ensure the preparation of accurate and error-free accounting and taxation record as per the applicable accounting standards and taxation laws, also it enhance the credibility of the financial statement in front of the other key stakeholders such as investors, suppliers, banks and partners. Outsourcing bookkeeping and accounting services often provide higher quality work, you get access to an entire team of experts having sufficient knowledge, skills and experience and have practical hands-on experience in each account head, also they are well trained, updated with latest tax and accounting standards changes and technologically has more hands-on experience than in-house person.
3.Less chances of Fraud
According to a research, 22-28% of the businesses have experienced employee fraud and it’s more common where the older the employees are as the work goes unnoticed so it’s easy for them to keep the scam under the table. Segregation of duties is another benefit of outsourcing the accounting and bookkeeping work as e.g. the person who is paying the bills is different than the person who is recording and doing bank reconciliation so chances of fraud are less.
4.Save your Time and Energy
You invest more of your time and energy in strategic tasks instead of organizing the books.
5. Expert Finance Advisor :
Outsource accountants have years of experience working with other similar companies as well so sometimes they better advise you in budget planning and help you in taking sound financial decisions.
Before choosing any option, to get accountants onboard or outsource, thoroughly understand your business model, goals and unique propositions. It is strongly recommended to assess your business operations model and then decide what is in the best interest of your company.