Why Do Companies Outsource Accounting?

A concept people get fired up about is Outsourcing. Some people love it; others hate it. It seems as though nothing divides a room full of professionals faster than the idea of sending some services out of the house. Though, why do companies outsource accounting?

Outsourcing Advantages

By outsourcing, they can free up valuable time that can be better spent elsewhere. Precious company time is consumed when pouring over the books on backend office operations. This can be a huge hassle as the time spent there can be better spent on daily operations and bringing in new clients

It helps cut down on costs by eliminating costly benefits packages to a full-time or part-time employee. When you outsource, you only pay for the actual service and nothing else. This saves you productivity costs as well as payroll costs. The cost-benefit analysis of outsourced accounting vs. in-house bookkeeping can save up to 40% in monthly costs.

 According to a study released in 2012, the most common victims of fraud are privately owned small businesses with less than a hundred employees. This is due to the fact that most small companies don’t have access to a controller or CFO who could look at the KPI and metrics which show abnormal activity in the transactional and billing data. Accounting controls and external audits are responsible for 26% of the cases in the study for detecting or preventing fraud. With outsourced accounting, small businesses can afford a CFO/controller who can look for fraud signs and implement proper fraud protection controls.

By outsourcing to a professional accounting firm, you are effectively hiring a team of experts. Professionals that know the tax codes and laws backwards and forwards. They work around the clock for your business by keeping up with the latest tax information, affording you full-time coverage for only part-time pay.

These are only some of the advantages of outsourcing your accounting.

Why Outsourcing Accounting is Important?

Outsourcing is the practice of hiring a party outside a company to perform services and create goods that were traditionally performed in-house. These tasks were performed by the company’s own employees and staff. It is usually handled by companies as a cost-cutting measure. This can affect a wide range of jobs, ranging from customer support to manufacturing to the back office. While it has many benefits, why is outsourcing important?

Companies outsource accounting as it is important. It not only is cost-effective but also increases efficiency and focus. It helps the company grow faster while reducing risks and increasing their access to better, up-to-date technology.

A business values cost-saving and increased efficiency over anything. The ability to produce better results at a cheaper rate and lesser time is valuable to everyone. It helps them focus on more important tasks while outsourcing the lesser tasks to a team that can handle them just as efficiently. It reduces the risks by providing the businesses with the latest technology and skilled professionals that are trained in the given tasks and technologies.

What are the benefits of outsourcing accounting services?

Companies outsource accounting as it provides a wide range of benefits. Some of them are as below:

• Cost-Saving:

Most businesses consider outsourcing to be additional, and therefore an unnecessary cost. It is not the right approach. In fact, it is the opposite. Businesses that outsource reduce their expenses without reducing the quality.

• Eliminate Time and Cost of Hiring:

Recruitment is a brutal job. It takes resources to manage it, from creating a recruitment strategy, selecting applicants to interview them. The whole process costs your business time as well as money.

• Team of Experts:

Getting new employees is a taxing task as it takes time and resources to train them, pays their salaries, etc. Meanwhile, when companies outsource accounting, it offers them the possibility to hire a professional with a higher level of expertise at an affordable price. 

• Saves Time

As your business grows, you will find yourself spending more time managing your money and less time scaling the business. Therefore, outsourcing tasks like accounting help you to focus your time, energy, and resources. These resources and time can be spent on tasks such as bringing in more revenue, as well as networking, and building relationships with your customers.

What Are The Different Types of Services in Outsourced Accounting?

The different types of accounting services available include:

• Bookkeeping
• Tax Accounting
• Chartered Accounting
• Forensic Accounting
• Financial Controller Services
• Accounting Audit
• Bank Reconciliation
• Account Payable
• Account Receivable
• Payroll Processing

What Are Outsourced Accounting Services?

• Bookkeeping

This type of accounting service involves keeping records of the financial accounts of the business. The bookkeeper updates financial systems by recording a hard copy of the financial data or using financial accounting software on the network.

• Tax Accounting

This deals with income tax and other taxes that are placed on the business. The tax accountant ensures that they give the best advice when it comes to claims. In conclusion, they do their best to protect the company from paying unnecessary taxes. They also help in fixing issues related to the filing of returns.

•  Chartered Accounting

Chartered accountants specialize in several areas from auditing to management. They are usually a part of the professional financial body.

• Forensic Accounting

This type of service offers the tracking of missing funds that may appear in the course of the financial report. The accountants usually work hand in hand with law enforcement agents. For effective delivery of this accounting service, it’s essential for the business owners to be transparent with their forensic assistants concerning any tax evasion, fraud, or any financial problem.

• Financial Controller Services

The financial controllers are the head of the commercial department. Their task includes: assigning work to employees, overseeing staff, and dealing with new clients. They may also carry both external and internal auditing tasks. They ensure efficient and accurate accounting work.

• Accounting Auditing

Auditing gives detailed financial information about the business. The accuracy of financial statements and reports is validated and ensured by auditors.

• Payable Accounts

This service modifies the payment system of the business by managing financial transactions, coming up with expenditure solutions, excluding duplication, and managing financial documents.

• Bank Reconciliation

This service ensures accurate bookkeeping of financial records and helps to find any discrepancies. The accountants’ help in providing the business cuts down on expenses and protects from fraud.

• Payroll Processing

This service ensures accuracy in tax rates and regulatory information. It provides the maintenance of financial records of employee’s income, deductions, and bonuses.

• Account Receivable

This accounting service helps in boosting the collection rate of a company. It also reduces the period of payments as a result ensures fast processing of invoices.