Identifying the Pros and Cons of Accounting Service Outsourcing—and More!
Business owners are resorting to accounting service outsourcing nowadays because of its numerous benefits. They know the value of having an efficient, accurate, and reliable accounting system in their operations. After all, accounting is a systematic process of collecting, summarizing, analyzing, and reporting all financial transactions in a company. Such pieces of information are deemed important when making business decisions. Accounting service outsourcing is usually done by small businesses and those who belong in the so-called mid-market industry.
Primarily, doing so is cost-efficient because business owners do not have to pay the outsourced accounting professionals the same amount they provide for full-time employees.
Company officials are opting for accounting service outsourcing because this also allows them to access effective accounting technology. Most of the startups do not have a huge amount of money earmarked for such an initiative. Accounting service outsourcing solves this problem.
While there are clearly benefits to accounting service outsourcing, business owners are also weighing them against the potential downsides. They are making sure that outsourcing such a service is advantageous to the company.
Evaluating the pros and cons of accounting service outsourcing is expected, of course. Smart investors always ensure that their money is not being spent haphazardly.
With this, let us look at the benefits of accounting service outsourcing and its potential red flags.
Outsourcing is Cost-efficient
As mentioned, employing a third-party accounting service is allowing companies to save money because it is cheaper compared to hiring in-house staff for the job. Why? Under such a scheme, business owners do not have to spend on overhead costs attributable to hiring an employee. These include health insurance, retirement, vacation pay, sick pay, and other related benefits.
Truly, outsourcing an accounting team is helpful in reducing the risk of non-compliance to regulatory standards and inaccurate financial reports. Your team has the expertise to monitor the financial transactions accurately and timely.
Beware of Hidden Costs
Like in any outsourced services, the tasks of the third-party accounting team may end up increasing, resulting in additional costs. How do you address this? Always have clear and regular communication with your service provider. In addition, make sure that you will only pay for the discussed deliverables. Do not let them trick you into paying more than what was intended because it might dry your funds.
Implementing a Proactive Approach by Delegating Tasks
Company owners are doing a lot of things at the same time. Because of this, they do not have the luxury of spending time looking over every financial transaction in their books. Being the owner, you are focused on the overall growth of the company. You are tasked with leading the business toward profitability and prosperity.
With this in mind, business owners are choosing accounting service outsourcing to delegate the duty of handling the company books. The hired accounting professionals are checking and recording financial transactions, including expenses and revenues.
Business owners can do their job more efficiently—and without worries—if they know they have someone doing the accounting and bookkeeping.
Having Less Control Over the Books
While having a team with accounting expertise is an advantage, it also has its downside. Business owners cannot just walk into the office of these accountants every time a financial transaction is completed. However, company officials are receiving regular updates through weekly and monthly financial reports.
Meanwhile, some business owners are also not feeling comfortable when relinquishing control over the books. It is only understandable because the stakes are high.
For company officials to be more ready, they must conduct proper discussions with the accounting team. This is to help them know and understand the whole accounting process and relationship.
Reducing the Risk of Fraud in Accounting
With only one employee in-charge of accounting and bookkeeping, your company’s financial reports might be more vulnerable to fraud. Under this setting, the numbers in your books may be easily manipulated, misrepresenting your financial position.
Because only one person is handling the books, he or she can steal money secretly for a long period. Every business owner knows this is not good for the company. It can even lead them to bankruptcy.
Accounting service outsourcing is addressing this concern. With an accounting team onboard, the company has many employees looking into the transactions. More than one pair of eyes are monitoring the gathering and processing of such information, increasing internal controls. This is beneficial because the transactions and funds are going to the right channels.
Accounting Service Outsourcing vs In-house Employees
In-house employees are always at the beck and call of their business owners, making it easier to lodge queries about the financial transactions. On the other hand, the outsourced accounting team may not be able to respond to the business owners instantly. Business owners know there are limitations because they are not from the same office.
With this, it is truly important to establish a clear communication schedule with your accounting service provider. It is another task you should figure out.
Things to Consider When Outsourcing Accounting Services
After weighing the pros and cons of choosing accounting service outsourcing, you need to evaluate further the things to consider in doing so. After all, you do not want to spend on a service that does not fit your company. Business owners are doing background checks on their potential accounting service provider. It is tedious but it needs to be done. At the same time, they also check first what they need.
Outlining the Accounting and Bookkeeping Services Your Company Needs
Business owners are making it clear with their accounting service providers what they need from them. This is because there are many services they can avail. These include regulatory reporting, payroll processing, accounts payable management, accounts receivable management, and many more.
Considering the Cost of Accounting Service Outsourcing
Accounting and bookkeeping services providers are employing different payment schemes. They are charging by the hour, by the day, or every month. With this, business owners are choosing the payment term suitable to their budget and needs.
Employing an Accounting Team with the Top-notch Expertise
Before hiring your accounting team, do research on the corporate service provider. Make sure that they have the proper training and are certified accountants. You need someone who has the skills to handle your finances. Business owners are also asking for recommendations from fellow industry players.
Valuing the Data Security
In this day and age, data plays a major role in the success of every business. Because of this, business owners are doing their best to protect financial information and overall company data.
With accounting service outsourcing, business owners must ensure they are dealing with an accounting team that values data security. At the same time, they should be capable of protecting such information with accounting technologies.
Looking for the Best Accounting Services
All business owners want the best for their company. They seek to employ the accounting team capable of handling their finances efficiently.
If you are one of them, do not hesitate to reach out to 3E Accounting. We are an excellent accounting service provider in Indonesia. We offer different kinds of business support, including accounting and bookkeeping services.
Our team is ready to handle your business. Contact us today.