Businesses are consistently faced with an ever-changing legislative landscape and the expectation of transparent financial information, whether from investors or internal management. The requirements for accurate and informative financial information is ever increasing.
Companies looking to expand, obtain financing or just understand their business drivers all require accurate, timely and complex information at their fingertips, but do they have the skills or expertise to obtain this?
As more and more business owners identify their need for sustainable accounting functions, they face the tested “in-source vs. outsource” decision, we aim to help you, by identifying and outlining a couple key considerations when determining whether to employ or outsource your accounting function.
1. Cost considerations
Many SME’s face considerable cash flow and spending constraints. By employing you effectively paying employees for their time, but have you considered and calculated the expected employee hours after you have factored in paid leave, sick leave, and inefficient time. Further have you considered the ‘not-so-obvious’ additional overheads, such as printing costs, software requirements – licensing etc. – of increased staff numbers.
Inevitably outsourcing these functions relieves a large portion of this administrative and financial burden. You pay for what you get, along with the comfort that experts are looking after the back-office requirements.
One of the most obvious benefits of outsourcing back-office functions is the considerable time you save. Simply, if you are performing (or reviewing) the payroll & accounting yourself, you are losing time in what you do. These functions require attention to detail and expertise, thus the time required to maintain these functions becomes significant and can reduce the time you spend on your ‘core’ business.
Outsourced accounting functions – will generally – have multiple clients, across industries, giving holistic views on best practice methodology and efficiency. Additionally, with consistent training and management oversight there is a constant ‘expert’ available to provide invaluable business solutions.
4. Key-man dependency
In accordance with experience and cost considerations above, a huge factor impacting SME’s decision is the ability to obtain the right level of skills at the right price, and in doing so continually exposing the business to key-man risk. Generally, with SME’s and more streamlined accounting services there is limited expertise or resources available, given the associated costs. However, with an outsourced accounting function you are ensured quality and timeline assurance as staff are interchangeable, operating with complimentary and consistently revised skill sets. Your accounting function will have the depth required for your business needs.
5. Efficiency & speed
With companies requiring end-to-end business services their considerations and requirements for staffing are extensive. You required tax services, payroll services in combination with effective accounting and oversight functions. Outsourcing these services provides you with a holistic solution with a single contact point. Whilst ensuring you obtain the quality you require.
6. Risk management
All companies are exposed to considerable risk. However, accounting services provides significant risk exposure and opportunity for risk occurrence.
Accounting functions are regulatory requirements, hence inappropriate accounting treatments can have significant consequences, be it interest payments or potential litigation, prudence is required.
Unfortunately, risks are everywhere and may be sitting directly in front of you! There have been numerous instances whereby individuals have manipulated accounting records, or misappropriated cash. Outsourcing of these key functions to those, who understand the regulations and what is required, will significantly reduce these risks, whilst eliminating self-interest incentives.
7. Privacy & security
Privacy and security remain topical with ever increasing focus and scrutiny. Relying or creating your own software infrastructure provides increased risk, or hefty bills, to get the appropriate infrastructure in place. Use a proven formula – outsource and get peace of mind that your data is consistently maintained and safe.
8. Big picture guidance
Lastly, outsourced accounting functions offer a wealth of knowledge and information across sectors and services. Generally, the latest trends, ideas and updates will all be communicated and considered as these form the core functions of the services provided. With the addition and understanding of your business, it allows for immediate, objective and ‘big picture’ ideas giving management an appropriate sounding board for their requests.
The benefits outlined above are merely a snippet of the benefits expected, but I hope these have provided some insight into making your decision to outsource your accounting function – or to rethink your current setup. In a digital age where things are forever moving and improving, don’t let your key requirements lag – allow experts to assist and work alongside you.
If you are interested in hearing more or understanding the nature of the services provided by CA Management Consulting or just want a sounding board for ideas or solutions.
Contact us below