Outsourcing of accounting functions
Outsourcing is the business practice of hiring a party outside a company
to perform services or create goods that were traditionally performed in-
house by the company’s own employees and staff. This practice is
usually undertaken by companies as a cost-cutting measure.
Outsourcing with regards to accounting refers to a service which
provides a full, accounting department experience for small businesses.
An accounting department handles the day-to-day transaction coding,
accounts payable, accounts receivable, payroll, management financial
reporting and many other services.
However, outsourced accounting has its pros and cons as well. It’s many
benefits include:
– Enhanced business continuity
– Elimination of hiring costs
– Real-time information
– Security
– Freedom
And its disadvantages include:
– Hidden costs
– Less control
– It is not local
There are 3 common mistakes people make when outsourcing their accounting department, which are:
- Choosing a firm with unaligned values.
- Choosing someone who doesn’t understand your business.
- Not making a list of the support and services you need (e.g.
bookkeeping services, reporting, payroll taxes, tax returns,
monitoring transaction fees, etc.) but also your goals (e.g. increase
cash flow, have better visibility into your finances and balance
sheet etc.)
Outsourcing is by far the most convenient yet highly effective activity
undertaken by a contemporary business. Such collaborations are highly
sort after given the fact that wage rates are evidently soaring. It can help
you to take a more, organic, holistic approach to engage more outside of
the contractual requirements & guide them through the imminent
financial roadblocks.