Multiple organizations now tend to operate on a slim budget, which makes outsourced accounting a feasible option.
If you had two options to spend INR 4,00,000 per annum on an employee or choosing an outsourced accounting service at INR 2,00,000, what would you do?
The answer to the question is clear. You would think about cutting costs and saving extra money on accounting and bookkeeping activities.
And isn’t it obvious?
Coronavirus pandemic has already hit companies harder than anticipated. In the past few months, we have observed multiple SMEs break apart. In a condition like this, it is far more feasible to outsource accounting and bookkeeping for SMEs.
You get every benefit of an in-house employee, sometimes even more. This is because you can save your time, improve processes, streamline tasks, and gain access to expert employees.
To help you understand the deeper benefit of outsourced accounting and bookkeeping services, we have created a small guide. Read on to know the advantages of outsourcing accounting services.
Advantages of Outsourcing Accounting Services
Hiring an in-house bookkeeper and accountant means keeping a tab on the following:
- Office space
- Time spent by the employee in the office
- Benefits offered to the employee
- Training provided to the employee
Outsourced accounting and bookkeeping services mean keeping a tab on the following:
- Monthly or timely payment
What would you prefer?
Let’s see why outsourced accounting can help you mitigate most of the issues that you may have been facing during the COVID-19 pandemic.
1. Saves Time and Money
Every small and medium organization spends approximately 2-5% of their revenue in training, hiring, and managing employees. While this seems like a minimal cost, multiply it with the amount you would be spending for the entire accounting team for multiple years.
When you utilize outsourced accounting and bookkeeping services, you can eliminate this cost. Everything from training to employee payroll is handled by the outsourcing provider.
Other than this, you can save a lot on the financial mistakes that are common in every organization. This mistake is hiring the wrong employee for a job role. When that happens, you need to repair the mistake by again hiring and training a new employee.
You can reduce this hassle with outsourced accounting.
2. Improves Operational Efficiency
With accounting activities clouding your mind every time, it is hard to focus on any other operational activity of the organization. You can avoid that by outsourcing accounting and bookkeeping and reducing your tasks at hand. This will give you more time to spend on operationally important activities of the business. This includes daily activities that are critical to the organization such as managing customers and lead generation.
3. Availability of Expert Resources
If a small or medium enterprise is handling accounting and bookkeeping activities in-house, it is highly likely that they are no expert in this task. Most of the time, the owner of the business keeps a check on these activities, and other times, an intern is hired to look after accounts.
All these scenarios are not feasible and efficient in the long term. You can make mistakes and run into accounting penalties.
When using outsourced accounting services, you can eliminate the risk and interact with expert professionals. These expert professionals are hired and managed by the provider, so that reduces your hassle. In fact, in outsourced accounting, you practically have access to a skilled team, which you may not be able to hire in-house at the starting of the business.
4. Improved Processes
One of the amazing benefits of outsourced accounting services is the opportunity to improve and upgrade internal account processes and procedures. With outsourcing providers, you can utilize best practices, reduce time to close books, and maintain an efficient accounting lifecycle.
You can create better benchmarks and meet the regulatory needs of your organization. Here, you would even have the support of the latest tech and updated software, which would consistently improve your working, cash flows, and service level agreements.
Simply put, your team would be positioned towards growth and goal achievement.
5. Reduced Tech Hassles
You need to purchase and manage tech and hardware. Everything is taken care of by the provider. You only need your office computers to access the files and accounting data. This means that managing and regularly upgrading tech parts is not your headache.
6. Reduced Risk
There’s no doubt in the fact that accounting and bookkeeping contain the risk of theft and penalties.
Let’s understand both:
Multiple times employee theft reduces the cash flow of the organization and puts the hard work of every employee to waste. This theft happens even when strong checks are placed on employees and regular audits are achieved.
Another way is mistakes that happen regularly with inexperienced employees. When these mistakes happen, compliance penalties follow. This means that not only you lose money in penalties and fines but also you put your organization at reputational risk.
An outsourcing provider can mitigate these risks with strong internal policies, robust audits, and expert handling of accounting. This removes the chances of theft as well as mistakes in the system.
With your outsourced accounting partner, you can actually reduce carbon footprints. This is possible when you are able to automate bookkeeping and accounting tasks that consume a lot of paper and computer units.
Outsourcing partners reduce this by eliminating the need for paperwork and moving to the cloud for better anytime, anywhere execution.
And think about it, wouldn’t it be simpler to access your accounting data files from anytime anywhere without having to visit the office?
We all want that and outsourced accounting provides that.
8. Efficient Scaling
Think of scaling in the following manner:
You currently have 5 employees and 10 clients. But, in 6 months, you are expected to scale to 15 employees and 20 clients. Then, how would you manage to scale your accounting and bookkeeping?
In-house, you may just drag your activities and push your employees. But, in outsourcing, you can simply arrange a meeting with the outsourcing partner and adjust your requirements with a new package. You can even scale and descale this package based on the seasonal demands of the business.
9. Peace of Mind
Let’s be honest, more than anything, you have peace of mind. This is because you are not worried about managing employees, handling tasks, compliance, audits, and financial health of the organization.
You have financial reports in front of you at all times, which empowers better decision making and enhances the success rate of these decisions. You have skilled professionals who you can trust with your accounts and books.
All this gives you peace of mind.
Is It Secure To Outsource?
When we think about outsourcing, there is an array of doubts that cross the mind. We are sure that most of these doubts are just myths. Let’s bust these myths.
1. You Don’t Lose Control
It understandable that you want to control every process of your business. Whether it is books or finances, you need to keep a check on everything. Hence, when this feeling of control overpowers, outsourcing seems like a less feasible option.
But, in reality, outsourcing doesn’t restrict your control in the business. It gives you more control. You have accurate data at every time. You have access to updated books. You can scale and descale.
Isn’t all that controlling your accounting and bookkeeping decisions?
2. Your Data is Safe
Data security is always a concern. However, were you able to secure your data 100% in your small or medium organization?
With limited resources, how were you able to secure your accounting data more than the outsourced accounting provider?
Outsourced accounting services have far more advanced tools to keep your data security and avoid security breaches. They are handling data of multiple clients, which burdens them with the responsibility of utmost data security.
Hence, your data is safer with the outsourced accounting and bookkeeping services provider than with you.
Don’t you think so too?
3. It is Not Difficult
Although you may have a preconceived notion that outsourced accounting is difficult, it is not. You have control of everything and you can keep track of your company’s data. In fact, you don’t have to manage your accounting department.
It is easier.
You don’t need to hire employees.
You don’t need to manage these employees.
You don’t need to keep these employees happy and engaged.
You just have to keep track of your accounting and bookkeeping activates.
4. You May Not Need an In-house Person
If you think that when outsourcing, you also need an in-house employee to take care of the activities, it is not entirely true. You can coordinate with the outsourced accounting partner yourself initially. You don’t require an employee and intern to achieve that task for you.
This is because outsourced accounting is developed originally for small and medium enterprises. So, your service package is developed such that to eliminate the need for an in-house employee.
Are you ready to make the leap and move to outsourced accounting services?
Coronavirus pandemic has hampered the functioning of every department of the organizations in some of the other manner. The department which is constantly struggling and will continue to struggle in the near future is the accounting and bookkeeping unit. The least you can do is improvise your accounting department for enhanced workflows and dedicated activities that focus on damage control.
So, read the above guide and start exploring your outsourced accounting opportunities. You can reach out to Paysquare for outsourcing your bookkeeping and accounting services.