When it comes to running a business profitably, you really need to focus on the expenses that can be avoided. Companies look for different methods of cost-cutting, mainly to maximize their profits. It is the reason why a lot of companies nowadays are looking to reduce the costs related to accounting and bookkeeping. Hiring companies that offer accounting and bookkeeping services is the method that is being preferred by a lot of organizations. But what are the other options available? How can you bring down this cost? Well, there is no need to worry about it. Through this blog, we will provide you with some easy to implement strategies. Once you start following these strategies, your company’s profit graph will surely move higher.
How to reduce costs in the accounting department?
We all know what the key purpose of an accounting department in a company is. But if your company’s accounting department is eating up your profits, here are some of the strategies you can follow:
1. Review your accounting department
Reviewing your accounting department from time to time can help you find out the weak points and eliminate them eventually. What you can do is bring in cost control measures and seal the areas which are making your business bleed. You can make the accounting department more efficient by focusing on its end goals. If the results produced by the department are not something your client needs, you should discard them immediately. Assessing your organizing at regular intervals is important for sure.
2. Reduce cost through outsourcing
Without any doubt, the method of outsourcing works pretty well in almost every business scenario. You don’t need to depend on your company’s in-house accounting department for each requirement. There is no need to hire another employee for financial bookkeeping, accounting, as well as other routine activities. In fact, it would make more sense if you outsource most of the accounting activities to one of the companies that provide accounting and bookkeeping services in India.
Rather than building an accounting team from scratch and hiring employees on a payroll, you can outsource the tasks and reduce your company’s operating costs. Moreover, you don’t have to worry about upgrading the tools and software packages used for accounting purposes. Once you outsource the requirements, they will be taken care of by skilled and experienced professionals. As a result, it would allow you to focus on other important areas of your business, which in turn can lead to the accelerated growth of your company.
3. Lean accounting helps streamline the processes
Another strategy you can use for minimizing accounting costs is by following the concept of lean accounting. It is an unconventional method of accounting that involves focusing more on the actual requirements. When you streamline your company’s accounting processes, it enables you to come up with more valuable outcomes. Lean accounting also helps in lowering costs and improving cash flow. Besides going for accounting and bookkeeping services, you can try out the idea of lean accounting. To support lean thinking and lean manufacturing, you need to implement the methods of lean accounting.
4.The 5S analysis leads to improved performance
The 5S we are talking about is- sort, straighten, scrub, systematize, and standardize. So, how do they help in bringing down the costs? Let’s start with sort. As the term suggests, it is about disposing of all items that are of no use to your company. In simple words, eliminate the waste items. Through straighten, we mean improving the efficiency of your workspace; you need to reposition the equipment and furniture accordingly. Talking about the scrub method, it signifies cleaning the work area of your accounting department; making it clutter-free. Systematize process refers to the regular and scheduled cleaning of the area. Finally, standardizing refers to the process of implementing the 5S system into your company’s standard operations.
5.Organize your finances
An efficient bookkeeper must know how to handle the paperwork in an organized manner. Scattered receipts and poor paperwork often leads to missed payments and error-filled transactional reports. When the payments are not made on time, it results in late fees, which in turn erodes your company’s profit margin. Unorganized paperwork makes the bookkeeper spend more time even on the simple tasks. So, an unproductive bookkeeping department is what your company is paying for. Even when you are looking for accounting and bookkeeping services in India, you must take into account the performance of the service provider. Outsourcing is undoubtedly one of the best moves you can make, but you need to pick the right option too.
6.Keep your personal and business spending separate
One of the major reasons for increased bookkeeping costs is that the business owners often mix-up accounting for business and personal spending. It complicates the process of financial tracking for the bookkeeper as it requires strategic sorting. By keeping the personal and business spending in different accounts you can substantially decrease the cost of bookkeeping.
You should have a clear-cut system to separate the spendings between personal and business accounts which will make it easier for you to allocate them to a specific account book. You can separate bank accounts or separate cards to keep track. Also, when you have such spending in separate books it will become easier for the accountant to track and determine the right deductions.
7.Keep options open for future upgrades
Always think ahead of your time and keep options open in case you need to upgrade your accounting system. If you do not keep the fast-growing technology in mind, you may end up paying for a completely new accounting system which will be very costly. There might be several reasons which can lead to upgrades such as changes in regulations on federal or state level, new technology in accounting, business expansion, overseas expansion and more. In all these cases the accounting and bookkeeping will require a makeover to keep up with the pace of your growing business.
8.Use technology to pace up the system with precise accuracy
In the end, manual account keeping or bookkeeping may result in unwanted human errors. Correcting even minor mistakes in the account can lead to exponential costs. To avoid such errors it is always better to use reliable technology for accounting and bookkeeping. Also, by using the software you will reduce the need for manpower in your accounts department. Accounting software can reduce the time spent on calculations and report generation. Even in large scale organizations, by using the right software you can reduce days work to hours. It is always better to choose a system that can deliver efficient results and has financial intelligence to provide correct information.
9.Get professional advice when needed
If you feel that you might be committing a mistake in managing the cost of bookkeeping, the chances are you are correct. Running a business, filing taxes, and working on a strict budget is not an easy process especially if you are new in the field. It is always better to seek professional advice to improve your accounting strategies and processes. Even though you have to pay some fees to the professional to streamline the bookkeeping system, in the end, the money saved will be much more than spent. Keep in mind that sometimes minor tweaks in the system, which you might have ignored, can be the game-changer.
10.Improve your security
For those who are using an in-house accounting system, data breaches are one of the biggest reasons for higher costs. Make sure the systems on which your accounting software is running are secure. Also, make sure that every login on all the computers in your company is properly tracked. In case of a data breach attempts or an unauthorized or untimely login should send a red flag to the administrators immediately. By improving the security you will eliminate the chances of security breaches which will eventually have a positive effect on your accounting and bookkeeping cost.
Benefits of outsourcing your business bookkeeping and accounting
Among the different strategies stated above, outsourcing is the most viable one in today’s times. The internet has changed the way organizations used to work. It is making organizations smarter and more efficient than before. If you want to run your business smoothly so that it can churn out more profits, you have to outsource some of its operations to the capable hands. Let’s take a detailed look at some of the key advantages of availing accounting and bookkeeping services in Pune and other parts of India.
1.You get more time to think about other aspects of your business
In any kind of business, there are multiple aspects you need to consider. From finding new clients to delivering the right products/services to them, there are already a lot of things on your plate. Functions related to the backend office can prove to be quite distracting for you. Rather than spending time on accounting and bookkeeping tasks, you should free up your time by outsourcing the operations. There is no need to go through the headache of handling an in-house accounting and bookkeeping team when there are already professionals available. All you have to do is outsource!
2.You end up saving a lot of money in the long run
To build an accounting and bookkeeping team, you would need to hire at least three or four employees. Besides taking care of their payroll, you would also have to spend on expensive software packages and other tools; and from time to time, you have to upgrade the same. If the attrition rate is high, your company’s HR will have to spend time hiring new employees for the accounting and bookkeeping department. All these things would lead to increased costs. You can easily cut it down by outsourcing the operations to any accounting and bookkeeping services in India.
3.You get better and more experienced professionals
Outsourcing gives you a great way to have full-time knowledge on your team without having to pay for it around the clock. By putting your books into the hands of highly skilled staff who understand the best practices and how to properly staff for certain tasks, your job becomes a whole lot easier—and effective.
4.No errors, better accuracy
Outsourcing ensures that there are no errors in accounting and bookkeeping services. As you are going to get the professional bookkeepers who have the knowledge of the latest regulations and new software, the chances of any errors are nill. The accuracy rate will go higher and you will also reduce the cost that you might have been spending on auditing.
5.Access to advanced tools and software packages
You will get access to the latest tools and advanced software packages from the accounting and bookkeeping services agency you have hired. In most cases, the businesses are unable to afford the high-end bookkeeping programs and it is not easy to keep up with the changing laws and regulations. Outsourcing will ensure that you get these tools and the knowledge via the company you have hired. It is better because you are not doing the actual work either. Also, these companies manage daily backups on high-end services and keep the records intact for years that ensure even if there is any inquiry from the government agencies you will have all the reports incorrect format.
6.Better scalability options
Outsourcing makes it easy for you to expand to cutback your business quickly and smoothly. A reliable team supporting you in keeping track of the expenses will enhance your productivity exponentially. The accounting firm will also provide different plans and options in order to ensure you achieve your goals. In-house bookkeepers cannot provide such services.
Accurate accounting and bookkeeping require time, money and energy. It is important to keep the expenses associated with these services in check to avoid overspending. You can either use different methods like advanced software to reduce the cost or you can choose to outsource the accounting and bookkeeping services in India to a reliable firm.