Outsourcing is when you hire a different company to provide services at a lower cost. Taking the concept to further levels, finance outsourcing is when you hire an accounting practice to run your financial and accounting functions for you. Outsource Financial Services are mostly outsourced by Small and Medium sized organisations. This is because maintaining an in-house finance department will incur more cost as compared to outsourcing. Sometimes it can be cost effective for larger companies as well.
The question that arises here is, Why Outsourcing? Answer to this is that, outsourcing is not only cost effective BUT it also brings in many other attributes. Outsourcing to an accounting practice means giving your finance in hands of professional accountants who collectively will have more experience than any in-house maintained accounts department. This in turn will accelerate performance and a better maintenance of cash flow. As we all know cash flow is core of every business. A business with good cash flow but making losses in accounts might survive a downfall in economy as compared to a business with worse cash flow and making high profits in accounting statements. Another benefit of outsourcing is that you don’t have to bear the pressure of hiring or training any new employee. This allows them to focus on building their outsourcing accounting businesses rather than worrying about small non-core areas.
There are many different type of financial services that can be outsourced through accounting practices. These can largely be bifurcated into services for personal finance and services for business finance. Business finance can further be divided into different levels. Outsourcing of virtual bookkeeping services is becoming quite common. Small and medium sized businesses often outsource their book keeping as it is more time consuming and sometimes the business owners might not categorize the nature of expense correctly. Sometimes the business owner might not even know the expense he is bearing in running his business. For example many home based businesses don’t know that they can claim use of home as an expense if they are working for home. Many accounting practices use online, cloud computing software. These software are not only fast but also both business owner and the accountant can see all information in real time.
Payroll outsourcing is not only practiced in small and medium sized businesses, but also in large businesses as well. Payroll services are quite complexed where there are large number of employees in a company. Businesses these days quite often run their own share options or pension schemes to give their employees a safer future. Maintaining either of them is quite difficult to manage inn-house.
Your financial outsourcing service partner may also advices you on ways to save taxes within legal boundaries of taxation laws. They help you remain inform about your creditors and their allowed time period, thus avoiding you from any late payment charges. Maintaining debtors and debt collection can also be outsourced to financial outsourcing companies.
On personal level, financial outsourcing can be helpful in maintaining your personal incomes and expenses and filing your tax returns on your behalf. People in multiple jobs or small sole traders find it difficult to take out time to manage their financials. Such people can outsource to financial services and gain maximum benefit through minimising taxes and avoiding heavy penalties due to none or late submissions.