Outsourcing is a process of subcontracting your company’s internal tasks to a third party which is specialized in these tasks. Outsourcing accounting is subjected to hire an accountancy firm to deal with accounting matters. Following are the matters which could be outsourced to achieve potential benefits.
- Accounts payable
- Accounts receivable
- Analysis and planning
- Management Accounts
- Financial Reporting to relevant authorities
It is somehow very important to evaluate your strengths and weaknesses in all primary and secondary task of your company. Primary task are subjected to value addition for the company as these are the reason for company existence. Such as primary task for pharmaceutical companies is research and production of drugs. Secondary task are not core activities therefore are less important and should be outsourced. For instance accounting is a secondary task for a production and service industries. Outsourcing accounting can lead a company to benefits as following
- For a business, profit generating activities are more important than non-profit activities. Outsourcing your accounting activity which is not at all a profit generating activity can lead management to be more focused on income generating activities.
- Major advantage which can be achieved through Outsourcing for accountants is by increasing efficiency and effectiveness of accounting process as people equipped with complete and updated accounting knowledge are dealing with this task.
- A company grows with the passage of time and operations of the company keep growing which should be countered with equal competencies. its not easy for a growing company to assess complexity of accounting and hire replacements to deal with such situation ,which causes extra efforts in form of time and money with no quality work assurance .
Outsourcing accounting at first place can overcome potential complexities as they have availability of staff of each competencies level.
- Operating a company in a regulated environment can be subjected to many laws and regulation in respect of meeting final accounts submission deadlines and submission of Annual Return at company house. Any breach of such law can create potential penalties to the company. Many companies face such penalties where there is absence of such technical knowledge in respect of company house requirements.
Outsourcing accounting can free a company from remembering any dates of deadlines and meeting all regulatory requirements as they have special department to deal with policies.
- Along with achieving accuracy in work, Finance Outsourcing accounting is cost beneficial by saving cost of hiring, retention, termination, insurance, payroll taxes, unemployment taxes, and potential penalties due to wrong dismissal of employees. Further it is expensive for a small business to hire accountant for full year to perform part time accounting but an accountancy firm can be hired on time to time basis when needed. Additionally no office space and equipment are needed as compared to in-house accounting
- Potential investors in a company are seeking to invest in companies where management is responsible in their roles. Which proves to potential investors that company in which they are investing is taking their accounting matters seriously by using highly qualified professionals.
- It is very important that all company accounts should be accurate and completely maintained for planning at strategic level .it is very sensible to involve experts in preparation of data which is used as a base for important planning. Accounting firms do accurate accounting and provide analysis on quarterly and yearly basis making spending worthy.