Benefits And Drawbacks Of Having An Outsourced Accounting Department
Improved internal processes and controls are what most businesses today seek to manage their operations smoothly. An outsourced accounting department is one solution that most companies turn to these days to be able to achieve a more efficiently-run business.
Outsourcing the accounting and bookkeeping functions of your company means hiring a professional services provider to handle your financial records and other finance-related concerns of your business. With outsourced accounting firms’ knowledge and industry experience, companies are able to access highly trained and accredited specialists to help not only in running the business better but more importantly, to assist in growing the business and earning more income.
What drives most companies today to outsource the accounting and bookkeeping functions are the numerous advantages that it presents. Imagine being able to save more on overhead costs whilst giving you more time to focus on your core business functions — such benefits are hard to pass up.
Not all companies, though, are sold on the idea of giving an outsourced accounting department free rein in handling their financial processes. There’s also the possibility that outsourcing to a professional services provider isn’t a good fit for your company.
Before deciding to take the plunge, it is best to consider the pros and cons of outsourcing the accounting function.
Advantages and Disadvantages of an Outsourced Accounting Department
Weighing the benefits and drawbacks of hiring an outsourced accounting department is the best way to know exactly what your business needs.
If and when you ultimately decide to do so, exploring the pros and cons can also help you find the best outsourced accounting services that can assist in improving your business.
1. Outsourcing gives more cost savings
You cut on overhead costs when you choose to outsource the accounting function. You don’t have to spend on monthly compensation and employee packages such as health insurance, retirement, and vacation benefits that an in-house accounting personnel is usually entitled to. You won’t also need to spend on equipment and software that are essential for handling the accounting and bookkeeping processes.
2. You get access to valuable knowledge and expertise
A professional services provider can give you experienced guidance when it comes to financial matters. Specialists in the field of accounting and bookkeeping can offer years of industry experience which you won’t find in an in-house accounting staff.
3. A more efficient way of getting the job done
Outsourced accounting firms’ expertise and experience improves your company’s finance management. This means errors, mistakes, omissions, and oversights in handling your financial documents can be avoided. You can also rest assured that the job can be done faster and more accurately.
4. Improved internal controls
You reduce the possibility of fraud when you outsource your accounting function, as there is a dedicated team of accounting experts who will accurately check your books and transaction reports. You lessen the risk of having your books manipulated, which could sometimes be the case when an in-house accountant is tempted.
5. You can allot more resources to growing your business
Hiring one of the top outsourced accounting firms allows you to direct your resources to activities that can help your business generate more sales.
1. Lesser control
It is easier to communicate with an in-house accountant when you have finance-related questions. This isn’t the case when you have an outsourced team handling your accounting function, in which you don’t have direct control on how things are being handled.
However, this issue can be resolved when policies and procedures are set during the initial stages of the partnership.
2. Add-on costs you’re not aware of
Unreliable outsourced accounting firms can sometimes put hidden costs in the form of additional tasks that weren’t in your arrangement in the first place. It is important to settle the cost of service at the early stages of the partnership to avoid this from happening.
3. You rely on them completely
Dependence on your outsourced accounting department may spell disaster when the firm suddenly goes bankrupt or if there is a security issue that may put your financial records at risk.
Whether or not you choose to outsource your accounting function, it is imperative that you know what’s good for your company in the long run. Should you choose to go for the services of an outsourced accounting department, be meticulous in your hiring process to be able to ensure that you get the services you need without compromising the financial state of your company.
The best outsourced accounting services firm won’t put your business in jeopardy but will instead help you manage your company to be able to realise its full potential.