One of the most important department of the company is it Accounts/Finance department. The accounting books of the company reflect the financial position of the company. In fact, depending on the performance of the accounts department, the success and the failure of the business is determined. But due to increasing competition, sales pressure and lack of cash flow companies tend to loose on the accounting department.
This is where outsourcing can help. In today’s economy outsourcing has played a key role in the success of the companies. Bookkeeping outsourcing is one common service which is being increasingly outsourced. Apart from its cost advantages accounting books are also up to date and regular update means that it can be used at any given point of time.
In this article we will discuss some of the bookkeeping services which can be outsourced and there different pricing structures.
1. Accounts payable processing- is one of the most common bookkeeping service to be outsourced. Certain functions under A/P processing which can be outsourced are:
Matching of vendor bills with Purchase Order
Matching of vendor bills with Sales Order
Posting of invoices in the accounting file
Generation of suitable Accounts Payable reports
2. Accounts receivable processing- Certain functions which can be outsourced under A/R processing are:
Sales Order Processing
Customer Invoicing
Accounts Receivable Management
Management of the end-to-end accounts receivable processes.
3. Payroll Processing- Functions under payroll processing which can be outsourced are:
Creating and maintaining employee profiles on the Payroll system
Managing time and attendance
Processing of Weekly/Bimonthly/Monthly Payroll from time sheet
Calculation of Net Pay checks
Calculation of Federal / State taxes for Employer and Employee
4. Other bookkeeping services which are being increasingly outsourced are:
Bank and Credit Card reconciliations
General Ledger Maintenance
Account Reconciliation
Preparation of financial statements- income statement, balance sheets and cash-flow statements
These are some of the common bookkeeping functions which can be outsourced and depending on the volume and nature of the accounts pricing can be discussed with the vendor.
There are several factors to be considered while negotiating the price for bookkeeping outsourcing. The type of pricing- hourly, fixed fee or transaction based. Hourly pricing works well where you have small projects that need to be completed on as and when needed basis.
Fixed fee works well when you have regular monthly accounting requirements. The most often used fixed fee model is the FTE (Full-Time Employee) model where service providers charge a fee per full-time employee working on the client projects. Transaction pricing is the toughest for a service provider to provide as the risk of non-performance gets directly built into the pricing. However this pricing is not suitable where transaction volume is not high, or where a ‘transaction’ cannot be clearly defined in processes such as year-end finalization. The most used approach is a fixed-price contract. Also, clearly define the scope of work covered under a given pricing. Confirm from the service-provider any additional charges that could be applicable apart from processing or service charges.
Therefore clearly identifying which bookkeeping function you would like to outsource and the associated pricing model is one important aspect of outsourcing and regular monitoring is the other important aspect for a fruitful outsourcing venture.
