Despite being the most important part of every company’s daily routine, the recruitment, training and maintenance of a department of accounting personnel is not affordable for all. In today’s digital age, there is the added expense of constantly purchasing and updating licensed accounting software. More companies are beginning to realise the importance of outsourcing non-core activities which makes room for them to focus on their core competencies and spend their time aggressively pursuing business goals. This also reduces their operating costs significantly by eliminating the need for software ownership and upgrades and the need to hire accounting staff. Additionally, standardising accounting practices means improved efficiency.
A leaner business model is flexible and adaptable to dynamic and changing requirements. It offers increased scalability during peak periods and allows businesses to scale back during quieter periods. Improved agility enables focused effort on maximising business potential and ensures that the company is primed and ready to seize growth opportunities.
Companies do not have to suffer costly mistakes by their own staff. Instead, they can entrust their bookkeeping to professionals that manage cash flow and perform regular and accurate bank reconciliations and diligently prepare daily, weekly and monthly reports as required by the company. Some companies even go so far as to request credit extension from vendors. Outsourcing bookkeeping services allows companies to make up for the lack of accounting infrastructure by tapping into third party resources. Upon request, they can provide proper metrics that companies can access anytime and use to track the financial health of the company.
Many companies have a misconception that by outsourcing they lose management and supervisory control over their financial operations. In fact, the opposite is true. They can now exercise a more stringent and precise control than their in-house employees. There is increased accountability, clearer metrics and analytics as proof of performance. There are minimum standards outsourcers have to meet based on service level agreements and long-term contracts. Besides, outsourcing firms use state-of-the-art technology for their bookkeeping operations and are therefore more efficient. They regularly back up all their systems and do regular and licensed upgrades of all their software.
If this does not convince businesses to outsource, then the fact that specialist accounting companies have better knowledge of changing regulations and compliance requirements ought to convince companies to outsource their financial services. It is hard to keep track of legal regulations and businesses will further need to hire expensive legal professionals, auditors and compliance officers. Instead, it is much more cost-effective to outsource these functions. Outsourcing companies go to extraordinary lengths to ensure data security. Client companies will have 24/7 access to company financials, customized reports and the option to restrict access based on confidentiality requirements. Companies can pick their own passwords.
Several cost-benefit analyses have concluded decisively that outsourcing bookkeeping needs to be viewed as an extension of enterprise departments and capabilities and not as separate entity or a substitute.