Outsourcing accounting services is the transfer of accounting to specialized organizations. This process is necessary to optimize the business, automate processes, and reduce financial costs. Management and employees can concentrate on performing key tasks, reducing financial risks.
The Advantage and Disadvantages of Outsourcing Accounting Services
Accounting outsourcing is a relatively new trend in the business services market. It has advantages and disadvantages that you need to familiarize yourself with before transferring a company to new operating principles.
Pros of Outsourcing Services
- Saving: A good accountant is expensive. In addition, each employee of the accounting department needs his own workplace, expensive equipment, and licensed software. You pay taxes for each employee. Outsourcing of processes is often cheaper than the cost of maintaining a function within the enterprise due to a more even distribution of projects among employees. The use of resource centres in cities with lower labour costs and economies of scale.
- Accounting without mistakes: If a full-time employee works in accounting, he must independently detect all errors and continue to learn since laws change frequently. Finding an expert is not always simple, and even if it is, the human component will not be completely eliminated. Outsourcing companies employ internal control systems and process automation to address this issue.
- Advanced accountant functionality: In-house specialists do not always have all the necessary skills and knowledge to maintain records. Outsourcing companies provide qualified specialists, as well as methodological and legal support for the successful execution of services.
- Additional services: Outsourcing firms not only do accounting and tax accounting, but they also frequently provide a variety of other services, such as verifying counterparties and preserving employee records.
- Services of exceptional quality: Outsourcing companies have figured out all of their business operations in advance, and routine tasks are completed quickly and automatically. The outsourcer responds quickly to legislative changes and possesses the most recent versions of specialist software. Professional development does not have to be costly.
- When accounting is outsourced to a third-party business, the customer and the outsourcer sign a contract indicating that the latter is responsible for any errors. The third party assumes the risk of damages and payment of fines to the tax authorities.When it comes to employing a freelance accountant or establishing an accounting department within your firm, all of the risks fall on management, which lacks the required skills and information to supervise the accountant.
- Confidentiality: When a firm and an outsourcer sign a contract, confidentiality restrictions are created. According to which, all information collected is kept confidential in order to prevent customer data from being leaked.
Risks of Outsourcing Accounting Services
Despite all the advantages, accounting outsourcing has its own risks that must be anticipated by the customer.
- Not all suppliers are ready to take full responsibility for the quality of the services provided. But large outsourcing providers, ensure liability and compensate customers for fines if they are caused through the fault of their employees.
- Lack of attention to the particulars of the company. There’s a chance that a tiny outsourcing firm won’t dig into the details of a customer’s business, especially if it’s a specialized market. Accounting outsourcing, on the other hand, is a tried-and-true system. A dependable firm includes a team of experts that are knowledgeable in a variety of fields.
When choosing an outsourcing company, it is important to pay attention to:
- the transparency of the offer;
- the availability of IT solutions and liability insurance;
- the financial condition and turnover of the company