20 Feb Reasons Businesses Must Outsource Finance and Accounting
Focusing on the integral aspects of a business is the key differential between successful companies and struggling ones. According to a survey conducted by Deloitte, CFOs around the globe are spending 12 to 15 hours a day in their workplace. This is not detrimental to their health but can significantly impact productivity or well-thought decisions.
Most CFOs spend their time on manual reporting; rechecking figures and data analysis. This diverts their attention from critical business operations such as customer service, innovation, company culture and outdoing their competitors. Although finance and accounting is an urgent need for any business, its importance is overstated. Furthermore, in-house reporting restricts CFOs to focus on ratio analysis, in-depth analysis, and forecasting.
Therefore, to ease the burden on internal employees and focus on growing your business, it’s recommended that you outsource your finance and accounting operations. We have listed down why outsourcing is beneficial for small and medium scale businesses.
Reduction in Costs
If you outsource your finance, you’ll be free of the taxes and fringe benefits of hiring permanent and part-time employees. You’ll need to pay a monthly fixed fee to the outsourced accounting firm. Statistics have shown that outsourcing accounting can save up to 40% in comparison with in-house accounting. You won’t be liable to pay salary, additional taxes, vacation, supervision, health insurance, and other benefits. Also, it’ll help your firm use modern technology for accounting purposes which is normally used by an accounting firm at a lower price.
Capitalize on Available Expertise
Hiring in-house staff would never give you access to the expertise that your business needs. You might hire the best people, but there will always be complex rules and regulations that need expert oversight. Therefore, by hiring an accounting firm, you are assured that the provider gives you a group of expert outsourced accountants. You can take more human resource as per your project requirement in any crucial time. Therefore, you’ll have access to a more specialized staff that doesn’t require any training saving you time and money.
Eliminate the risk of fraud
If you run a small business, the chances are that you have hired a single in-house accountant that sends out bills, receives and deposits checks and reconciles everything. Association of Certified Fraud Examiner conducted a study where they found out that small businesses with less than 100 employees are more prone to frauds. The average fraud amount for these businesses amounts to $147,000. Therefore, separating your financial duties is integral to successful in-house accounting, but it isn’t cost-effective at all. Therefore, by simply employing a third-party company to do accounting and finance for you, you’ll get the necessary checks and balances that you need.
Ability to Scale
Outsourced accounting and finance grow linearly with your business expansion. Instead of focusing on hiring additional finance staff, you can focus on hiring more people for sales and marketing. Also, you can focus on R&D to provide improved products and services to your customers. All these factors directly contribute to the bottom line of your business, therefore, increasing your revenue and profit.
Improvement in Cash Flow
Most outsourced accounting firms provide access to cloud-based tools and technologies. All of these services help your business financial transactions to be quick and effective. You can be sitting anywhere in the world, and with a simple click, you get an updated minute analysis of your cash flow. These allow CFOs to make more rational decisions for future projects and expansions.
Shifting the Burden of Risk
Once you hire an outsourcer, you are also shifting the risks towards them. It’s now their responsibility to deliver the reports within deadlines without any errors. It’s quite likely that an accounting error or calculation can slip by in in-house accounting. However, F&A companies have various review layers built within their process; therefore, chances are quite high that they can catch an error swiftly.
For running a successful business, it’s imperative that you have quality regulatory compliance. An F&A firm is up-to-date with all the accounting principles and other complex tax regulations; therefore, you can be sure to have improved compliance for your business. In present times, it’s a necessity, so you don’t run into any legal issues.