Operating a business is becoming increasingly complex day by day; there are hundreds of things a business owner needs to take care of. Today’s entrepreneurs have to be the jack of all trade – there is no other choice. If you are a business owner, there is a simple cost-effective solution to take away some load off you – ‘Outsourcing’. Outsourcing has helped businesses achieve a competitive advantage globally.
Outsourcing has been practiced for several years. Entrepreneurs have outsourced functions such as bookkeeping, accounting and human resource for experts and have benefited immensely from the decision.
Out of all the functions that are considered for outsourcing, accounting is one of the most preferred ones. A recently done research shows that almost 40% of companies worldwide plan to outsource their accounting function in the coming years. Even small-scale business can take the advantage of cloud-computing and advanced financial automation solutions when they outsource the accounting function.
Here we have listed down eight reasons why you should also outsource your accounting function. Read on to understand how you can benefit from outsourcing:
Save money and time
Outsourcing the function can not only save your expenditure on human resource in terms of salaries, employee benefits and training, it will also curtail spending on accounting software and hardware. Accounting is a stationary oriented department and outsourcing the same will reduce the cost incurred on office supplies, printers, fax machines and copiers to a great extent. In fact, outsourcing accounting has been identified as an effective method to reduce carbon footprint. Less paper also means a lesser filing which ultimately leads to reduce infrastructure cost incurred due to storing those files. Your office space will be more organized.
You may argue on the ground that outsourcing will also lead to significant cost outflow, however, when compared to maintaining a full-fledged accounting department, it can lead to lot of reduction in costs. You can reinvest the fund you save in other channels and use it to grow your business.
Leave it to the experts
Unless you are an accountant, chances are that your accounting skills may not be the best in class. However, there are innumerable accountants out there ready to lend their service to you. Outsourcing the work to an expert will give you some free time which you can use for other activities. This will increase productivity and ensure quality use of time.
Inefficient bookkeeping can be a major time waster in a business. Any time wasted is a wasted opportunity for generating more revenue. Outsourced agencies, on the other hand, work on a heightened level of efficiency because this is their core function. Instead of spending time on things that your team is trying to grasp, they can spend their time on what they are good at, trusting experts to do the accounting function.
Professionals can also provide you valuable suggestions in the form of channels for cost-cutting, feedback on expenditure and various other insights which may prove very beneficial for you. It may help you take strategic decisions and make significant contributions to your long-term goals.
Related Article: Maintaining Accounting Records in Singapore
Improve operational efficiency
Being an entrepreneur is no easy task. You have to be on your toes all the time focussing on the minute details of day-to-day operations. Accounting functions, on the other hand, involve attention to detail and spending a lot of time examining various documents. Outsourcing certain tasks will give you free time to concentrate on the holistic functions.
Thanks to cloud computing, a business owner can access data anytime, anywhere. Cloud computing involves a host of services and you can get a complete guidance on which solution works best for you. No matter where you are traveling around the world, you can access the financial aspects of your business with the help of cloud computing.
Reduction of fraud
It is a known fact that small and medium scale businesses are more prone to frauds than large ones. In fact, companies with less than 100 employees are more prone to frauds. This is primarily because small companies don’t have access to a finance controller who can keep a keen eye on all suspicious activity. However, no business is completely immune to frauds. In most cases, frauds are committed by employees who are trusted blindly. Often frauds have been discovered in companies during an external audit by an independent firm. An independent firm has no vested interest in an ongoing illicit affair and therefore always works in the best interest of the organization who has hired them. Outsourcing the accounting function will give you the benefit of such an independent company going through your daily entries.
Another angle involved in fraud detection is the sentiment of employees while imposing checks. It is almost impossible to enforce strong checks and balances on the trusted employee. This can lead to sailing on tricky waters as honest employees may feel vindicated. This can be avoided by using an independent vendor to handle such situations. Imparting strong checks and balances becomes much easier by using an outsourced agency.
More efficient taxation planning
Accountants have spent years understanding taxation and know the relevant laws and loopholes. Unless you are an accountant yourself, learning what they have learned through the years can be very difficult. Outsourced accountants can guide you on all the clauses that can be used for the best benefit of your business. Moreover, business owners often spend sleepless nights, during the tax filing season, trying to find their way through heaps of documents. As a result, business suffers at the end of the day. Outsourcing the function will release you of a headache and help you concentrate on your business.
Related Read: How to do Tax Planning and Tax Return in Singapore?
Creating a better opportunity
The world is ever-changing and the new accounting processes and software replace old ones regularly. The new practices are more efficient and can help implement tighter controls. An accounting firm is adept with such changes. They upgrade their systems and software regularly to offer the best in class service to their customers. They instil best practices to improve their efficiency.
Additionally, outsourcing is a proven way of reducing the cycle to close the books of accounts. From having the latest software to implementing up-to-date accounting procedures, outsourcing will enable your organization to perform at a heightened level of efficiency and create better opportunities.
Scaling the business
Small businesses grow at a fast pace in the first few years of starting a business. The accounting department has to grow at the same pace to keep up. However, when a business starts, learning everything in one go can be a major challenge. Outsourcing takes care of this opportunity.
Outsourcing also leads to minimizing investments into several aspects of business such as infrastructure, technology and human resources. As an entrepreneur, this will enable you to channelize funds in the right direction, giving you opportunities of scale. It will make your business agiler and help it to adapt to change quickly. Heavy financial teams slow down other functions increasing bureaucracy through innumerable questioning, controls and concerns. Outsourcing this function will direct such unnecessary delays to a third party and enable the business to concentrate on customers, services and products.
Peace of mind
When experts handle the accounting for you, you will get a better visibility on the financial health of your company. Outsourcing it to a vendor will enable you to ask for any report, anytime and anywhere. It will also immune your business from software and hardware restrictions. Vendors who handle accounting have the latest software to provide you with whatever you need. The fact that outsourcing makes your business almost immune to fraud will bring you peace and enable you to concentrate on more important functions at hand. This is especially true for small businesses which grow at a fast pace, especially in the first few years of establishment.
Since outsourcing can save you some valuable fund, as an entrepreneur, you can channelize that fund in the right way to fuel business growth. You can reinvest the fund in your business and gain competitive advantage. This can be a great opportunity which can be a deciding factor between success and failure.
Outsourcing makes business sense, irrespective of the size of your business. When your financial operations are in place, you will feel a sense of security which will add to your confidence. It is the way forward for moving your business from good to great.
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