Accounting services Whether to outsource or not?
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Outsourcing is everywhere. This is an undeniable and unavoidable fact in the field of business. In today’s business ecosystem, any business irrespective of the field has to outsource non-core activities for them to thrive. Outsourcing comes with numerous benefits like cost savings, enables concentrating on core tasks of business, higher efficiency of tasks etc.
In today’s business culture, outsourcing of redundant, non-redundant and non-core seem to be essential for any industry. However, outsourcing of accounting services slightly critical compared to others. As it involves highly confidential and critical data of the company, there comes a question in the minds of business owners as to whether or not outsourcing accounting services is required.
To arrive at a favourable position about this question, one must analyse the pros and cons of outsourcing from their individual perspective, weigh the analyses on each side and come to a conclusion. Even if there are cons, one has dig in another level down to analyse if that identified disadvantage can be sorted out without much hassles.
Let us analyse the pros, cons and the mitigation strategies for the cons to answer the title question.
Enormous cost savings
This is a primary benefit of outsourcing accounting tasks. accountancy outsourcing services have structured and modularised processes which achieve significant cost savings and higher efficiency in service delivery. In cases of outsourcing companies in countries like India, cost arbitration contributes to reduced costs in the services. So, businesses that outsourced bookkeeping services tasks can save a lot of money.
Quicker turnaround time, scalability
The accounting services companies are exclusively dedicated to providing accounting services making it their core competency. And hence, these companies put a lot of effort into increasing the efficiency of their processes and equip them to deliver the services with minimal turnaround time without compromising the quality.
Also these companies employ versatile resources and provide end to end accounting services which enables them to scale up the work in case of unprecedented surges or take up new projects without much trouble.
Enhanced Fraud detection
As accounting services providers are exclusively dedicated to accounting services, they employ various types of fraud detection policies to identify fraudulent transactions and associated incidents easily. Enforcement of these policies can identify errors that cannot be easily identified in an in house accounting team. Also these companies follow fraud mitigation strategies to guide the clients in eliminating fraudulent transactions.
Specialised and expert guidance
These accounting service providers are specialists in the field who are well versed in the best accounting practices. Also they employ some of the best accounting professionals and consultants who offer exceptional guidance to the team and the clients in improving their accounting practices. A business which outsources accounting tasks to these companies can avail the benefits of these experts at a much lesser cost and effort compared to the in house teams.
Higher quality delivery
Incorporation of advanced and innovative quality control and quality assurance procedures in their service delivery enables these companies to provide high quality work to the clients. Achieving these levels of accuracy in an in house team would require a lot of effort, training and money which is cumbersome. A highly accurate financial records would work wonders in the effective operations of the business.
More time for core tasks
Outsourcing redundant and non-core accounting tasks to these companies would take a load of the business and gives a sense of relief as they are entrusted in capable hands. This factor enables the business to concentrate on the important core tasks that are essential for the effective running of the business.
Minimized visibility of operations
Accounting service providers showcase a commendable levels of visibility in the service operations. But it cannot match the operational visibility of the in house teams.
However, these companies provide complete details of all the aspects services and its execution in their proposal beforehand. These can be well analysed by the companies before outsourcing and outsource as per the visibility demands.
Companies who outsource may feel that they have lost a significant control of their operations on outsourcing. But the accounting service providers setup their teams such that they answer to every concern raised by businesses at any point of time during the service delivery. Any ad hoc demands of the clients are met effectively by these companies and ensure the expected hold on the outsourced accounting functions.
Possibilities of delays in communication are existent if the businesses outsource their services to distant countries. This usually happens due to time zone difference of the countries to which the services are outsourced.
Businesses that feel communication is of utmost importance can demand the accounting service providers to work as per business time preferences to seal gaps in communications. Some businesses who are outsourcing their services take advantage of the time zone difference by effective management of work allocation to the service providers. These measures would ensure a smooth functioning of the processes.
Perceived data security risks
This is not exactly a disadvantage but just a fear that outsourcing would compromise the security of financial information entrusted to service provider companies. Standard service provider companies follow industry prescribed Information Security standards and protocols to ensure data security. Also these companies sign NDAs even before beginning to work with the businesses that outsource to maintain confidentiality and integrity in all aspects.
These are some of the pros and cons of outsourcing accounting services to the service provider companies. Businesses willing to outsource their accounting services need to weigh the pros, cons and the feasibility of executing mitigation strategies in the cons to decide the outcome. What’s more important than deciding to outsource or not is finding the right company to outsource your business. That is the key to unfaltering excellence in running businesses.