- Posted by: anmol
- Category: Finance & accounting
Benefits of Accounting Outsourcing
An Overview: Finance and Accounts Management
Finance and accounts management are two significant parts of every organization, irrespective of the size and nature of their business. With changing scenarios, organizations prefer outsourcing their accounting and financial duties for quite a number of interesting reasons. First, let’s first understand the actual meaning of accounting outsourcing.
What is Accounting Outsourcing?- An overview
Outsourcing means hiring a third-party service provider to perform a part of the company’s function. instead of getting it done within the organization. It could be any service or function like catering, IT services, marketing, or accounting.
Accounting outsourcing implies delegating all or some of the accounting and outsourced bookkeeping functions to a Finance & accounting outsourcing service provider. It will undertake all the relevant responsibilities of the accounting function, compliances, and structuring of that organization.
Purpose and objective of accounting outsourcing
As a company starts expanding its operations or commences its business operations, the founder or management realizes the need for particular departments. A dedicated department is required for keeping accounts, maintaining financial operations and performing cost & budget analysis. Account management requires proficiency in the subject and involves a plethora of chores on a day to day basis.
Undoubtedly, it needs an investment of time, energy as well as resources, human as well as non-human. The purpose of accounting outsourcing is to get the third-party outsourcer to perform those day-to-day accounting tasks for them. With this, the organization can focus on other essential issues or functions of the business.
Benefits of Accounting outsourcing
Well!! Accounting outsourcing in India has proven to be a boon for businesses. Small to large sized organizations have made use of it as it offers several promising benefits to them.
These include:
- High cost-effectiveness:
Accounting Outsourcing substantially mitigates costs on operations, and costs incurred on purchasing authentic accounting software, training, setup, etc. This allows the organization to save costs and focus on other core areas of its business.
- Premium accounting quality by diligent professionals:
Every accounting outsourcing provider hires skilled accounting professionals. They are well-versed in the respective field and well-trained in running accounting operations. It would lead to premium delivery of accounting services and effective maintenance of the company’s accounts.
- Better productivity, higher profits:
Delegation of accounting services to third-party service providers enables organizations to concentrate on other revenue-adding areas and ideas. Eventually, it would result in an increase in the company’s productivity and thereby profits.
- Swift & better decision-making:
Accounting outsourcing service providers work on targets while making detailed accounting reports and provide all accounting information handily. It is equipped with advanced accounting software that can generate personalized reports instantly. This way the organization can overview them speedily and take better business relating decisions timely.
- Different perspectives foster new ideas:
Accounting outsourcing service providers may have their unique way of handling accounts and analyzing financial reports. Its new and original perspective on any accounting report may present new ideas, refreshing solutions and unique evaluations. It would help the organization to change its approach, prepare for the risks and earn more profits.
- Minimal chances of accounting fraud:
A good accounting outsourcing service provider will take strong security measures to keep its client’s financial and important data confidential & safe from hacking, phishing, or unexpected accounting frauds. Further, since there is more than enough segregation of duties, chances of fraud go down since accounting and other teams are unlikely to collude.
- Improved governance & timely compliances:
The accounting outsourcing companies in India are committed to looking after only one important function of an organization i.e. Finance & Accounts. Their professional expertise and experience in the field ensure better governance of business accounts and timely compliances as required by accounting & corporate laws.
- Ease in Scalability
Many SMEs face an issue of high employee requirements during a specific period, which increases their overall cost. Outsourcing eliminates this issue as work can be outsourced as per requirement.
- Lesser dependency on a particular employee/team member:
Absence/lack of availability/resignation hampers work deliveries and consistencies. Ultimately it is the SME or business owner who bears the brunt of the situation. In such a scenario, outsourcing comes as a rescue. As the work is handled by a team of professionals, the work submission timelines are managed well and thus it reduces the risk.
- Saves time and eliminates cost of recruitment process:
Outsourcing provides an access to valuable resources without having to worry about the whole recruitment process. Further, it reduces the overall HR cost of the business.
- Technology in place:
Outsourcing enables business owners or SMEs to take the advantage of technology. The geographic boundaries no more confine the business enterprises to function and operate. With technology, the entire team is virtually connected and continuously supports one another despite being placed in different parts of the world.
Why is it better than the age-old in-house accounting option?
Outsourced accounting services are better than in-house accounting because it helps the company in saving infrastructural & operational cost, time, and resources. It offers them comprehensive solutions to all finance and business accounting issues. Also, the company would not have to allocate managerial staff to supervise day-to-day accounting services. Instead, it can shift its emphasis to other core areas that need attention and can make more revenue for the company.
As observed, In-house accounting staff would not directly contribute to increasing revenue, rather it would indulge in extra-costing on hiring manpower, purchasing required hardware & software, installing internal controls to prevent & detect fraud, and ensuring timely compliances. With accounting outsourcing, the company can be relieved from all such troubles and avail so many valuable benefits that would result in improvement in account-keeping & increase in revenue.
Conclusion
Nowadays, many business sectors are welcoming accounting outsourcing as well as outsourced booking services and are adopting it on a major scale. It is a perfect solution for all their business accounting requirements and processes. Some of the main sectors that have availed the long-term benefits of accounting outsourcing are real estate, pharmaceuticals, construction, MNCs to small-scale companies, etc. This shows that it guarantees improvement in businesses and boosts their profits.