Outsourced Accounting Versus Inhouse Accounting
The daily bookkeeping work inside a corporation may cost administration a considerable measure of supervision time. That being said, if part of or even all the bookkeeping capacities is re-appropriated to an expert administration firm, the administration will have the capacity to spare more energy to focus on the central business. Hiring a professional firm to manage the company’s accounting can minimize the risk of fraud and common area maintenance (CAM), and can help companies to settle on best decisions. Strong measures are additionally taken by outsourced organizations to deliver financial articulations for their customers. A few companies even have methodology where one worker needs to survey another's work to wipe out financial errors. Managing your accounting team can be time consuming and can result in many errors as mentioned earlier. There are many benefits of hiring outsourced bookkeeping firm such as it minimizes errors and provides accurate reports on time. Hence, hiring a professional accounting firm will be a smart choice.
Managing Your Business Finances
In the eyes of chief experience officers (CXOs) and the business management, there is high monitoring time when it comes to inhouse accounting. Whereas, in outsourced accounting the monitoring time is greatly shortened. Outsourced accounting has a team of experts to monitor the company’s accounting. CXOs can review and settle on decisions efficiently. To better manage accounting inhouse, companies will need to invest in a significant amount on software and Enterprise Resource Planning (ERPs), but in outsourced accounting the accountants can get access to existing ERP or accounting software provided by the accounting firm. Inhouse accounting makes it hard to catch up with the pace of fast technological advancement even though it’s essential in the very aggressive business environment. Standard policies and procedures are applied in outsource accounting to support the rapid growth of the business. In outsourcing accounting, you pay for the specific service you need. The risk is also lower in outsourcing accounting as it ensures credible, professional and on-time services. In inhouse accounting, accountants are subordinates who only provide “labour”, whereas in outsourcing gain access to “services” from the vendor. (Wilson, M., 2015)
Advantages and Disadvantages of Having In-house and Outsource Accounting
For inhouse accounting:
- The accountant will be available every time and will have an idea about every aspect of the business.
- The accountants can be asked to perform HR and office administration duties if the bookkeeping needs of the firms are small.
- Expensive to hire someone with many years of experience, with an average cost of $5,000.
- Inhouse bookkeepers will be developing a process in a vacuum. If the processes don’t meet the requirement, it may result in losing money.
- Inhouse bookkeepers may be too familiar with the accounting system, whereby understanding its flaws and capitalising the flaws to commit fraud.
- There are many complications when it comes to capital expenditure and other costs per employee, such as staffing and recruitment fees, leave pay, insurance and capital expenditure among others should accounting be done inhouse.
For outsource accounting:
- Outsourced accounting ensures flexibility; an outsourced team has plenty of options that allow the proprietor to pay for the most important tasks.
- The outsourced accounting team is trained in accounting and has years of experience which they are able to implement in your organization.
- Does not require long-term commitment when it comes to engaging bookkeeping services.
- Outsource accounting is not embedded in the business. The teams will have less understanding about company and its operations which can be fatal for the business.
Picking the Right Outsource Accounting Firm for Your Business
Sometimes, it is difficult for businesses to make the right choice. While we comprehend that outsourced accounting and bookkeeping isn't right for each business, on the off chance that it fits the business' needs, it often cost less and provides more benefits than in-house accounting. Every business is different in terms of bookkeeping, requiring different type of accounting to cater to their business. To pick the ideal outsource accounting firm for your business, you can look at different elements. First, you will have to identify your business’ needs and requirements. You outsource accounting to reduce costs, increase productivity and improve work quality. Secondly, communication plays an important role. The firm you outsource to should be professional and provide good corporate communication. Thirdly, you are encouraged to do some research on the market rate before choosing a firm. Lastly, confidentiality is another important factor as leaking of information puts your business at great risks. The firm you will be working with must keep the data confidential as you are entrusting them with important company data.
After weighing the pros and cons and identifying the above-mentioned factors, you will be able to determine whether you should outsource you accounting in the firm or hire a professional to do all the bookkeeping inhouse. That being said, whether you go for outsourced accounting or do accounting inhouse, it is good to practice good bookkeeping practices and maintain clear accounting records to ensure your business is running smooth and making profits.
OA International has helped many SME take care of their monthly accounting function. We are a team of professionally trained accounting dedicated to providing such outsourced service to clients so that they could focus on their core business functions while we take care of the cumbersome process of managing accounts. Our outsourced accounting process includes, but not limited to:
- Understanding the current accounting/bookkeeping process
- Assessing and Evaluating prospect’s current accounting /bookkeeping process against best practice
- Guidance and discussion with management regarding the implementation of best practice in order to improve the current accounting/bookkeeping process
- Perform monthly accounting on and/or off-site on an agreed time schedule
- After the closing of monthly management account, the business owner will be invited to attend a face to face meeting to go through the management accounts of the company, which highlights areas that need improvement or even potential risks identified
To learn more about how we are able to assist you, you are welcomed to speak to our expert Alan Chang (MD, Head of AOS) and Sebastian Sha (AM) for more details or simply drop us call at +65 6914 1111 to schedule for an appointment.
Wilson, M. (2015, June 15). Decision Paralysis: Outsource vs. In- House Accounting.
Wright, B. (2017, May 31). In-House vs Outsourced Bookkeeping: The Results are in. Retrieved fromhttps://www.linkedin.com/pulse/in-house-vs-outsourced-bookkeeping-result...