Why Not Outsourced Accounting? Benefits & Challenges
It has been observed that outsourced accounting services can help you meet regulatory requirements, increase profits, and reduce overhead costs. With the assistance of a third-party F&A firm to handle your company’s finances, you can focus on core business issues while significantly increasing your ROI. According to Grand View Research, the global outsourcing market is valued at $245.9 billion and is expected to grow at a 9.1% annual rate until 2030.
The argument over whether outsourced accounting services adds value to SMBs is long-winded. The only things left to do are for those who currently have it to use it effectively and for others who have not yet accepted it to consider it. SMBs must recognize the benefits of outsourcing accounting beyond just the cost.
The notion that companies must reduce costs at any condition is erroneous. Instead, your organization should consider outsourced accounting services in a broader sense to achieve global standards operations. 78% of businesses all over the globe are satisfied with their outsourcing partners. In this regard, outsourcing accounting is a prudent decision with several benefits which help companies scale with optimum growth proximity by using the best practices in bookkeeping & accounting management.
Outsourred Accounting Benefits and Challenges:
Benefits of Outsourced Accounting: Key Element
Important additional aspects of the cost-benefit outsourcing analysis are as follows:
The Prolific Business Environment of Pakistan
In terms of the thriving BPO industry in Pakistan, there are 500,000+ people working for leading BPO and IT firms. Global tech giants that were once skeptical about investing in Pakistan are now queuing up to bet on the newly-trusted BPO exporter. Pakistani tech companies have seemed to fully gear up to meet with the growing demand of BPO services in the global market.
Standardized financial and accounting expertise
Outsourcing bookkeeping & accounting leadership gives you hands-on experience with a team of skilled and market expert accountants with holistic financial management. For example, small firms do not require M&A analysis, succession planning, or annual budgeting on a weekly or even monthly basis. Instead, SMBs often require a business owner’s financial records to be precise and well-organized. As a result, 71% of CEOs in the financial services industry outsource or offshore parts of their work.
Enhanced Quality Control
An internal accountant for a business could be a qualified accountant who is well-versed in Generally Accepted Accounting Principles (GAAP). However, the work produced by outsourcing accounting is always of high caliber. For example, bookkeeping and accounting services firms work with incredibly talented accountants, giving their clients access to high-quality accounting services. Additionally, accounting firms demand that their staff members maintain 100% of their certifications and training.
Best Industry Practices
By following Generally Accepted Accounting Principles (GAAP) and best practices, outsourced firms have built-in efficiencies that keep processes structured. Over the period, outsourced accounting teams and finance leadership will probably establish reliable and effective accounting systems for the company (such as SOPs, ERP software, etc.).
Did you know? Businesses spent $75.2 billion worldwide on security outsourcing in 2017.
Outsourcing minimizes fraud
Your small firm will have less threat of fraud if you use outsourced bookkeeping and accounting services to sort things out remotely. But, of course, having a second set of eagle eyes to spot and warn strange behaviors always helps you be on the lookout.
Cost-effective accounting solutions
30% of businesses that avail outsourced accounting services have benefited from their accounting firms and have generated more revenue. Hence maintaining your records and staying well-organized will allow your employees to focus on expanding your core competency instead of conducting bank reconciliations or journal entries. For your information, nearly 54% of all businesses contact clients through outsourced staff, which proves more expedient for them.
Moreover, payroll taxes, office space, IT equipment, and other expenses add to the cost of hiring internal staff. Most organizations calculate that these extra expenses amount to 20–30% of total costs, on top of wages alone.
Challenges with Outsourced Accounting and How to Overcome Them
#1: Knowing the scope of support
A startup’s transactional support requirements will differ from those of a company that has already created a complicated structure of business units.
Solution: The key is to define your goals and anticipate the outcomes clearly. After that, compare them to the KPIs currently used by your company.
#2: Setting realistic goals
Unfulfilled promises can disappoint your customers or business partners and reflect poorly on how your company conducts activities like accounting.
Solution: Outsource trustworthy suppliers and they will make sure that you are given details about pricing, deadlines, and expectations before you sign a contract.
#3: Retaining control
It’s legitimate for BPO clients to worry about poor service, poor management, and a loss of control.
Solution: Take your time choosing the best service provider, and don’t be afraid to specify exactly how you want your business procedures to be carried out.
#4: Accessibility for offshore teams
You would undoubtedly consider your team members’ capacity to achieve deadlines that are essential to the operation of your company.
Solution: In outsourcing accounting, you have flexible hours; hence, time zone differences are not a concern for BPO staff.