Driven by the 4M’s, being Men, Material, Machinery and MONEY, the entity designs it way ahead. Since the inception of the business comes “n” numbers of undefined jobs and functions for the enterprise. Accounting being a pivotal function becomes vulnerable if not adequately monitored. A dedicated team of professionals enable statute compliant accounting and preparation of well analyzed financial document which is to be compulsorily filed for financial reporting. Not just that, when used as MIS tool, it revamps the decisions of the Management as every aspect is readily available with statistics and its fine details. While considering the outsourcing option the client based on his requirements may define the reporting format for your accounting, budgeting, forecasting and cash and treasury planning and what not. These questions may further assist you to assess the relevance of outsourcing function
Is Time a Constraint?
The answer is always an affirmative one. Fresh orders, existing clients, recoveries, expansions etc. rightly keep the owners occupied. That’s what the ultimate goal is, to generate revenue. However, non-core business functions and accounting, in particular, seeks a lot of attention of businessmen. Registration, obtaining various licences, recruitment, office management, funding, productions, operations, legal compliance, accounting and taxes, MIS, reporting, assessment, review and every possible thing has to be done to make the entity a success. It is here where the outsourcing of the accounting function comes to rescue.
Do You Know the Laws Well?
- “IFRS necessitate actuarial valuation in certain cases of ESOP, Long Term Employment Benefits, Post-Employment Benefits”. It is not expected out of common man to know this. An expert may, however, be very well acquainted with it.
- The introduction of new indirect tax law being VAT in UAE has essentially added another function to the business. Where just the records were kept for the transaction, no additional burden of accounting for taxes is to be managed. Apart from the significant impact on cash flow of an entity, concerns like rates applicable, return filing, accounting for such taxes etc. have gained attention. The VAT compliant systems can very well be outsourced to resolve all such issues.
- Business growing across national borders has brought forward various accounting concerns. In absence of proficient in-house team, the financials may start giving a distorted image of the business. Merely recording of export/import transaction at prevailing foreign exchange rate cannot be considered as complete accounting. It has numerous aspects like hedging, speculation, futures, forward contract etc. which require special accounting treatment.
An external agency qualified to deal with such matters shall reduce the substantial risk of non-compliance and default.
What’s Your Priority – Make Money or Save Money?
It is 28th on the calendar. Meeting with an important client is scheduled. Many orders are at hand to be delivered, recovery from debtors is due, bank reconciliation is to be done. Amid this busy routine, you realize that VAT return is yet to be filed. So, what is the plan, “Business” or “Compliance”? Surely “Business” is the answer. Undoubtedly business functions are severally and jointly crucial for a venture to be a success. However, management of the same deviate the efforts and energy that could create additional value for the entity. A smart decision will be to hire a professional agency at a justified fee and concentrate on core business to generate even more revenue.
But how effective is it to outsource accounting can be judged best on the basis of one’s own requirements. The following enumeration may address the indecision and turmoil of Companies to outsource their accounting function.
1. Expertise
The expansion of business and the escalating regulatory environment around it has swayed attention of business houses on hiring professionals. It is not just the accuracy of the data that delivers confidence to the user of financial statements, but also the compliance with various globally accepted standards of accounting like GAAP, IFRS, Ind AS. A team of experienced professionals from across the world like CA, CPA, CMA, CFA etc. shall suffice to assure the quality of work. These professionals are formally trained and exercise professional scepticism. The service agency is exposed to numerous business environments with distinctive attributes as they deal with different clients. Such exposures assure fine dealing with the business complexities and prompt resolution of the same.
2. Flexible and Scalable
To curb the turmoil to outsource accounting, it is worthwhile to mention that outsourced accounting services can be tailored to fit the client’s needs. Every entity has its own needs with regard to accounting functions, which may vary from day to day accounting to financial reporting. A new business start-up may require only bookkeeping as service. Whereas, an established manufacturer may outsource accounting for inventory management, cost accounting etc.. Further, not just financial but also management accounting services are offered to clients. Management reports enable management to take decision backed by a real-time updated information.
3. Cost Effective
While it is a costly affair recruiting dedicated personnel to perform accounting functions, retaining such personnel is another cost burden. An outsourced accounting function completely waives such complexities and creates synergy. A team of professionals with specialization in accounting is full time employed to take care of the client’s accounts, and may very well be upsized or downsized as per client’s need. The decision to outsource accounting not just reduces the cost, but also acts as a risk-mitigating factor. With the expertise of subject and dynamic responses, outsourcing accounting function can very well act weaponry to the entity. Also, the time and resources saved after outsourcing can be employed to generate additional revenue.
4. Focus
Businesses are always under intense time and cost pressures. As a CEO or executive director always controls the financial pulse by reducing costs and optimising their resources. The accounting function being outsourced, the management can focus and streamline its efforts on its core business processes. The focus ensures higher productivity and innovative approach to match competitive forces in the market. All these factors ultimately lead to better financial and non-financial results.
5. Information Technology
The manifold growth of business including a volume of transactions and complexities has sought for management solution. Automation is the answer to all such issues. However, most businesses can’t afford to pay for the extremely expensive software like SAP HANA, ORACLE Fusion, ORACLE Hyperion, which are designed to effectively automate various business functions. Outsourcing ensures information technology oriented business solutions, within the budget of the client.
6. Continuity
Governed by bilateral contracts, outsourcing ensures continued and secured accounting. Renewal of such contracts after fixed intervals provides ample opportunities to renew and renegotiate the terms of service contract. Now that accounting is outsourced, instances of confidentiality breach or system slowdown due to resignation of key personnel shall not exist. Thus the client can focus on his core business instead of engaging in such issues.
With the evolution of business, now is the time for its functions to evolve. Indeed the change comes with uncertainty, but when assessed wisely it can do wonders. The market size has grown, and so has your business. Then why shouldn’t your team grow? Getting a partner in your growth, that assures efficiency, effectiveness, economy and a continued relationship is a bonanza.