Should bookkeeping and accounting be internal or outsourced? This is still an on-going debate, with no end in sight. However, a decision must be made in favour of business development. So, check out our latest blog post to see if you should outsource or have an in-house accounting team.
Accounting books for any business are rarely discussed in public. Unless it’s a public listing, where you have to disclose your numbers to your shareholders, accounting ledgers are largely an internal matter for most small to medium businesses. For this simple reason, the success of any business is rarely attributed to well-maintained accounting books.
But the fact of the matter is that those well-maintained ledgers are an essential part of the success of the technology they use, the workforce they use, or the service/product they provide.
Well-maintained accounting books not only allow you to set budgets for business growth, and help with future forecasts regarding business plans, but also get you on the right side of the law by complying with legal regulations. For this reason, financial managers and business owners have put bookkeeping and accounting at the top of their priority list when it comes to investing in new technologies, resources, and disruptions to boost business productivity.
Recent technological developments in the field of accounting attest that managing a company’s accounting books is a vital task as any other aspect of the business.
Therefore, there are compelling arguments for and against in-house accounting and bookkeeping services versus outsourcing.
The good –
Having an internal bookkeeping function has certain advantages. The most common argument in this regard is to control its books.
Some even suggest that the internal bookkeeping job understands the nitty-gritty of a company’s finances, making it the right choice for handing over financial responsibilities.
The bad –
Although we do not deny the obvious benefits that in-house bookkeeping functionality brings, we feel it is necessary to highlight some of the issues they face. Here are some of the issues that you may encounter when going to an in-house bookkeeping service:
- High Cost – Having a full-time accounting team on a company’s payroll is an expensive manoeuvre. You have to pay for the individual’s salary and everything else like insurance, vacation, space, office equipment, etc. When compared to hiring an external accounting team, all of these costs make outsourcing an affordable option.
- Educate, Qualify and Recruit – The pain of having an in-house accounting and bookkeeping team starts even before you have a team on board. You need to invest heavily in scouting the right talent, training them, and educating them about the finances of your business. All of these problems are handled by your bookkeeping partner, if you get one for your business.
- Quality of Work – In no way should it be construed that employees of the internal team compromise the quality of their work. It just comes down to bookkeeping and accounting are complex tasks and you need incredible mathematical skills and a huge amount of industry experience to operate at optimum efficiency at all times.
If you have a small accounting team, this is almost impossible. However, the outsourcing partner has teams to address all of these issues simultaneously.
The benefits of having an accounting and bookkeeping partner can vary depending on the nature of the business you are in. However, there are some industry/business neutral benefits that most companies with outsourcing, bookkeeping and accounting partners in general reap.
Here are a few of those benefits that are noticed from the perspective of CPAs and business owners while providing outsourced accounting services to them.
- Advanced Accounting Systems and Tools– Modern accounting professionals work on highly advanced systems and tools. From artificial intelligence to machine learning and the cloud, modern accounting professionals need to be knowledgeable, if not adept at all of these advanced technologies
- Pay only for the service you benefit from – It saves you thousands of dollars a year because most outsourcing partners offer a relatively flexible pricing plan. In most cases, you pay for the services you get, but you can also create your own packages to meet your needs.
- Compliance and Industry Knowledge – Most third-party service providers have a team of experts who are well-versed in compliance and regulatory issues in the geographies they serve. Since they have years of specialization in accounting and bookkeeping, their cumulative knowledge is more important than any in-house team you could have. It will take years to train your internal staff to reach these levels.
- Quality Outputs – Review and quality checks are included in the delivery process to any of the external service providers. No need to worry about over/underpayment to creditors, duplicate entries in the system or wrong posting of expression
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