Why Outsource Accounting? A Closer Look at the Benefits to Your Enterprise.
Outsourcing the accounting function is generally worthwhile especially for businesses whose core-competencies fall outside of the financial and accounting disciplines.
For all businesses, accounting is essential to any business with financial goals because it is how a business measures financial success. Accounting is critical for every company to track and measure profits and losses, assets and liabilities, cash flow, as well as maintaining compliance with financial reporting regulations.
Additionally, a properly run accounting department provides shareholders and interested governing bodies with quantitative information to support making strategic decisions.
Accounting Automation and Outsourcing – A Focus on Best Practices.
Outsourcing also allows a company to gain access to best practices and innovative technologies. Because the outsourcing company is performing these functions as its core competency, it has generally invested in best practice processes and technologies out of reach of all but the largest companies.
It, therefore, achieves higher levels of performance that most in-house accounting departments.
Why Does Accounting Outsourcing Making Sense? A Focus on Reduced Costs.
Because accounting duties include many low-value transaction-laden activities, outsourcing and automation are viable alternatives to supporting an entire accounting department in-house. The cyclical repetitive nature of many accounting duties makes automating at least a good portion of its operations an ideal choice.
Companies can already save a significant amount in costs by reducing the number of full-time employees that must also be trained and supervised by senior managers. Relieving a company of its more labor-intensive low-value tasks that can be done elsewhere – and in a more efficient manner – would at the very least cut costs and time spent on recruiting, evaluating, hiring, training, and managing full-time employees along with all the related overhead costs associated with staffing.
Fees paid to the outsourcing provider, ultimately result in much lower costs than dedicating an accounting division to function as part of the business entity.
More Good Reasons Why Companies Outsource Their Accounting:
Here are some additional reasons businesses outsource their finance and accounting functions:
- Accounting is not a core competency of most organizations: organizations relying on the expertise of a business processing provider to perform specific business operations more efficiently while meeting the required statutory obligations so that the in-house employees can improve their focus on the core activities of the business
- Improve performance: outsourcing companies are generally held to a much higher standard of performance than an internal department, and often achieve much higher levels of quality and timeliness
- Reduces risk and uncertainty and increases business reliability and redundancy, which has proven itself in 2020 during the Covid pandemic
- Provides flexibility and scalability for rapid growth: Companies going through rapid changes, such as mergers and acquisitions, can streamline their transition while cutting costs
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