Accounting outsourcing: the pros and cons

Recently, outsourcing is widespread in the Belarusian business environment, having ceased to be a rarity. Thus, firms increasingly outsource their bookkeeping.

Organizations do not necessarily contain their own accounts. Instead, they can use the outsourcing service, transferring the affairs to another specialized company or private specialist. This option is ideal for those who want to save money and make your business mobile, or those who have no time to mess around with numerous financial documents and forms reporting.

In many countries, this practice started. The majority of small businesses (and many large!) Not even a full-time accountants. And this is understandable. For example, in the USA or UK, accounting is a technical work, which boils down to the correct registration of all business funds and filling out standard reporting forms. And such painstaking and accurate, but not too complicated work can be performed by qualified specialists of consulting companies. In our country, an accountant is rather a creative person. The requests of business owners are sometimes simply impossible. Usually, a Belarusian accountant is required to do everything so that the company pays minimum money to the budget and the tax office would have been pleased at the same time.

Benefits of Outsourcing

According to statistics, most Belarusian companies prefer to have their own accountant. Nevertheless, small and medium-sized businesses are increasingly using the services of outsourcing organizations, concluding contracts for the provision of the services they need. What does outsourcing can give to business owners?

1. Structural and personnel optimization of the processes of company. It should be noted that, in contrast to full-time employees, the company that provides outsourcing services does not go on sick leave, does not take vacations or days off.
2. The ability to use the services of highly qualified workers.
3. Reducing the space leased for business.
4. Reducing the tax burden: thanks to the use of outsourcing, the wage fund is significantly reduced, and also insurance premiums become smaller.

What are the benefits of accounting outsourcing?

Speaking about accounting outsourcing, then, firstly we can say that it is a real savings on cost. If you completely entrust accounting to a specialized company, you no longer need to maintain your accounting.

Secondly, most often such services are provided by audit companies. As a result, the businessman receives not only an accountant, but also an auditor, a tax accounting consultant, a specialist in the field of labor legislation and a qualified lawyer.

Thirdly, it is possible to give accounting to a third-party organization at any stage of activity and in any condition. For example, if the chief accountant resigned just before the balance was deposited, and you simply do not have time to look for a new specialist, then outsourcing accounting is a good way out of a difficult situation. Of course, you will have to pay a double or even triple price, but it’s worth it, because the reports will be drawn up competently and delivered on time. In addition we can say that outsourcing  provide guarantees and insure risks.

Fourth, outsourcing of accounting services is often convenient and beneficial to companies engaged in several types of business. As a rule, it’s almost impossible to find an accountant who is well versed in construction, trade and the provision of services, and keeping five accountants on staff is unprofitable. Turning to  outsourcing, such problems do not arise. The entrepreneur sets the audit company with a clear task: to organize accounting in a particular company, with all its features.

In addition, outsourcing is beneficial to businesses engaged in seasonal work (you won’t be able to recruit a new staff every quarter of the year!). The use of external accounting is also effective in the implementation of investment projects, when the investor and manager are not the same person. In this case, it is easier to ensure accounting independence and introduce a mechanism for monitoring the development of investments.

So, outsourcing is beneficial for those who are just starting their business, for investors interested in independent control of the investment project, as well as for entrepreneurs who need to restore accounting or reduce their costs.

It should be noted that each customer is assigned a personal chief accountant. In this case, the client of the outsourcing company, in the presence of a controversial situation, can discuss urgent issues and listen to the opinions of several highly qualified specialists, which will support in making the right decision.

Each company providing outsourcing services tries to be the best, constantly improving the quality of the services provided, finding a common language even with the most difficult customers, looking for innovative solutions to the tasks, focusing on identifying and satisfying the actual needs and wishes of the client. The most important thing for an outsourcing company is its business reputation among partners and government, which can never be called into question.

Outsourcing Risks

The most important risk is that you disclose all the information about your activities to unauthorized persons. Therefore, if an entrepreneur fears that the data on his company may fall into the hands of competitors, it is better for him to check the reliability and decency of external accountants. Of course, confidential information can also be obtained from other sources, but in the case of outsourcing, the businessman voluntarily transfers such materials to the wrong hands.

Another argument against the use of external accounting is the lack of control over the activities of the company or professionals providing accounting services. When the accountant is in the company’s staff, the manager can fully verify and organize his work in the way that is suitable for him. All accounting documents pass through the entrepreneur. And even if a businessman is not always well versed in reporting, the fact that he will once again control his employee will only benefit everyone. But when using external accounting, the entrepreneur is practically isolated from the preparation and submission of reports, which can entail the most unpleasant consequences.

Here is what one of the clients of the one outsourcing organization said: “We had a small company that exported products from a warehouse in the Republic of Belarus. The office was very small, only three employees worked there. Having your own accountant was simply unprofitable. Of the two options – an accountant-homeworker or a firm – choose the second. It is a bit more expensive, but we thought the company was a more reliable option. And we concluded an agreement according to which all of our primary documents were submitted weekly. What a surprise it was when we found out that during six months zero reports were sent to the tax inspectorate on our behalf! We had a field tax audit, which revealed a bunch of violations. ”

For this reason, we strongly recommend periodically request reports on the activities of your company from an outsourcing organization, for example, in a form that you have developed taking into account the specifics of the activity.

However, such problems can be avoided. When concluding an agreement with a company providing outsourcing services, it is reasonable to transfer documents according to inventory or simply provide copies.

When everything is framed according to the rules and the businessman uses the services of a specialized company, the procedure of compensation for harm should be regulated. If the company dishonestly approached to its functions, as a result of which your company was damaged, it must compensate for the losses – the one who “screwed up” pays. By the way, the responsibility of the contractor to the customer is provided for by civil law.

And the last one. When an entrepreneur makes an agreement, the company promises that your records will be kept by “highly qualified specialists.” But in practice, small firms that provide outsourcing services attract personnel with low qualifications – they are cheaper. Reporting and accounting are entrusted not to auditors, but to the same accountants-homeworker. The results can be disastrous. And if a conflict arises, there is a danger of simply not solving this problem. It is impossible to hold a negligent accountant to responsibility for what he has done  – most likely, he is not bound by a contractual relationship with the company.

How to avoid troubles?

If an entrepreneur decides to give accounting to the hands of a specialized company, he should learn more about it. And here the problem arises of choosing an outsourcing company or specialist.

The best option is to use the recommendation of colleagues, partners, acquaintances or friends. If this is not possible, then you will have to look for information yourself. Of course, you don’t need to contact a detective agency. To draw the right conclusions, often enough to analyze the information that the company provides about itself.

Despite the fact that outsourcing services are not licensed, most often they are provided by audit companies. Therefore, first of all, find out if the employees of the company have auditor certificates. In addition, the role played by the time the company operates on the market, its availability of various certificates, diplomas. By the way, the number of services of an outsourcing company is also very important. Accordingly, the wider their spectrum, the better it is – then the company will be able to solve much more problems.

Quite often, there are informal relations between accounting companies and various state bodies. However, it is impossible to cover all the services of the tax office. Therefore, it makes sense to choose an outsourcing company depending on where the entrepreneur or company is registered and where the outsourcers have connections. Then external accountants will easily solve all problems in official structures.

In addition, it is necessary to clarify exactly who will prepare your statements. The specialist, who will start accounting, must be an employee of the company. It will be great to get to know him directly and find out his professional level. It is not necessary to ask for a diploma at all – this is the prerogative of the employer, but asking the specialist some specific questions would not hurt the entrepreneur.

In conclusion, we want to note: there can be hundreds of suppliers at any enterprise, but there is only one accounting outsourcer. Costs of an enterprise for accounting outsourcing – a low fee for the confidence of owners, customers and partners in the stable position of the company.