As we reach closer to two year anniversary of work from home, it’s important to reflect on how COVID-19 has changed the accounting and tax function of businesses.
Outsourcing of business processes with more skilled tasks like software development, design works, digital marketing and even accounting has continued to evolve over the past decades with the rise of the internet and COVID has just accelerated it. Accounting task demands expertise and confidentiality as the business is surrounded by money and an accountant’s job here becomes very critical. Therefore, the task of outsourcing accounts to some independent contracting company becomes even more critical.
There is a general misconception that outsourcing started with the IT sector during the mid 20th century, which isn’t quite true. Accounting outsourcing was there even before that but it wasn’t really thought of as an outsourcing model.
- Cost-Saving Accounting Services
Businesses that are outsourcing accounting is willing to reduce their expenses but most importantly, without reducing the quality.
The savings that outsourcing usually provides can be quite considerable as most Accounting KPOs’ can offer their services at lower cost rates (typically due to lower labour costs at their location).
Besides, by outsourcing, you save money on paying the salaries, retirement benefits, office supplies and benefits for the full-time or part-time employee. You only pay for what you need. There is no loss in productivity costs that come along with hiring full-time employees.
- Eliminate Time and Costs of Hiring Processes
The recruitment process is a rigorous job. It takes resources to manage it, from creating a recruitment strategy, selecting applicants to interview them. The recruitment process takes your business time, it costs, and you will need to dedicate the time either for yourself or an employee in hiring accountants with the right skills.
- Focusing on Core business processes.
As your business grows, you will find yourself spending more time managing your money and less time scaling the business. Therefore, outsourcing administrative tasks like bookkeeping and accounting help you to focus your time, energy and resources on creating business strategies. It will be bringing more revenue, as well as networking and building relationships with your customers.
- Trained Accountants (TAs’) and Financial Accounting Experts (FAEs’)
Outsourcing may offer you the possibility to hire a professional with a higher level of expertise at an affordable price.
Outsourced bookkeeping and accounting service firms continuously have to improve their skills and qualifications to stay competitive in the market. Imagine, set of people working in the same office, they can easily share the new accounting trends, solutions and tools. To add more, great accounting companies have more extensive access to training, courses, and they are participating continually.
Moreover, outsourcing to an accounting firm is giving you access to the team of Accountants. For example, at Spacebucks, Our team consists of several Trained Accountants who are responsible for the maintenance of accounts and Financial Accounting Experts who are responsible for statutory filings and Management review. Financial Accounting experts review the work done by trained accountants to ensure accuracy and efficiency. Financial accounting experts ensure all statutory filings in the form of GST, TDS, PF, PT, Income Tax, ROC returns are filed with accuracy on time. These experts further work closely with the client’s management on analysis of financial position and make strategies for improving the organization’s financial health. In a nutshell, the purpose of Outsourcing should meet 2 objectives:
- Maintenance of Accounts (carrying day to day accounting work and keeping a track of entire finances related to business) – job of TAs’
- Review of Financial Accounts for Statutory filings and Management Discussion and Analysis (MD&A) – job of FAEs’
By choosing the outsourcing company wisely, you can be sure that your accounting is in the reliable and knowledgeable company’s hands.
- Scaling Accounting Easily
The accounting service providers has the amount of availability to scale your services significantly without any lag. For example, if your bookkeeping and accounting tasks exceed the number of functions for 1 employee, you can easily be enforced with the extra workforce without the need to go through a rigorous recruitment process.
- Automation technologies
Most businesses use accounting automation software to save time. It will save time, but importantly, it reduces risks. Automating accounting is minimizing human errors. Secondly, in automation software, accountants get real-time reports. They assist in catching potential problems and resolving them at an early stage. Thirdly, it will reduce the probability of internal fraud.
Most of the accounting service providers are highly qualified in the automation tools such as Tally, Quickbooks, Zoho, Xero, Microsoft Dynamics and more.
If your accountants are still using only Excel sheets – you are wasting your time and money.
- All services under one umbrella
By outsourcing, we mean not only book-keeping but also providing management consultancy, taxation advisory and compliances which includes MIS, Budgeting, Payroll, Project Finance, GST E-filing, TDS E-filing, ROC E-filing, Income Tax E-filing, PF, PT, ESIC and allied labour laws, Tax Assessments and even Company Audits. Businesses may get all these services with domain experts by outsourcing entire accounts.
- An outsourced accountant is your advisor
A good accountant will always provide advice on how to make accounting more efficient. Sometimes he might work with a couple of companies and propose an excellent experience from another client. Whether it is about taxation, accounting software or even providing financial advice.
Acceleration of Outsourcing of Accounts post COVID:
COVID 19 has prompted businesses to go for automation for all their business processes including accounting which should ensure data security and accessibility. The use of cloud-based infrastructure for accounting will bring greater efficiency to this process. Also, post covid its very difficult to get accountants with right skills for businesses across locations with issues of travelling and safety. It’s important now to have an admin person separate from an accountant for businesses in India because of the changes in taxation and regulatory structure post-Covid. GST has undergone multiple changes and is in continuous updating. Synchronizing such changes in accounts has become critical to avoid defaults and notices from tax authorities as even all tax authorities have automated themselves, so why not businesses then??
Outsourcing is more than letting an outside firm take the extra workload off your shoulders. It is a key business strategy that successful Accounting firms are already well-aware of and leveraging to grow their practice, thereby making more impact on their client’s businesses. Moreover, It’s even more important to have a review of Financial Statements periodically with a focus on cash management, Funds mobilisation, Budgeting, Profitability, MIS which will enable management to make optimum financing and investing decisions and therefore to carry out such tasks, businesses need to hire Virtual CFOs.