Should Your Business Outsource its Finance and Accounting Functions?July 16, 2020
Is your business struggling to contain costs and stay on top of regulatory developments surrounding the COVID-19 crisis? Outsourcing accounting and finance functions can help. Here are the details.
Outsourcing can help businesses struggling to contain costs and stay atop regulatory developments during the COVID-19 pandemic. One functional area that’s being targeted is finance and accounting.
No business can function for long without qualified people handling finance and accounting matters — but, contrary to popular belief, they don’t necessarily need to be part of the company itself. Unless your business actually provides such services, there are many reasons you’d be better off outsourcing these cumbersome, time-consuming and costly responsibilities to professionals who focus on them.
Businesses of all kinds increasingly are recognizing the benefits of outsourcing their finance and accounting functions. Examples include:
Reduced costs. Outsourced services are scalable. You can increase or decrease them according to your current demand, so you’re never paying for more than you need. And you can do so without ending up on the hook for recruitment and training costs or unemployment benefits. Plus, if you cut your in-house finance and accounting staff, you’ll save on salaries and wages, employment taxes and employee benefits.
Better deployment of human resources. If you decide to outsource these functions, you may opt to reassign those employees to tasks and duties more closely related to your core function. For example, they might transition to your sales or customer service departments. This type of redeployment of staff can improve your service and customer satisfaction and, in turn, your profitability.
Lower compliance risk. Tax and accounting rules are constantly changing, and the costs of noncompliance can prove high. Tax missteps may lead to steep penalties and interest. Litigation and hefty judgments due to reporting errors could devastate a business’s reputation and bottom line. Fortunately, third-party professionals routinely monitor the updates and timely implement the requisite practices to protect their clients from the wrath of auditors, regulators and other stakeholders.
Greater access to expertise and technology. Employing top-notch, full-time finance and accounting staff can be expensive. By outsourcing, you have access to expertise you might not otherwise be able to afford, especially if you don’t live near a major metropolitan area with a deep pool of talent. Outsourced professionals also may have access to specialists at their firms and greater bandwidth than in-house accountants, helping management get the answers they need to make quick, but informed, strategic decisions.
Similarly, staying on top of the latest software can be cost-prohibitive for smaller businesses. Dedicated finance and accounting firms, on the other hand, invest in these tools as a cost of doing business.
Fraud prevention. The Association of Certified Fraud Examiners (ACFE) reports that organizations lose 5% of revenues to occupational fraud every year. While financial reporting schemes — in which the perpetrator intentionally causes a material misstatement or omission in financial statements — are the least common type of occupational fraud, they’re the costliest, with a median loss of $954,000, according to the latest ACFE study.
When you outsource your finance and accounting, you get the services of objective professionals who aren’t in a position to benefit from such schemes. They’re also more likely to be unbiased than in-house employees who might let their relationships with co-workers or supervisors sway them when they come across red flags for fraud.
With many businesses still struggling with the effects of the COVID-19 pandemic, civil unrest and economic uncertainty, the time is ripe for outsourcing finance and accounting tasks. Our outsourcing services team can help ease your load so you can devote your attention to what you do best.