For major companies, it is vital to have an in-house accounting department, while one-person startups and home-based businesses tend to handle their finances on their own. Still, what about those stuck in the middle? The greatest majority of businesses fall under the category of small and medium enterprises (SMEs) and it is often debated which of these two afore-mentioned business models they resemble more. With this in mind, we’ve decided to do a quick rundown of both benefits and downsides to outsourcing your SMEs’ accounting.
Expertise of Services
The first massive benefit of outsourcing your SMEs accounting lies in the expertise of services. In order to get employed in an accounting agency, an accountant needs to have a solid education and satisfactory work-history. For your company to hold such an accountant on a retainer (let alone several of them), it would cost a small fortune. Therefore, it is safe to assume that people employed by a company you would like to outsource to have a higher level of expertise than those who would work in an average SME’s accounting department.
It goes without saying that having an in-house team gives you more control and more input into what your team is doing. For instance, you have no way of knowing if the company you’re outsourcing to takes your finances seriously enough, especially if you don’t do enough research on their portfolio before hiring them. On the other hand, having less control can sometimes be a good thing, no matter how ironic this may seem. You see, by having one less department to micro-manage, you will free up your schedule and be able to focus elsewhere.
Going with outsourcing is a trend that stands to save you a small fortune in the long-run. Sure, you still have to pay for people who are going to handle your finances, but you are no longer obligated to worry about their insurances, benefits or paid time-off. In other words, you get a fixed price you need to pay, which also makes your expenses much easier to calculate. In this way, outsourcing your accounting also makes the process of accounting much easier – yet another irony to your benefit. Apart from this, you also wouldn’t be obligated to invest in industry-specific, premium financial apps, that these companies use. In other words, you’re saving money on more than one front.
Perhaps the greatest issue that medium enterprises have with outsourcing is the fact that it involves bringing in additional people to sensitive, even confidential, projects. This is especially problematic, seeing as how your financial information often reveals much that you would prefer to keep hidden from your competitors. Nonetheless, by going with a reliable company, the one with outstanding reviews, ratings and testimonials, this risk can be minimized by quite a bit.
Distance and Language Barriers
Finally, there’s one problem, the impact of which is often misinterpreted or completely blown out of proportion. A lot of SME owners worry that their business could suffer due to the different time-zone between them and the company they outsource to, the distance between two countries or even language and cultural barriers. This, however, implies that you have to offshore your accounting and there is literally no reason for you to do so. Why would an SME owner from NSW, outsource to China or India, when there are so many local tax accountant Sydney agencies willing to offer these services? Therefore, it’s all just a matter of perspective.
At the end of the day, while it is clear that there are both benefits and downsides to the trend of outsourcing, in most cases, for SMEs, outsourcing is a better choice. While the long-term investment in your in-house department may turn out to be cost-effective in several years, temporary results in both services provided and financial savings are too significant to be underestimated. Nonetheless, no one knows your business like you do, so the choice is yours and yours alone to make.