Outsourcing can benefit small business by saving time and costs. So, what should you look at for?
In small businesses, the accounts function often tends to stay in-house and it can be quite a dilemma to consider outsourcing it. Many businesses only ever consider the cost implications and not the benefits when considering outsourcing, which should be weighed against the costs.
To outsource or not to outsource? The real question is:
- What can you do with the extra time you will have, if you outsource?
- Can that time be used better, to bring more revenue by meeting, networking and building relationships with your customers?
- your accounting be done in-house or whether it could be outsourced without having any negative effects on your business, your employees and your customers?
- Maybe it’s time for a change? Has your accounting always be done in-house? Do you have the necessary skills to do the job, or would it be better to outsource to someone with the right skills who can do the same job in less time and in a more cost-effective way?
The outsourcing company
There is lot to consider before you can outsource accounting: –
- Check to see the organisation has the appropriate skills to do the job. Check their qualifications; they should have a pool of qualifications, such as:
- ICB (Institute of Certified Bookkeepers)
- ACCA (Association of Chartered Certified Accountants)
- CIMA (Chartered Institute of Management Accountants)
- AAT (Association of Accounting Technicians)
- They should also be flexible enough to use various accounting software such as:
- Advance spreadsheets
- Sage
- MYOB
- IRIS
- QuickBooks
- Xero
- Consider how well respected they are in the market, how their current customers rate them, request testimonials, and check how quickly they can turn around the job. Are they financially sound? Competitive? And, how flexible is the service level agreement? Check the conditions if you want to end the contract.
Depending upon services outsourced – such as credit control or bookkeeping – the business will need to provide different information to the outsourcing company. This could be everything from giving information about your debtors for credit control, to raw records – such as invoices and bank statements for bookkeeping. If the business is looking for complete outsourcing (bookkeeping, payroll, VAT and annual accounts), they would need to provide the following:
- Sales and purchase invoices
- Bank statements and loan statements, if applicable
- Pay-in books and cheque book
- Petty cash details
- Details of employees – personal and salary information
- Stock level, if applicable
- Debtors and creditors List
There might be some further information needed, as requirements change depending on the business sector, as well as each individual client’s needs.
Cost
Cost puts off most businesses from outsourcing. It could be perceived as additional, and therefore an unnecessary cost to the business; however, in reality, the savings can be quite considerable.
These savings can include the running cost of accounting in-house. Businesses can therefore increase revenue, but redirecting the time spent on accounts to somewhere else.
Don’t forget, outsourcing is tax deductible!
If you’re thinking about outsourcing, ensure several quotes are obtained from a number of companies – first to find the more competitive! It is important to pick the right provider, as picking the wrong one can prove very costly later. If the provider is picked solely on cost, it may not be right for your business-specific needs, as the provider might not be qualified to provide certain services, and, in turn, you will not receive the right service or advice on time. This can not only get your business in trouble with tax authorities but can cost the business financially in penalties and having to put it right.
If done properly outsourcing can benefit your business greatly. An effective outsourcing partner will bring their expertise and knowledge to the table, providing you up-to-date information required in order to make a better, more informed decision.
So, if you’re considering outsourcing your accounts and require some further information, why not give Brian Munjanja a call on 01604 328328 to find out how Broadwing Accountancy could help you? Alternatively, you can email Brian on [email protected].
