Outsourcing the accounting of a company is a decision that offers advantages especially for SMEs and freelancers. It consists in the transfer of competences of the accounting management from a self-employed professional or a company to an external professional. This outsourcing can be total when the external professional takes care of everything. Or partial, in which the client performs certain functions.
Let’s keep in mind that one of the most complicated tasks to carry out is accounting. But it is also an unavoidable function for all companies regardless of their size.
Advantages of outsourcing the accounting of a company
The reasons why we might be interested in outsourcing the accounting of our company are diverse. From the lack of time and to be able to dedicate ourselves completely to our activity. To the lack of knowledge on the subject.
But without a doubt, the decision to outsource accounting has many advantages.
First of all, it will allow you to spend less time on tasks that can sometimes be complex.
In addition, entrusting the accounting to a person specialized in this field ensures compliance with accounting and tax regulations. Including always being up to date with legislative changes. This task also requires a lot of time to study these changes.
In small organizations, especially, it avoids having to hire a specialist. This translates into cost savings.
It avoids obsolescence, since being in the hands of a professional company, the company will benefit from access to modern, state-of-the-art systems.
Finally, it allows us to focus on our activity, focusing on the basis of our business. Let’s keep in mind that accounting is a complicated and time-consuming task.
Potential drawbacks
However, outsourcing also has disadvantages, such as the feeling of loss of autonomy, the difficulty of sharing confidential data with a third party or the fear of not being aware of the financial movements of our own company.
Despite all these benefits, this type of outsourcing also has some risks.
Hiring an external company always involves handing over confidential company information to a third party, so you should be very careful about which provider you hire. Aspects such as data protection and confidentiality with third parties are important.
In addition, you should pay close attention to the capacity of the contracted company to operate in the long term. And not only for reasons of financial solvency, but also for other factors. Because switching to another provider is a complicated task that often requires a lot of time and effort. Especially in ensuring the correct transfer of the information accumulated over time.
What factors should be taken into account when outsourcing accounting?
The decision to do it yourself or to outsource accounting is in any case a valid decision.
But when we are asked, we always say the same thing. There are several factors to consider, which in our opinion would be the following.
Firstly, what level of information do we require. Because if we just need the accounting to be done, we don’t need a lot of equipment, nor are we going to need specific training in accounting and finance. But, if what we want is something more and analyze well the data derived from accounting we need something else. Either an adequate team in quantity and constant training. Or hire an external accounting consultancy with specific training.
Another very important factor is the sector of activity to which our company belongs. Because in some cases, there are specific characteristics.
Of course, the size of the company can be a determining factor. For the reasons mentioned above, the size of the equipment and its cost.
The moment of life of the company. It is not the same a recently created company, where the entrepreneur has to focus on making it viable. Or an already consolidated company, where certain processes may already be at a certain “cruising speed”.
Finally, something we have highlighted before. Information needs. We may only use our accounting to comply with legal obligations. Or we want to use the information provided by accounting to make business decisions. The added value of good financial-accounting reports is invaluable.