Accounting Outsourcing and its Benefits

Businesses, these days, not only look for cost-effective solutions to systematically run non-core activities like accounting and bookkeeping services, but also expect to add value in order to achieve better control and understanding of cash flow and thereby make informed decisions. Accounting services form an integral part of an organization’s operational capabilities and systematic functioning. Therefore, outsourced accounting and bookkeeping services definitely help streamline core business operations of an organization.

Benefits of Outsourcing Accounting

Cut down operational costs

A major advantage associated with outsourced accounting services is the cost-effectiveness of the services. A huge amount can be saved up on operational costs, which can be used towards the funding of core business processes.

Focus on Core Business

Businesses normally outsource their business process to reduce expenses, and to transfer the burden of responsibility. This enables managements to concentrate on their more important business activities. Outsourcing also facilitates firms in avoiding capital expenditure. It gives you the flexibility to grow without huge investments in Human Resource and infrastructure.

Improved Quality of Work

Typically, outsourcing companies are those which have a wide expertise in their own respective fields. Be it accounting outsourcing, or bookkeeping Therefore, you can expect quality work from these companies, owing to their field of expertise.

Get the work done in quick turn-around-time

Most of the specialized accounting outsourcing accounting firms work on a particular delivery time, which ensured the timeliness of the services. Moreover, the time difference between India and USA ensures work gets done faster.

Gaining from the assistance of experts

Outsource accounting services providers hire qualified and experienced professionals to perform accounting services. These consultants can provide professional guidance to their clients as to how to handle processes effectively. And this in turn can really be helpful for running any business smoothly.

Up-to-date Accounting

All possible accounting information can be obtained regularly from the outsourced accounting service providers handling accounting services of the company. Advanced software can help companies look at personalized reports that can save a lot of time while making important financial decisions.

There are multiple reasons why a business owner should consider outsourcing of their accounting and bookkeeping services needs. Many business owners have benefited immensely from making such a decision. If the business owner wants to eliminate the hassles associated with the implementation and supervision of the accounting process they should consider outsourcing with a reputable accounting and bookkeeping firm.

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Data Security in an Accounting Outsourcing Process

Outsourced accounting refers to having accounting done by a third party instead of an employee of the business. The concept of accounting outsourcing has gained immense popularity in the past years and more businesses in the USA and Canada are looking at outsourcing as a means to cut significant back office cost and remain competitive in the market. Whether you are starting a new business or running an established business, outsourcing accounting can be of great use.

Though accounting outsourcing offers great cost savings, how confident are you as an owner that your accounting data is secured with an outsourcing accounting services provider. Data security is a worry for buyers. The outsourcing accounting vendor has access to many sensitive financial documents: income tax returns, mortgage loan documents, credit card payments etc. How can buyers be sure their data remains safe?

Briefly elaborated are a few points and questions realted with data security which you can ask the outsourcing accounting vendor-

Physical Security (security mentained at the workstation)

– Screening of visitors and employees by a security guard during entry and exit for data storage media like floppies, cds, usb drives etc
– Make sure that no employee carries cameras, camera phones and digital recording media in the premises
– PCs used by processors have disabled floppy/USB and CD ROM drives
– PCs used in accounting and financial analysis work are denied email and web access
– As an additional step you should ensure that no client data resides in PCs used for internet access

Data Security

– Get information on the server which the accounting outsourcing vendor uses and where is it located
– Make sure that the server is protected using Symantec Antivirus and firewall.
– Access to the server should be preferrably through 128 bit SSL encryption which ensures transmission security
– Comprehensive security audits are performed
– All data is backed up on a regular basis in a back-up server

Network Security

– Network security is maintained through Symantec Antivirus and firewall protection
– Segmented LAN with firewall protection

PC Security

– Make sure that there is Individual domain accounts for each processor which ensures that the access to source documents is restricted to the employee who would be working on your files or authorized employees only
– No fax and printing capabilities should be connected with the PCs
– Virus protection through Symantec Antivirus
– No usage of paper in the floor area

When you engage with an outsourcing accounting vendor also enter into an agreement of strict non disclosure of data which ensures that the data would be kept secretly and any breach on the agreement would be punishable under the law.

These are a few points which can be used before you link with some outsourcing accounting vendor. In most of the cases outsourcing vendor too ensures you know beforehand about the security measures they take for your accounts data and details.

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Outsource Accounting to India- An inexpensive way to grow!

Global economy is slowly and steadily recovering from one of the worst recessions experienced in the last 50 years. Organizations are looking at ways to reduce the costs and be competitive in the market in the coming years. To recover from the situation companies are increasingly looking at accounting outsourcing services to reduce costs. Accounting outsourcing has been a dominate tool over the years to cut back office cost. Most organizations today are either outsourcing their entire accounting activities or part of their accounting activities to vendors in India. Accounting outsourcing if implemented well can be an inexpensive way to grow for organizations.

In recent years, India has strongly attracted attention of many global companies and big business enterprises throughout the world. The country has consistently been ranked as one of the most popular choices in providing outsourcing services. Several developed countries including United States, Canada, United Kingdom and Australia are running their business with larger profit through the outsourcing assistance offered by India. According to a recent study, India is preferred by many overseas businesses as the favorite choice to outsource.

Why choose India as an Accounting Outsourcing destination-

– Substantial costs savings: Savings upto 50%. By outsourcing accounting services organizations can reduce their accounting cost by half
– Largest well-educated English-speaking workforce after US. India’s large base of accountants is a useful asset in accounting outsourcing process
– Access to economical but skilled labor force- per accountant cost is around 1/8th of that in USA & Canada, 1/6th of that in Europe
– India is considered as the most renowned outsourcing accounting destination in the world
– Advantageous time zone difference between US and India ensures high productivity and faster turnaround times particularly in accounting outsourcing processes
– Considerable technological and infrastructure upgrades in recent times. India enjoys an edge in Information technology over many other countries that have also ventured into the field of outsourcing accounting
– India is one of the largest providers of accounting and bookkeeping outsourcing services

Several global companies are therefore making a beeline for hiring outsourcing accounting vendors in India for the financial benefits and convenience that it offers to each of its clients. Also since the services offered are customized to suit the needs of each client and most reputed vendors offer round the clock facilities it ensures that the client does not have to go through any hassle to receive the accounting data. Outsourcing accounting services from India has therefore become the much desired course of action for companies worldwide.

Accounting is one of the most important aspects of any business and cannot be just taken as a routine activity because most of the financial decisions and future planning of the organization depends on the accounting department. Accounting outsourcing services works out very effectively and there are several advantages connected with this.

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Outsourcing Accounting Bookkeeping Services

The contribution of the various divisions of the organization such as marketing, finance, accounting, administration, human resource is the key to success, each employee in various divisions plays a crucial role in determining the future of the organization. So if you are planning to set up a new business or even if you are an owner of a successful venture you need to ascertain that each division is functioning in a proper and accurate manner. Finance and accounting is one such division where accuracy is of utmost importance, where you simple cannot make any mistakes as it will create major confusions and disturb the entire functioning of the organization. Hence for businesses which do not have experienced and qualified resource to do the job accounting outsourcing services can be of great help.

Accounting and bookkeeping outsourcing refers to outsourcing of activities pertaining to accounting and bookkeeping functions. It includes outsourcing of activities such as accounts payable, accounts receivable, credit and collection, bank and other reconciliation, general ledger maintenance and financial analysis among others. Accounting and bookkeeping outsourcing has become a key element of outsourcing. Businesses can either outsource their entire accounting functions or parts of the accounting functions such as accounts payable and accounts receivable.

Why Accounting and Bookkeeping Outsourcing makes sence-

Substantial costs savings, savings anywhere between 40%-50%. Cost cutting can play a vital role in today’s tough economic slowdown.

Flexibility in staffing, you do not need to retain or pay for a staffing if you do not have enough workload. In other words pay for only what your needs are.

Favorable time difference, between India and USA ensures that work gets done faster

Flexibility to grow without huge investments in Human Resource and infrastructure

Accounting outsourcing services also gives you the added advantage of having instant access to updated accounts at any point of time. This comes in handy when you need to review the accounts during important decision making period or during the tax filing.

Priority on other core divisions of the business such as sales, marketing, client relations

Accounting and bookkeeping outsourcing services of a reputed and reliable vendor (properly research before selecting the vendor) ensures that the financial records of the business are available at a short notice hence there is no requirement to adjust accounts once the tax season approaches or during important decision making. Having accurately maintained accounts of every business transaction is very helpful during the tax season. In addition, the instant accessibility of the records enables the company’s officials to take decisions regarding the future growth of the business. Any expansion or diversification can be well planned only when you know you actual standing in the market and the accounts are the only source for such information.

In today’s technology led world businesses are looking at new means to run their businesses successfully. Accounting outsourcing is the concept which combines the technology and business into deriving fruitful results.

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Basics of Small Business Accounting

Accounting is a key function of any business-big or small. Good accounting practices are necessary to maintain an accurate set of books which in turn are necessary for taking business decisions, raising capital or bank loans and of-course for knowing how much money your business is making.

Many small business owners ignore the fact and consider it boring and unimportant as accounting is a monotonous task, and anyone can get bored very easily while maintaining the day-to-day accounting and financial transactions. They would rather focus on things they think are more critical to their business, such as marketing/sales. While marketing/sales may be the most critical activity for any business the finance or accounting department cannot be ignored. For a small business to succeed accounting is as important. Without accounting, your small business might not reach its full potential.

Importance of Accounting for a Small Business

Decision Making
Accounting is a way for you to keep records on your business performance. A business owner should be able to see how the business is performing over the years. Accounting helps in making better business decisions and is useful in the growth of a business.

Obtain Funds/Loans
A detailed and correct set of accounts are important when a business is seeking outside financing. A financial institution would be reluctant to assign a loan unless the financial state of affairs of a business is presented in an acceptable manner.

Taxes
With good records, preparing an accurate tax return will be easier and filing will more likely be done on time. Poor recordkeeping may result in underpayment or overpayment of your taxes.

Small business accounting is no rocket science and accounts can me maintained in a simple and proper way. Small business accounting software’s such as QuickBooks and Peachtree are available in the market which could reduce the efforts in maintaining the accounts of a business. Any person with basic knowledge of accounting and work on these software’s.

Small Business Accounting Outsourcing

In a small business it is often seen that due to high overheads small businesses are not able to or rather cannot afford a qualified and experienced accountant to manage the day to day accounting activities of the business. Hence the owner either ignores the accounting aspect of the business or does it himself. Both the cases can be harmful in the near future. Ignoring the accounting activities can create problems in the future and if the business owner does it himself then his time is divided between daily routine aspect of the business and thereby giving little time to more important aspects of the business, i.e. marketing/sales.

Accounting outsourcing can be the answer to these problems. Many small businesses in developing countries such as USA, Canada are considering accounting outsourcing.

Advantages of Accounting Outsourcing

– Cost minimizing, usually saving of 50% as compared with an in-house accountant
– Up to date books, have access to up to date books at any given period of time
– Fast and accurate
– Concentrate on other important aspects of the business

Outsourcing Accounting sets every small business owner free from all accounting hassles so that they may better concentrate on the growth of their organization. If you own a small business and are worried about proper maintenance of accounting transactions, then you must try out these accounting outsourcing service providers, as it will perfectly manage your financial activities without increasing company expenses and responsibilities.

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Why accounting outsourcing is so popular

Accounting outsourcing refers to outsourcing of activities pertaining to finance and accounting functions to a third party vendor. It includes outsourcing of accounting activities such as accounts payable, accounts receivable, credit and collection, bank and other reconciliation, general ledger maintenance, financial analysis, management reports etc.

The primary reason that organizations turn to Outsourcing is cost reduction, to leverage themselves ahead of their competitors, and as a means to increase their adaptability to changes in the market place. In today’s touch economic times accounting outsourcing allows organizations to remain competitive in the market.

Outsourcing of backend and non core activities such as accounting and bookkeeping also provides the ability to benefit from the advances in information technology, while focusing on core business activities of the organization. Not only does Outsourcing accounting functions enable increased concentrated efforts toward the organizational mission, but if skillfully planned and properly managed, contributes to a healthy growth in the company’s fiscal bottom line also.

Earlier accounting outsourcing was only considered for larger companies. But now due to the advancements in technology and other aspects small and mid-sized businesses to can reap the benefits. Some recent studies and surveys highlight the following, Mid-market sector ($1bn-$3bn revenues) is in-fact the sector which is getting a lot more out of the experience in outsourcing services, Mid-market buyers have been enjoying considerably more success in every area- from cost reduction through to global effectiveness, through to getting better business process improvement and technology.

Finance and Accounting has become one of the most attractive and straight-forward functions to outsource. It is one of those non core activities which can be easily outsourced. It is also important to choose the right service provider. Choose a service provider which provides specialized outsourcing services and is experienced in the areas of accounting and bookkeeping. They should be well equipped with modern technology and experienced professionals to manage the process with great efficiency. It is essential for you to make sure that outsourcing accounting firm which you are looking for is a reliable one and has good track record with previous clients. The real purpose of accounting outsourcing is only achieved when all the services required by the client are provided by the service provider.

A lot of organizations be it the large, mid or small, have adopted accounting outsourcing with wonderful results. Outsource accounting activities can be viewed as a concept which if well implemented can yield fruitful results, not only in the short run but the long run as well.

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Accounting Outsourcing For Smaller Companies too

Finance and Accounting Outsourcing in the early days was considered only for large organizations. Large corporations generally have the technical and management resource to manage outsourcing services, clearly identifying which part of finance and accounting functions to outsource, and select the process to choose the right service provider to fulfill their outsourcing needs.

But unlike large businesses, small businesses may not have the right resources to find suitable service providers to outsource their accounting business functions. Nevertheless small business too can successfully outsource their accounting needs and enjoy the benefits of outsourcing. This article elaborates the basic steps small businesses should follow to successfully outsource their accounting activities.

Identifying What Finance and Accounting Functions to Outsource

The first step involves in deciding whether you want to outsource your entire accounting process or some part of your accounting functions. If you are new to accounting outsourcing, start with outsourcing some part of your accounting functions to the service provider. Clearly identify which accounting function to outsource and which not to. Generally noncore accounting functions which would require minimum guidance to the service provider is ideal to start the process. Once the familiarity increases additional accounting functions could be outsourced to the service provider. A/P, A/R, Bank Reconciliations, payroll are some of the activities which can be a good starting point to initiate the outsourcing process.

Selecting the right accounting outsourcing service provider

The second step would involve in finding the right service provider. Some things to consider before choosing an accounting outsourcing service providers are:

1. You can search for vendor names through a Google/Yahoo search. This throws up multiple vendors with vastly varying capabilities. Prepare an initial list of 15-20 names
2. Study the outsourcer’s website for quality and comprehensiveness of information, ease of navigation, and clear explanation of services and capabilities. Study their client testimonials, case-studies and client profiles.
3. Shortlist about 8 names from the list for further questioning. Questions that can be asked include the following, how long have they been in business, do they have clients that you can do a reference check etc.

Pilot/Trial Project

Once you have selected your final candidates, begin with a pilot phase with the service provider. The pilot project is important to establish a working relationship and to test and check the capabilities of the service provider. It also provides an opportunity for you to understand the procedural activities involved in outsourcing (like transfer of data, reporting formats etc).

Finalizing and Contract negotiation

Once the service provider matches you expectations, finalization and contract negotiation is the final step.
A service agreement should cover the following:

1. Define the scope of work and level of quality
Define your project requirements up front. Give vendors as much information as you can about what you need and the way in which you need the work done. The level of the quality of services from the vendor should also be clearly defined.

2. Pricing
Depending on your needs you can either opt for hourly price or Full time. Hourly pricing works well where you have small projects that need to be completed on as and when needed basis. Fixed fee works well when you have regular monthly accounting requirements.

3. Payment Terms
You should pay your vendor as you do your staff or other vendors. Don’t accept demands for payment before the work is complete.

4. Length of the contract
Usually it’s a yearly contract that renews automatically unless notified otherwise by either service provider or client. You could negotiate for easier terms in the first few months, when the process is new.

5. Build flexibility into the contract.
As your business needs change, you will want to change the scope of the contract. Build in a process to resolve these issues as they arise. While the outsourcer shouldn’t charge you for every little change, recognize that changes cost money and you may need to pay for such changes as they arise.

Accounting is one of the most major processes in any business. It is the act of recording, verifying and reporting all the assets and liabilities of a company. It is of great use to decision-makers because it helps them take steps in order to reduce their costs and increase profit. Accounting is also a proof of a company’s goodwill and is referred to by auditors monitoring the financial dealings of a company. Always make sure that your accounting functions are in good hands.

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Essentials for a successful Accounting Outsourcing Engagement

The concept of outsourcing accounting is not new and an increased number of firms have realized the benefits of outsourcing their accounting activities. Outsourcing of these accounting services cost much lesser than the amount spent on in-house accounting staff. For companies who do not have the required skill to handle accounting activities properly, outsource accounting services can be of great use.

Despite the benefits outsourcing has in offer some businesses still come short in bringing their venture to success. Engaging with an outsourcing service provider is not that easy a job, various factors determine the success and failure of the project and same is with outsourcing. Having the right component would ensure that the business is running successfully in no time.

Tips for having a successful Accounting Outsourcing Engagement

Accounting Outsourcing Service Provider

There are quite a number of outsourcing companies in the market today who provide almost the same types of services. There is a wide variance in quality levels across service providers. You can find small set-ups (less than 5 people) who charge the lowest accounting charges while provide unreliable and poor quality services. You can also find service providers who are primarily call centres/web development/IT firms with a small accounting set-up. They do not have the capabilities or the skill set to perform accounting services efficiently.

Therefore choosing the right accounting outsourcing service provider is essential. Reliability and quality of work is utmost important. Before choosing the service provider run a pilot project for few weeks and see if the provider matched your expectations. A trusted partner will ensure that your business is in safe hands and running smoothly.

Expectations

Clearly define the scope and schedule for your project. This might seem obvious, but any successful outsourcing engagement always starts with a clear statement of what you are hoping to accomplish. Define your project requirements up front. Give vendors as much information as you can about what you need delivered and the way in which you need the work done. It is best if a company is clear with its expectations of the outsourcing deal because this will help the outsourcing service provider to perform the tasks better.

Communications

When outsourcing some people think that it’s as easy as giving the outsourcing company the requirements and letting them do their thing, and then come back some time later to pick up the finished product. Nothing could be farther from the truth. Outsourcing a project to an offshore company can meet failure due to several reasons, the most common one being lack of communication between you and the service provider. Communication with the accounting outsourcing firm is of utmost importance and you need to be able to interact and communicate in respect to the progress of work, suggestions, issues and clarifications in the assignment etc. Thus the service provider ought to have communication facilities that are satisfactory and must be quickly contacted.

Right strategy and involvement is the key for successful accounting outsourcing engagement. Invest time in the outsourcing engagement to reap fruitful benefits.

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Accounting Outsourcing – For a Better and Brighter Future

No business is free from competition and the foremost objective or need of any business is to earn maximum profits. A known fact in the corporate world is that the accounts department of an organization is the most important department of all. In fact, depending on the performance of the accounts department, the success and the failure of the business is determined. Well experienced personnel’s and good accounting practices are necessary to maintain an accurate set of books which in turn are necessary for taking business decisions.

In today’s tough economy organizations are looking at ways to reduce the costs and be competitive in the market in the coming years. Accounting outsourcing can be seen as a common answer to these questions. Accounting outsourcing has been implemented by many businesses, small, medium and large, with wonderful results. Businesses enjoy the flexibility to grow in near future without overheads.

Everyone is aware of the fact that accounting outsourcing saves a lot of your money. Most of the companies today are outsourcing their accounting activities because it helps them to manage their books in an organized manner at low costs. Savings as high as 50% on the current accounting costs. Thus the money saved can be invested in other aspects of your business. Savings can be utilized to boost sales and marketing efforts of the business.

Accounting outsourcing ensures better quality of service. Most of the service providers hire experienced accountants, CPAs, and MBAs with prior experience in outsourcing accounting and taxation related processes. This ensures that your books are in safe hands.

Accounting outsourcing also comes in handy during seasonal increase in work load; specially during the tax season. Tax season is the ultimate time that everyone gets tensed. Most of the time it is seen that businesses fail to maintain their books throughout the year and begin to worry at the time of taxes. Outsourcing accounting companies can be used easily to manage additional work and complete tax related work.

The decision to outsource can be an easy one. If there is a company or individual that can do it better, faster, and cheaper than you, then you do not want to keep the work in house. Outsourcing has become an accepted business tool worldwide. By turning over business processes to companies that consider these tasks their core competency, organizations now have the ability to become more profitable, more efficient and far more competitive by focusing on the tasks that are most important.

Outsourcing accounting service providers have earned the reputation of being reliable, efficient and trustworthy. You can be assured of security and protection of your data, preventing any misuse or any unintentional leakage of the data from the system. They have a sound security system that makes sure that your valuable data and information are not being accessed by a third party. Outsourcing accounting is an important tool for all businesses to lower costs in these times of falling sales.

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Is Accounting Outsourcing right for your Business!

All prosperous company owners understand the significance of an appropriate accounting system. Accounting is a key function of any business-big or small. Good accounting practices are necessary to maintain an accurate set of books which in turn are necessary for taking business decisions, raising capital or bank loans and of-course for knowing how much money your business is making. Every single company transaction and financial record keeping task must go well, as any problem or mismanagement in these tasks can impact the growth pace of the organization.

The concept of outsourcing your accounting functions to a third party service provider is rapidly gaining momentum. Today not only large companies but small and mid-sized companies are adopting accounting outsourcing for their businesses.

But how will one know that outsourcing accounting is right for their business. Simply answer these basic questions and if you answer is yes, try the concept and decide for yourself.

1) Looking for ways to cut back office cost of your business?
2) Is most of your time being spent on preparing the books of the company?
3) Employee retention

Over the last few years hundreds of thousands of businesses have transferred their accounting functions to a third party service provider. The time you save in managing the bookkeeping function will allow you to spend more time in building relationships with customers, staff and vendors

Overview of the benefits of an Outsourced accounting solution:

• Cost savings- Accounting outsourcing has been considered cost effective savings almost between 40-50%. The expenses of keeping an entire specialized staff for managing accounting work can be more expensive than outsourcing it. Also the client can be assured of well maintained and absolutely accurate financial records being maintained by professional accountants. This enables the client to have ready access to his financial records at a moment’s notice.
• 24/7 access to all your data, irrespective of whether you are in your office, at home or traveling.
• Flexibility to grow- Accounting outsourcing gives the distinct advantage of flexibility to grow without huge investments in human resource and infrastructure.
• Access to specialized skill set of an outsourcing service provider
• Favorable time difference: There is a complementary time differences between India and USA. This ensures that work gets done faster; the time thus saved can be used for concentrating on other matters of your business that need more attention.

Accounting outsourcing has been implemented by several businesses with wonderful results. This includes both the large and small sized companies across diverse industries like manufacturing to retail. Of course, you need to be properly informed about all the aspects related to accounting outsourcing. This includes short-listing what to outsource, selecting right service provider, planning the handover to the service provider, and managing risks.

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