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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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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Accounting Outsourcing- Cost-Effective Means of Handling Accounting Tasks

No doubt, accounting tends to be one of the most tedious and tiring aspects of the business executions. It hardly matters that whether the respective business organization is a large firm or a small company which is still on its way to mark its presence. What exactly matters is that the entire process of accounting needs to be swift, flawless and properly managed. At the same time, accounting cannot be done in the desired manner, if experience and expertise are lacking.

Therefore choosing the right person or service provider is essential. Accounting outsourcing companies can be of help in the present scenario. Apart from the education and experience most service providers are well equipped with latest technology and infrastructure required to manage an outsourcing solution. Employing accounting outsourcing firms will also aid in diminishing the investment of revenues. It’s not only dollars which are saved but it also provides the opportunity of potential development.

Accounting is an important and strategic move because accounting is as important as any other business activity. Therefore, it is important to consider many things before you actually take the decision to outsource accounting. The most important thing here is to find out why! Is it necessary to outsource the accounting of a company? Cutting cost and increasing productivity is the most common reasons for firms to outsource. The next thing is to fully discover the actual credential (ask for references) of the supplier in question. It has to be confirmed that the supplier is in a condition to deliver the kind of service that it has offered. The next step would include process migration, if possible ask for a trial phase to test and check the services of the service provider. And finally go live, once you are satisfied.

While cost saving is the major criteria in all the financial and accounting outsourcing deals, other business benefits like accounting process efficiency and innovation can be achieved from the outsource vendors. Accounting outsourcing service providers are highly motivated to drive down unit cost and improve process innovation through technology and accounting process standardization. Both businesses and the accounting outsourcing service providers should see technology as the key enabler in accounting process innovation beyond traditional cost reduction. As the outsource accounting market matures, more businesses will use the concept of accounting outsourcing for all their higher-end accounting outsource needs.

Accounting outsourcing has been implemented by several businesses with wonderful results. This includes both the large and small sized companies across industries like manufacturing, retail, real estate, logistics etc. So, it is recommended to outsource your accounting services in order to reap more profits. Internet is an appropriate medium to carry out your search of accounting outsourcing firms for your company. The service will definitely be less pricey and will be lucrative for your organization in the long run.

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Finance and Accounting Outsourcing India

In today’s economic pressures and competitive demands companies are required to more aggressively evaluate options to reduce costs and increase value from their back office functions. To stay competitive and specially during the economic recession business executives have to aggressively pursue cost savings and productivity enhancement options and stay ahead. The pressure of the current market forces and the price wars have seen many companies to reduce cost by outsourcing its non-core activities to low wage service providers. A cost cut of any manner can change the company’s position in the market. Companies with low cost leadership are able to gain the potential market share. Business process outsourcing as a strategic tool has been accepted as one of the most effective means to achieve these twin goals. Most companies now consider finance and accounting outsourcing as an important part of their outsourcing strategy.

Accounting Outsourcing and other back office activities allows firms to focus on the activities they do best and improve their overall performance and, transferring the responsibilities of accounting activities to specialized vendors can help reduce the cost and improve the performance of such activities. Accounting Outsourcing is generally considered as a very powerful tool to cut costs and improve performance. The principal idea behind accounting outsourcing is to obtain services of specialist who will perform the function better at a lower cost.

Accounting Outsourcing and India

A large number of companies are outsourcing their accounting functions to India. Fortune 500 companies such as: GE, Bank of America and American Express for example have formed partnerships with Indian firms. A recent survey found that almost two out of five Fortune 500 companies currently outsource some of their back office requirements to India. The reason for this according to most research is that it saves time, money, and better work ethics; thus, India is ahead of competitors such as China. There are many reasons for India getting the Lion share of outsourcing. Cost is the chief reason for sending business to India. But the country’s abundant manpower has made India a target destination for companies to back end their operations in India.

Other reasons for companies outsourcing to India are:

– Labor Pool – graduating 75,000 English speaking accounting professionals annually
– Cost advantage – US – $2500 a month versus India – $800-$1000
– Time difference – 10 hour time difference allows 24-hour service
– Thus because of its labor pool, lower cost, friendly government policies, infrastructure investment, and expertise, India is on a fast track to become a developed country.

Conclusion

Hence, hiring outsourced accounting firm is a good idea, as it not only provides effective work but also decreases the burden on the person dealing with the accounts and can focus on high end activities like consulting and tax advisory services. In fact, many small and large companies have visualized the importance and need of outsourcing accounting as it cuts down the money and time, both simultaneously. Outsourcing accounting has become a vital part of various companies for profitable reasons. With the help of outsourced accounting, business owner will be able to get a clearer picture of his business in the terms of profits and losses. Moreover, he will be able to have details on the position of business in the market.

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