Outsourcing of Accounting of Functions14/10/2022 0 By indiafreenotes
Outsourced accounting is a service which provides a full, accounting department experience for small businesses. An accounting department handles the day-to-day transaction coding, accounts payable, accounts receivable, payroll, management financial reporting and many other services.
Outsourced accounting providers have a full complement of accounting professionals allowing them to offer a small team of accountants at a lower cost to hiring.
Benefits of Outsourced Accounting
Many companies outsource a business process. You may already outsource your payroll process, so you’re familiar with some of the general benefits of outsourcing. Outsourced accounting has similar benefits as well as many others:
Work on your business while we handle your accounting through the use of secured cloud-based accounting software; which enables you to have access to your accounting records from anywhere in the world at any time.
Your accounting is processed as it comes in. You work with us on what you want to do next. We can work on the same data at the same time, ensuring it is current and up-to-date; which puts actionable and current data at your fingertips.
Eliminate Hiring Costs
It’s expensive to hire, train, and maintain an accounting department. Outsourcing the accounting function eliminates hiring and training costs.
Enhance Business Continuity
Valuable knowledge walks out the door when a key accounting personnel leaves your company. The risk of knowledge loss and enhance business continuity with outsourced accounting.
Your accounting data is stored on secured servers in the cloud protecting against physical data loss, and to enhance business continuity and disaster recovery.
Since Accounts Payable & Accounts Receivables are highly manual transactional processes, they are often assigned to entry-level accounting professionals in an in-house model in UK accounting firms. Employee attrition is high in these positions, hence every now & then a new talent must be sourced to fill these roles. This means downtime, which represents its own cost in lost productivity, plus the additional cost of hiring & training new team members to take over the role, all while the already scarce talent market drives the cost of this talent upward. That’s a lot of money & effort dedicated to a routine bookkeeping process.
With an outsourced model, this liability is delegated & will be meticulously handled by outsourcing management. General accounting & financial service workforce for outsourcing industry comprises of qualified accountants who are ACCA(UK) & Chartered Accountancy (India) charter holders who are well versed with IFRS & IAS compliant Accounting practices. They lead teams to ensure uttermost accurate accounting while processing your data.
With the need for timely submission of VAT & Income Tax Returns, it is very pertinent that accounting transactions & bank reconciliations are updated on frequent intervals to avoid missing tight deadlines. Furthermore, if a business operates on high cash inflows & outflows, it becomes very essential that records are accurate & the processing of the same takes place under strict internal controls with proper management. Outsourcing assists you in delegating that authority & responsibility thereby adding another layer of safety with cross verifications to mitigate the risks of fraudulent malpractices.
Timely available reports also enable executives to take accurate decisions for companies with immaculate record keeping. Statement of Equity, cashflow and Financial position can be prepared at ease if outsourced rather than the end minute hustle. Accurate statements aid in availing government benefits, loans and angel investments. They are the benchmarks upon which performance is judged & such meticulous tasks should be entrusted only with experts which the outsourcing industry boasts of.
The General Data Protection Regulation Act (GDPR) has introduced new dimensions to legislative compliance bottleneck for UK companies, particularly with regards to their staff payroll data. Major outsourced accounting firms invest heavily to build network infrastructure that is GDPR ready so as to ensure data security. With NIC contributions to be made every month for each worker, it becomes a cumbersome process specially if it involves wage-rate & time-rate computations. The complexities of processing payroll are becoming more & more integral & to ensure that rising fines by HMRC are not implicated, firms in general remain fully up-to-date with legislative changes on IR35, NIC contributions, Pension contributions & Finance Act-20. Hence, ensuring that our services remain compliant with changes in taxation or payroll legislation. Moreover, for a UK Company, the constant iterations in the Furlough Scheme, new payroll regulations & the Tax Code system would require hiring of a payroll specialist or staff members who need extensive training perform such mundane yet meticulous task. Evidently, the cards seem better on the ‘outsourcing’ table for all grounds.
Qualified Accountants have expertise in SA100, CT600 & SA800 filing & with a proper tax plan tailor-made for every client, their progressive tax savings over time is eminent. Outsourcing industry is in lieu with the MTD system for VAT leaving little to no ground for systematic errors in compliance. Furthermore, outsourcing experts ensure full adherence to the PAYE & the Tax code system. Outsourcing firms tend to go by the rulebook of HMRC guidelines & employees are regularly updated with policy changes. Guidance is often needed in choosing the right VAT schemes & to utilise the maximum deductions available through allowances. The staff at outsourced companies are well acquainted with implications of Finance Act of UK while being extensively trained in the use of softwares such as Xero, Payroll Manager, SAGE, QuickBooks, Spotlight Reporting, IRIS among others. This saves our UK Accounting clients the need of scrounging for skilled staff during busy season or cutting corners.
The complete digitisation of financial & accounting process comes with its own perks. Previously, advisory services such as Cost accounting, Transfer pricing & Performance Measurement were expensive endeavours for companies as these required professional specialisation which came at a hefty consultancy fee. These reports must be undistorted, accurate & unambiguous & they must be customised as per the business operations in line with the goal perspectives. However, creating & analysing these reports is a labour-intensive task & not advisable to be performed by in-house staff to ensure transparency. Opting for advisory services of an outsourcing company to carry out functions such as relevant costing, creating pricing strategies, budgeting, risk analysis & variance analysis for large scale manufacturing units is a low-risk way to innovate your financial process while creating dynamic improvements in business performance and profitability. The desire of efficiency can be fulfilled within the stipulated budgeted expense structure by collaborating with an outsourcing firm.