Outsourcing your non-core business functions to third party experts can be an effective strategy to preserve limited capital and scarce management time. Large organizations have for a long time enjoyed the outsourcing benefits for years and now small to mid-sized business are discovering the benefits for themselves and quickly adopting this business model.
Some of the key factors driving the decision to outsource include: reducing overhead and personnel costs, controlling capital expenditures, and engaging experts with specialized skills.
Concentration on your core business.
It should be noted that those functions that are important should not be done at the expense of those that are strategic. By outsourcing your accounting needs you’ll be able to focus more of your efforts on your core business. This will thus translate into growth in the business, rather than spending your critical time building an accounting department which is a cost centre that does not bring in revenue or growth to the business.
There are significant cost savings in outsourcing your bookkeeping and payroll needs. You won’t be paying for benefits such as sick and vacation time, as well as health insurance and retirement. The benefits include reduced office space as there is no need to house the accounting function. There is also a further reduction in employer payroll taxes, no worker’s compensation insurance, no medical insurance or other benefits to pay. There are also no retirement plans, no vacation or sick days to consider and costs of placing classified ads, screening interviews, testing, training and retention of staff.
Most clients typically save between 30-60% over their present costs. Most times, more than all the above are provided to an in house financial controller/accountant, but the next challenge is that there is mostly no sufficient work to keep his hands full for eight hours a day throughout the month. This therefore means that employers are definitely paying for idle capacity and therefore not getting optimal value for their money.
Access to accounting experts & world-class systems.
Your organization will take advantage of ready, trained and experienced professionals at an accounting firm who are experts at accounting and bookkeeping and have proven experience establishing and maintaining the accounting function for different types of businesses.
Due to economies of scale, the business is able to get access to world-class accounting softwares and Entreprise Resource Planning systems (ERPs) and gain access to world-class capabilities.Your organization will avoid the challenges of hiring in-house which sometimes might lead to employees who are not as well-skilled or experienced compared to our professionals whose training is done more systematically and supervisors are more regimented and experienced.
There are also the advisory benefits that accrue to the business by virtue of the experience, knowledge and expertise from the accountancy firm’s professionals in such areas as tax planning and capital structure.
Timely and accurate financial reports.
Without accurate accounting records, it can be difficult to make business decisions with any degree of confidence. By outsourcing the accounting function to an expert firm affords a business in delivering the information required in a timely manner, allowing the business owners to make informed decisions based on accurate information and expert analysis. The business will be able to have upto-date financial reports and summaries as well as provide credible explanations as and when they are required. This might be during the annual statutory audit by the external auditors or when requested by bankers, lenders, shareholders, the Kenya Revenue Authority (KRA) and any other stakeholders. There is also reduced exposure to fraud risks since the critical accountancy function has been outsourced to another business whose reputation is at stake as there now exists a business-to-business relationship. The business can also free up internal resources for other purposes as well as accelerate re-engineering benefits.
Businesses which should consider adopting outsourced accountancy.
Businesses whose core business is not financial or accounting in nature such as engineering & manufacturing concerns, transport & logistics, retail & distribution chains, mining & exploration companies, education & health institutions, hospitality & tourism players, ICT & Media corporations, agricultural & horticultural firms, churches & NGOs, venture capital firms, family businesses, entrepreneurs & consultants.
Bottom line, outsourcing helps you succeed by providing expert, timely and dependable accounting services and financial insight. Outsourcing your accounting needs to a competent firm allows you to achieve cost savings through reduced need for internal bookkeeping staff, helps you to make informed business decisions and gives you time to focus on your core business.