First published in Business7 on 14 March, 2008.
Financial outsourcing solutions are becoming more sophisticated and businesses that have not considered putting their day-to-day accounting operations into the hands of a third party, should take the time to explore the possibilities.
The internet is the obvious first port of call and one software house has recently launched an international online service through which it aims to pair up clients with accountancy firms who can manage their affairs no matter where they are in the world.
This is all very well, and virtual solutions are certainly one way of passing over the accounting function of a business to a third party. However in looking further afield many firms are ignoring the solutions that lie right under their nose.
The majority of businesses already have a working relationship with an accountancy practice, although too often they do not take the time to explore what they could really get out of that relationship.
This is a mistake and as a matter of course the majority of medium and large accountancy firms now offer a fully managed accounting service to clients, taking control of everything including purchase ledgers, sales ledgers, credit control, payrolls and management accounts.
Before looking at the advantages of outsourcing per se, it is worth looking at the benefits of working with a firm where a relationship already exists.
In such a situation there is an understanding between both parties of how the business works and the way in which it is structured. While the majority of the work may be done remotely, having a personal relationship also makes it very much easier to deal with any issues that may arise.
On an ongoing basis, meetings between the two parties will help evolve the relationship further, improving the flow of information.
There is little doubt that for the majority of businesses, outsourcing their finance and accounting divisions will deliver savings of up to 20% on their current spend in this area. This saving should be realised within a year and switching from an inhouse to an outsourced model can be done in a matter of weeks.
Relieving a business of its finance department will let it focus on its core operation. Management can also rest easy in the knowledge that the work has been passed to a firm set up specifically for the purpose of accounting and so more efficient processes and practices are in place and those carrying out the work are on top of the very latest legislative and legal issues.
For any business employing its own financial controllers and accountants, there are also the human resource issues attached to having these staff on the payroll. Like any other member of staff they will be entitled to holidays and sick pay while employers will also have to meet the cost of pension contributions and National Insurance payments.
Then there are the issues created by trying to replace a credit controller who has gone on maternity leave or a cashier that is unable to work because of a long-term illness. Replacing people in these situations can be a major issue for smaller firms and by outsourcing the work they do, firms also pass all of these problems on to the third party.
No one wants to urge a firm down the road to redundancies, but equally every business must be self conscious enough to assess how it could operate more efficiently and consider the options available.
For those who do decide to outsource their accounting operations, there will in many instances be the opportunity to transfer a number of staff over to the professional firm being handed the reigns, although clearly this will not be an option for those giving their business to a virtual online accountant, based in a far flung location.
Many directors in companies across the country will perhaps worry that outsourcing their everyday accounting function will see them lose a degree of control. In truth the reverse is true and by doing the work more efficiently and reporting as regularly as clients wish, they actually have access to well prepared, fully transparent data that will better help them manage their cash flow on a daily basis and improve their financial health in the long-term.
On top of this the confidentiality created by outsourcing the accounting department can also improve office politics and makes it much easier to reward staff as directors see fit. It may not seem like an obvious benefit, but numerous small firms have suffered from the discord and frustration created by loose tongues in the accounting office, which have let on how much various members of staff are being paid.
For those choosing to outsource their finance division, working with an established accounting partner will enable both parties to come to the best solution for that particular business. Whether this sees the work carried out over the internet, on sight in the company’s own offices or offsite at those of the accountant, getting the balance right is important in making sure the arrangement works effectively.
For those who have simply ignored the option in the past, now is the time to reconsider.
Robert Kerr is Managing Partner at French Duncan, Chartered Accountants
Back to In the News
Top
|
|
Recruitment | Contact Us | Home |