The Disadvantages of Handling Accounting Functions In-House and the Ideal Solution to These Problems

For any business, their operations are the most important aspect, but ensuring smooth operations is possible only if the accounts are maintained properly. Accounting is the accurate financial information that is essential for taking business decisions accurately and timely. Without a clear understanding of available reserves, cash flow, margins etc., no company can function well, forget about expanding the business.

Some business owners like to keep the accounting functions in-house, which is not a very ideal situation. Let’s see why:

Sucks Up the Precious Time

The budget constraints of small companies don’t allow them to hire staff for the tax compliance functions. Thus, those who should be concentrating on the core aspects of the business take up the additional responsibility of account keeping. This puts an extra workload on them and the precious time that should have been put in issues related to the company’s core competency gets sucked up in keeping the accounts.

Hiring Experts Is Not Possible

Even if a company hires a person for accounting functions, hiring different types of experts is neither possible nor feasible. As the company grows and earns, the complexity of managing the money also increases. Thus, having a single person taking all the responsibility of staying compliant and managing all accounting functions can lead to hiccups, mistakes and problems.

Difficulty in Detecting Fraudulent Activities

Any business employing less than 100 people and keeping the accounting functions in-house is prone to fraudulent activities. This is because they generally do not have a controller or a CFO and any abnormal activity in transaction or billing data doesn’t get noticed or caught.

How Outsourcing Helps in Eliminating These Problems?

 The ideal solution for all the above downsides of handling accounting operations in-house is outsourcing. Here’s how outsourcing helps in eliminating these problems:

• The in-house resources can spend their time on activities that are their expertise areas rather than struggling with the accounting functions.

• For a company, the requirements keep coming up on various fronts and hiring all sorts of experts is totally impossible. For example, a company might decide to merge with or acquire any other entity. In such a scenario, a person with sound knowledge of mergers and acquisitions is required. All sorts of experts are available with the outsourced agencies and the company can benefit from their expertise as and when required.

• When the accounting process is outsourced, the fraudulent signs can be detected in external audits. The outsourcing agencies also make sure to implement proper fraud protection control measures.

Given the numerous benefits that outsourcing the accounting functions provides, more and more companies are going for it. It’s time that you also outsource your company’s accounting functions!