Outsourced accounting and taxation services industry has grown manifold during the last few years traversing through multiple challenges and overcoming geological and trust deficit barriers. Every transaction or process has benefits as well as limitations, but the benefits outweigh the limitations and below are key benefits:
Cost Reduction
Outsourcing reduces cost substantially since professional firms can charge business owners lesser because their cost is relatively low. For instance, if work is outsourced to Indian professional firm, its cost of resources will be lesser as compared to USA, UK, Europe and many other countries and hence they can charge less for the same level of service assurance. Also, professional firms can deploy their human resources for multiple clients and hence its cost attributed to each client even after significant profits will be far lesser.
Variable Cost (Pay as you go)
Inhouse finance and accounts team requires a mix of skilled people to manage and often not all these resources are utilized optimally, but business owners end up paying a huge amount. On the top of it, engaging professional firms for certain aspects like audit and compliances is inevitable. For Small and Medium Enterprises (SME) or Freelancers, it is viable to pay for the work done based on hours or assignment. The variable payment is less burdensome, and costs can be incurred in line with the growth of the business.
Professional Management
Business Owners manage the whole of the business and therefore cannot be expected to manage one particular aspect with full time and efforts, since they need to prioritize. Often seen, finance and accounts does not generate revenue and hence categorized as relatively unimportant which may lead to financial losses in terms of fines and penalties, late or non-recovery of Accounts Receivable, etc. Outsourced accounting and taxation services focuses on managing finance and accounts, computing payrolls and complying tax and other laws. Knowledge, experience and frequency of volume that professional firms manage give them a competitive edge which assures business owners that their finance and accounts are managed professionally in the best manner.
Expert Services
Business owners may end up compromising with lesser skilled resource to manage the accounting due to cost or lesser work quantum etc. With outsourced accounts and taxation, for all activities be it day to day financial transaction, periodic compliances, AR and AP Management or management information reports, business owners can have access to highly skilled workforce relevant to their operations.
Room for focus on Core Business Activities
Registering orders, processing invoices, making payments, chasing accounts receivables, managing accounts payables is all important in business. But is it fair for the business owners to focus on this compromising on their core business activities, like production, sales and marketing, public relations etc. in this era of fast-growing economies. Outsourcing, these repetitive tasks can leave a room for the business owners to channelize more time and energy on the activities that is essential for the growth of business.
Smooth Financial Ecosystem
Managing human resources and devising internal process for finance and accounts is not easy as it is dynamic since change in law, employees, size of business, operations. For any business, it is very important that a complete financial ecosystem is developed, monitored and upgraded so that all processes run smoothly, and all the stakeholders get the desired output. Outsourcing helps a lot as the ecosystem changes are managed by professionals and hence hassle free.
Low Infrastructure Cost and Management
Managing larger number of human resources comes with a lot of responsibility in terms of infrastructure like real estate, furniture, laptops, etc. When outsourced, only basic expenses like software utilities cost are all business owners generally worry for as entire accounts team is working for your business virtually.