WHY OUTSOURCE YOUR ACCOUNTING FUNCTIONS?
Companies mainly chose to outsource their accounting and bookkeeping functions for the following reasons:
Small and medium enterprises (“SME”) will usually have a smaller capital which leads to the need to prioritize their plans for business expansion and growth as well as training, research and development while focusing less on the administrative costs.
Ideally, small companies would like to save as much cost on the admin cost and expenses, especially on parts of the company operations such as accounting and tax and its compliance .
Rather than self employing a team of accountants, or rely on one overworked employee that has multiple duties , it is obvious that it is more beneficial to companies to outsource their accounting functions and benefit from having the assistance of an entire team of professionally accredited accountants.
This way companies can save trouble by avoiding possibility of employee that may not have enough experience on the accounting matters and save more cost from hiring multiple accountants which requires more wages paid. Furthermore, outsourcing to a professional body can help companies avoid penalties from compliance issue as well as gain useful insights from accurate accounting reports.
Temporary shortfall in manpower
Retrenchment, maternity leave, temporary leave of absence, or resignation of employees may cause a sudden shortage of labor in the company. As these circumstances are usually temporary, companies may not necessarily want to hire a new employee immediately or be able to find a replacement as quickly as they preferred.
Therefore, companies can sought for professional accounting firms to provide them secondment services, where their experienced staff can step in during this interim period. This ensures flexibility and assurance to the company to have someone reliable to do their accounting jobs when problems arise. Companies can also save additional cost from hiring a short-term contract accountant and use this alternative on annual basis during the peak period of the reporting season.
Merger and Acquisition
In instances where an SME goes through a merger or acquisition, the existing accounting team may require some additional assistance in adapting to consolidating the group accounts, installation of new accounting software, clearing of backlog accounts etc.
Additional cost may incurred to acquire and implement new accounting system as well as time invest to learn and train employee to be familiar with the system. In these situations, additional assistance may be temporarily required especially during peak season and there is a pending due date before an audit of the company is completed for the merger and acquisition exercise.
Companies may not have the luxury of recruiting new individuals with experience to assist them. Therefore, it is an alternative to seek for outsource services for the accounting matter of the company.
General Accounting Problems
In cases that new employees entering the company will need subsequent transition of the work from previous employee, it is then the company require to invest extensive time and effort to look through the records and reconstruct past accounts, clear backlog accounts, resolve general accounting related problems and even forensic accounting in situations where fraud may be suspected.
Given that the team has to continue with their day-to-day functions, the company may wish to seek additional assistance to resolve these issues quickly, particularly if the company is at risk of being late to comply with the annual requirement to submit its accounts to ACRA.
Indeed, the penalties for non-compliance are significant. The Companies’ Act provides that the company and every officer of the company (including its directors and company secretary) who are in default shall be liable on conviction to a fine. Hence, it would be prudent for companies to ensure that bookkeeping records are in order and accounts are prepared on a timely basis.
On other note. any financial statements submitted to ACRA will become public information, in which members from the public can simply purchase them from ACRA’s website. While it may not seem to have a great impact on a young SME now, it may have a significant impact on its future
Additional benefits and advantages of outsourcing your accounting services
In addition to cost saving and avoidance of potential trouble, various intangible benefits that your company and your employees can enjoy are professional and operational advice provided by the accounting firm through its experience staff and insightful.
In addition, their accountants are exposed to a wide range of companies in different industries, all with unique circumstances; and can leverage off their experience to advise clients.
Particularly in situations where a company has relatively inexperienced staff, outsourcing part of the company’s accounting and bookkeeping functions can help with reducing the workload, as well as providing its employees with sufficient time to learn on the job.
Reputable accounting firm can also provide regular updates on changes in the market and advise business owner on how they can benefit from the various tax incentives and other pro-business initiatives aimed at helping entrepreneurs and SMEs compete in the local and international markets.
Outsource your accounting work to us today and do not let the bookkeeping and compliance issues hinder the operations of your company which delays the opportunity for business growth. Business owner can make swift efficient decision based on the insights of the accounts and execute proper strategy to expand the business and get extra advantages to prevent competitors from gaining on market share. A proper maintenance of books and accounts is essential and can also smoothen the operational flow of the company in terms of payment to suppliers and vendors, prompt wages and expenses clearance to motivate employees.
Failure to maintain and organised the accounts and books may cause serious harm to your company. Therefore it is wise to look for an accounting outsource service if the company is not willing or unable to afford its own accounting department especially if your company is required to submit its financial statements to ACRA annually under the Companies Act of Singapore.