Friday, June 27, 2008

OUTSOURCING YOUR BOOKS - The smarter way to save money

The importance of maintaining proper books and accounts is not just to file proper taxes, but essential to check the financial pulse of your business. The survival of your business depends on efficient, timely, well ordered financial reports providing timely updates and alerts on problem areas of business. Correct diagnosis and subsequent remedies depends on identifying the problem and finding right solution at the right time.

Although Bookkeeping and Accounting is not as hard as Rocket Science that would require extremely qualified professionals, it does require necessary skills, analytical ability, and complete concentration to maintain accuracy to avoid serious and expensive problems. This might translate for most of us into being tedious, boring, and time consuming frustrating task. However, this bull needs to be taken by its horns. It’s a necessary evil, which is why services of bookkeeper/accountant/CPA are sought.

But is there a smarter way to tackle your books and accounts?

It may sound noise to some ears, but Outsourcing can really work for even the small businesses too. If it means significant cost savings, you can always argue that it is a default advantage and well touted by all vendors. But there are few other not so obvious benefits too.

It is no secret that large companies have been sub-contracting or outsourcing their non-core functions to expert vendors to take advantage of economies of scale. This option was not readily available to small firms earlier. But economic slump is inducing more and more companies to look at this option. And if you have a local Outsourcing vendor who can provide an on demand one-to-one support, most of your fears regarding Outsourcing can be put to rest.

The obvious advantages of outsourcing accounting, bookkeeping and tax services are::..
· Pay only for reasonable time taken to render services. Rates are generally charged on hourly
· Saves up to 40-50% of operational costs as this does not require infrastructure or related support
· Quick turnaround of work
· 24x7 online access to your books and records
· Flexible and fully scalable modules
· Move towards a paperless office
· Reduces burden of staff and who can then be channelized to other productive activities
· Last but not the least, more time to strategize and concentrate on core functions

The not so obvious benefits of outsourcing are::..
· Access to ‘on demand’ qualified talent
· Access to service and client oriented vendors, since their existence depends on satisfying you.
· Flexibility towards changes and improvements demanded by your growing business which might be difficult to implement with in-house staff who are prone to resisting changes.
· No headache of retaining staff or training newbies. Time saved equals to money saved at the end of the day
· No requirements of any additional capital investment so there is reduction in total investment risk. More opportunities to invest in income generating areas.
· Outsource additional burden during busy time without adding costs of hiring new people.
· Save on add on costs like sick leave, benefits, bonus, promotions, training, house allowances etc without compromising on quality while getting work done faster.

However before jumping the band wagon and enjoying all the fruits from outsourcing, some essential points for consideration:
· Research the vendor thoroughly. Check credentials from other clients, networking and referral sources
· Partner with vendors having ethics and integrity instead of just being cost-oriented
· Vendor must be conversant with bookkeeping and accounting standards of your country
· Check the security and confidentiality policy of the vendor
· Check the quality standards and non-performance penalty clause of vendor
· Check how and where the disputes arising will be resolved
· Check whether your liability insurance covers outsourcing

The decision ultimately depends on business owner’s choice.

Do what is more appropriate for your company and reap long term benefits. The ultimate benefit of outsourcing if done right, leads to significant improvements in efficiency, cost savings and growth in the core functions of the business.

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