General Trends Regarding Accounting Services
Although every business in some form or another makes use of accounting services, outsourcing part or all accounting and bookkeeping functions has become a popular way to reduce management costs. Of course, there are many benefits of outsourcing accounting services. Gauteng companies, big and small, have come to realise such over the years and the trend is expected to continue throughout the next decade or so.
Indeed, accounting was one of the first functions that were outsourced, most probably because of the need for accuracy, while the time consuming nature of the function may also be the reason. The accounting sector has grown with more than 7% last year, while the world economy still struggled from the aftermath of a crippling recession.
It has been said that companies started to make use of third party accounting services, also in Gauteng which the business hub province of South Africa, simply because they wanted to reduce costs related to office functions. That may be true, but more and more companies want additional benefits and thus look for value-added accounting services.
The accounting firms now have to detail the services they offer and explain how such benefit their clients. Cost savings are still important, but firms want to know how they can improve accuracy, get financial expert advice, benefit from on-time financial reporting, minimise the risk of internal fraud and improve the integrity of their books.
Access to Technology
One of the most important benefits, apart from cost savings, is the ability to have access to the latest, most advanced and relevant technologies that can streamline bookkeeping and accounting, while also improving business decision-making. Many smaller companies cannot afford to constantly upgrade and maintain their electronic bookkeeping services. With outsourcing the function they have the technology at hand and can ensure real-time monitoring. No longer do small companies have to invest in complex and expensive IT departments to maintain their accounting systems. They can outsource the processes and have the third party service providers manage such to minimise the risk of data loss, theft and compromises.
Repetitive Tasks and High-End Accounting Functions
At the start of the outsourcing trend, companies simply used the accounting firms to manage the repetitive and time consuming tasks. Now clients look to companies for advance functions such as budget forecasts, projections, analysis and even internal audits, as well as tax structuring advice.
Meeting Reporting Standards
The global trend towards compliance with international standards for processes including accounting, reporting, quality, and auditing has made it necessary for companies to get in line with international practices. With outsourcing they are able to streamline functions to ensure compliance. The outsourced accounting firms ensure standardisation across board, making it easier to maintain compliance with international standards.
Access to Expert Advice
Not to be overlooked, having access to expert advice regarding financial reporting, bookkeeping and decision-making regarding tax structuring in addition to payroll, enable firms to keep a competitive edge without having to be concerned about possible company brain drain. Where firms employ people for the above functions, they invest considerably in these people. When the employees leave the firms immediately face the following:
When making use of external accounting services, companies benefit from continuity of services and thus don’t have to deal with the above risks.
Hired employees cannot be everywhere at once. With outsourcing companies benefit from services being available throughout the country when they need such and they are not limited to one province such as Gauteng or the Western Cape.
Types of Services Offered
The accounting functions now on offer range from the compilation of financial statements to independent audits. The traditional functions, such as bookkeeping which include bank reconciliations, cash books, General Ledger and month-end recording make up a large part of the outsourced accounting services. However, other services, such as debtor ledger management where monthly invoicing and debt collection services are offered, and the supplier ledger management are also handled by the outsourced companies. From budgeting and forecasting to online accounting solutions are among the popular outsourced functions.
The general trend suggests that companies are ready to focus on the activities that generate profit and provide them with a competitive edge rather than focussing on bookkeeping and accounting practices. Outsourcing, it seems, will be the way to go in future.