outsourced accounting and small business...

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The entire content of this newsletter is solely for the purpose of information and have been prepared on the basis of relevant provisions as per the information existing at the time of preparation. It doesn’t constitute professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any error or omissions. You are kindly requested to verify and confirm the updates before acting on any information provided herein above.

Outsourced Accounting

AND

Small Business Services Are they right for your business or organization?

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These days, accounting and finance

professionals are in high demand, and

that reality has made it increasingly

difficult for small and midsize businesses

to attract and retain qualified

professionals. While this challenge

extends across the organizational

spectrum, smaller enterprises, in

particular, may find it cost prohibitive to

hire a full-time CFO, controller or other

accounting professional.

Whether you are just starting your business or it is well-established, the experience, insights and expertise of qualified accounting and finance professionals are essential to maintaining smooth operations, facilitating profitability, enabling future growth, and ensuring compliance with federal, state and local tax and accounting requirements.

More and more, small and midsize businesses are turning to outsourced accounting and small business services providers to fill this need. The reasons are clear:

Qualified accounting and finance service providers from established and respected organizations offer a significant depth and breadth of experience and operational expertise.

Accounting services can be customized to meet specialized needs.

In many cases (if not the majority), these services offer enormous cost savings over a full-time CFO, controller or bookkeeper.

In select cases, the providing organization offers supporting consulting services (e.g., business consulting, strategic planning, valuation and litigation, audit and assurance, technology solutions) that provide holistic organizational benefits.

Qualified accounting and finance

professionals often identify and

recommend valuable process

improvements to the contracting

organization as a result of their past

experiences in similar organizational

settings.

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This e-book was written to provide you with a broad snapshot of outsourced accounting services—what they are, why they are important in small and midsize business settings, how they measure up against in-house CFOs, controllers and bookkeepers and what to look for in a service provider.

We hope you find this e-book useful as you think about your business accounting challenges and consider strategies to meet those challenges. Our Accountingbuzz Outsourced Accounting team is always eager to answer your questions or discuss our methodology in more detail. We have included our contact information at the conclusion of this e-book.

CONTENTS

CHAPTER ONE:

Understanding the Broad Roles and Responsibilities of Accounting Professionals for Small Businesses and Organizations

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CHAPTER TWO:

A Comparison of In-House Accounting Professionals vs. Outsourced Accounting Services Providers

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CHAPTER THREE:

Could Your Business Benefit from Outsourced Accounting Services?

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CHAPTER FOUR:

What to Look for in an Outsourced Accounting Services Provider

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CONCLUSION & CONTACTS

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Understanding the Broad Roles and Responsibilities of Accounting Professionals for Small Businesses and Organizations In our Introduction, we asserted that high demand for accounting and finance professionals has made it more and more challenging for small and midsize businesses to attract and retain qualified professionals. This challenge is particularly daunting for smaller businesses that may find it cost prohibitive to hire a full-time CFO, controller or bookkeeper. If you own or operate a small or midsize business or organization, then you likely have a basic and functional idea of accounting and financial duties that are necessary to run the business. What may surprise you is the breadth of responsibilities that fall under this broad scope.

Consider the widely accepted daily duties of today’s accounting and finance professionals, be they CFOs, controllers or bookkeepers:

Manage purchasing and accounts payable processes

Manage vendor contracts

Oversee and/or collaborate with the payroll staff or third-party service provider on payroll functions

Manage cash flow (and provide management with weekly cash position and forecast)

Communicate with bankers and/or lenders

Oversee revenue cycle outcomes (e.g., collections, forecasting, invoicing)

Maintain general ledger and account reconciliations

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Develop and implement “best practice” systems and procedures for all accounting functions

Maintain the accounting software application

Compile financial statements for management, the board (if applicable), lenders (if applicable) and any other designated third parties

Provide supplemental reports, and analyze financial statements and key metrics as requested by management (e.g., analysis of budget variances, board-required documents)

Assist management with annual operating budget development

Assist management with review of contracts as requested

Advise management on any matters that are financial in nature

Develop and deploy a monthly close process— i.e., general ledger review

Facilitate the audit process

Provide checks and balances for existing staff with regard to any financial matters

Facilitate business tax compliance (e.g., GST, Income Tax)

Maintain fixed asset schedules

Perform additional reporting for financial institutions as needed

Perform industry-specific reporting

Online bill paying and check writing

Act as a key advisor to owner(s) providing data analysis and input in corporate/ organizational strategy

As you can see, many crucial duties fall on an accounting professional’s plate each day. Some small and midsize businesses search far and wide to attract full-time professionals. Yet as with any business discipline, it’s tough to identify, attract and retain an individual who possesses all the requisite skills necessary for these positions—and do so at a reasonable total cost. That’s why an increasing number of small and midsize businesses are turning to outsourced accounting services from established and respected providers.

In our next chapter, we’ll compare the benefits and costs of utilizing in-house professionals versus outsourced accounting services from an established and respected industry provider.

DID YOU KNOW …

Eighty-two percent of small businesses fail due to poor cash flow management skills and poor understanding of cash flow.

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A Comparison of In-House Accounting Professionals vs. Outsourced Accounting Services Providers

In our last chapter, we outlined the many roles and responsibilities that can fall on the plates of accounting professionals. That said, no two businesses are exactly alike, and circumstances may make it more advantageous to retain full- or part-time in-house professionals, rather than outsource these functions.

In this chapter, we present both sides of the coin, citing benefits of full- or part-time in-house accounting services professionals versus outsourced talent.

Benefits of full- or part-time IN-HOUSE accounting professional(s):

Physical presence: Sometimes it’s just good to have someone with financial skills and capabilities around on a regular basis—whether it’s to answer questions, act as a sounding board, provide insights

or, depending on the individual, project a sense of confidence and underscore organizational stability. Potential enhancement of organizational culture: Again, depending on the personality of the individual involved, an in-house accounting professional could potentially benefit the organization’s culture in several ways. That said, an individual with negative personality traits could have the opposite effect—and it’s worth noting that the negative effects associated with this are usually much more impactful on a small or midsize business than positive effects.

Organizational size: A full- or part-time staff member may be the best option if you determine you need full-time support.

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Multifunctional support: This position may also provide office management, HR, marketing and other support functions. While that can be of benefit, wearing multiple hats can result in lack of specialized knowledge and expertise in a given area.

Benefits of OUTSOURCED accounting providers:

Outside expertise/industry specialization: Accounting professionals from established and respected providers offer a depth and breadth of expertise that, simply put, is a rare commodity. Established outsourced professionals often have worked for years – decades even – in a variety of business and operational settings. Their experience and expertise can be enormously beneficial to businesses large and small.

Customized services: Outsourced accounting services are 100 percent customized to meet the specialized needs of every organization. You purchase and utilize only those services you need, for the specific time in which they are needed. No more, no less.

Experience and insights to meet all reporting requirements amidst a complex and evolving regulatory landscape: Accounting professionals from established and respected providers are part of organizations that stay on top of the latest industry trends, shifts and legislative actions. This can potentially enable your business to anticipate changes before they happen, and plan accordingly.

Cost savings on several levels: This includes human resources (e.g., salary

and benefits, training, turnover), audit and tax time and the corresponding expense—provided you don’t have the need for full-time staff.

Knowledge of, and experience with, all widely used accounting and finance platforms: You’ll gain the benefit of an accounting professional who knows the way around accounting and finance systems. This means a much shorter learning curve for your business—and more time devoted to performing essential duties.

Accountability: Accounting professionals from established and respected providers are accountable not only to your business but to their employer as well. This double layer of accountability serves everyone well; to you, it provides peace of mind that the professional is meeting her/his obligations. To the outside provider organization, the professional’s solid job performance underscores the value of their services and strengthens their reputation in the marketplace.

Bench strength: If your in-house CFO, controller or bookkeeper is absent for any reason, your business could face real problems. With outsourced support, the appropriate resources can fill in as needed. Time savings: The hiring process is inherently time-consuming; retaining an outside provider of accounting services is a much more time-efficient task.

Sensitivity to book and tax financials: Professionals from respected outsourced accounting services providers know the difference between book and tax financials and can bridge that gap easier so that you consider tax implications in

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running your business—but you don’t run it solely based on tax implications alone.

Confidentiality of business data: Professionals from respected accounting services providers will keep all business data confidential and secure including business matters, and compensation and benefits (which also includes that of the owner(s) and management).

Expertise to grow with your business: When you outsource your financial

requirements to a firm with broad specialties, that firm can grow with yours—through a greater depth of services to deeper knowledge and experience with complex tax and accounting matters. In our next chapter, we offer information to help you decide if your business or organization could benefit from outsourced accounting services

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Could Your Business Benefit from Outsourced Accounting Services?

In our last chapter, we highlighted the various benefits of in-house accounting services professionals and outsourced talent. Now, we’d like to pose some questions that can help you further determine if outsourced accounting services are right for your business.

Take a bird’s-eye view of your organization, think through your financial, reporting and regulatory challenges, consider your place in the broader market and ask yourself the following:

Do you need a CFO-level decision-maker to manage financial operations?

Do you need a resource to help you comply with financial reporting requirements?

Are you not yet ready to bring someone on full-time?

Do budgetary constraints hamper your ability to bring someone on, either full- or part-time?

Do you seek to augment existing business and accounting staff?

Are too much time, energy and resources being taken up by you or another key person with these types of tasks?

Are you comfortable that you’re capturing all your financial data accurately—i.e., recording revenues and expenses accurately?

Are you reporting the key metrics necessary to make informed business decisions?

Is your business being run efficiently and profitably; are costs streamlined to the extent they can and should be? If your answer to any of these questions raises a red flag, that’s one red flag too many—and it indeed points to outsourced accounting services as an obvious solution to the problem. Operating a business is challenging enough these days; having to deal with just one of the above issues – let alone several – can severely strain your business and its

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finances, and put it at a significant disadvantage in an increasingly competitive market.

Utilizing outsourced accounting services from established and respected providers can help prevent these issues from ever arising. Furthermore, it can position your

business to seize opportunities for growth. Most important, it can help to maximize your efforts to deliver superior products and/or services to your customers and stakeholders.

In our next chapter, we’ll offer tips on what to look for in a outsourced accounting services provider.

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What to Look for in an Outsourced Accounting Services Provider If you’ve read through this e-book so far and determined that outsourced accounting services could potentially be a wise move for your business, we think you’ll find it helpful to know what to look for in a qualified provider of these services.

In this chapter, we provide a quick rundown of some of the key qualities that define best-in-class outsourced accounting services.

Each business is different, so each one may require specialized skills or experience. Yet in our many years of providing outsourced accounting services to small and midsize businesses, medical practices, nonprofit organizations, management companies and other entities throughout India, we’ve found that

most seek professionals with the following qualities:

In-depth knowledge: The provider understands the challenges of small and midsize business owners and organizational leaders, as they work with them every day.

Depth of resources: This includes reliable, accurate, on-time data.

Competitive pricing: Services are priced with the business owner’s or organizational leader’s needs in mind.

Flexibility: The provider’s services are tailored to fit client budgets and requirements.

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Breadth of capabilities and service offerings: The provider should be able to work as an extension of the client team/ department, or fill broad roles as needed.

Breadth of service/product offerings: This includes QuickBooks (and the requisite training), cloud hosting services, accounting services, CFO services, as well as consulting services and capabilities for all these offerings.

Culture fit: This applies to the cultures of your organization and the firm you hire, and it also applies to the individual or individuals who work daily with the client.

Articulation of work scope: The provider should clearly articulate the scope of services to be provided at the outset of the engagement—no surprises. Reputation: The provider’s reputation, in the business community, and the community at large, should be beyond reproach.

Adherence to external requirements: Services are designed to ensure compliance with Central, state and local reporting requirements.

Technology expertise: When an outsourced accounting professional understands business technology, accounting systems and data security solutions, the learning curve becomes much shorter—and that leaves more time for performing essential accounting duties.

Availability and accessibility: The outsourced accounting services provider you utilize should conform her/his schedule to your organization’s internal time framework, and should be accessible as needed to perform essential duties, answer questions, or handle issues if or when they arise.

References from other providers: The outsourced accounting services provider should be an established organization that is widely respected and relies on several industry organizations to vouch for the quality of its services.

Accountability: As mentioned before, outsourced accounting services professionals from established and respected providers are accountable not only to your business, but to their employer. This double layer of accountability serves everyone well; to you, it provides peace of mind that the professional is meeting her/his obligations. To the outside provider, the professional’s solid job performance underscores the value of their services and strengthens their reputation in the marketplace.

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Questions to Ask Prospective Providers of Outsourced Accounting Services

It’s critical to have strong financial and accounting systems in place—and leverage professionals who are capable of using them to ensure efficient and profitable operations. To help you identify the right talent, consider the following questions as part of your interview process:

1. Do you have an expertise in my industry?

2. Do you keep up to date with the current technology?

3. How do you keep up to date with regulations?

4. How do you train your people?

5. How experienced is your staff—e.g., number of years, industries?

6. How many CAs do you have—what’s the level of experience?

7. What is the level of customization you offer in your outsourced accounting services— do you only offer set packages, or are services customizable?

8. How accessible are you when questions, issues or concerns arise?

9. What is the turnaround time on all deliverables?

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Outsourced Accounting Services Your First Step Begins With a Conversation

Outsourced accounting services can help your business realize significant benefits from top to bottom. We hope you found this e-book useful as you think through the financial and operational challenges in your business, and consider how outsourced accounting services can help address those challenges.

The team of outsourced accounting professionals at Accountingbuzz is available to assist you with any needs you may have related to outsourced accounting services implementation. We provide these services for businesses and organizations in an array of industries …

We know the accounting and small business landscapes.

We understand the challenges small and midsize businesses face.

We develop and deploy customized programs for businesses like yours.

We are always available to answer questions, discuss issues or help you and your staff navigate complex financial and accounting challenges.

We strive to become an integral part of your team and your trusted advisor.

If you’d like to learn more about our outsourced accounting services and the approach we could recommend for your business, please call Yashika Jain, CA, at 8655 707 805 for a free initial consultation.

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ABOUT THE AUTHOR

CA Yashika Jain

Yashika Jain is the founding partner of JBTM & Associates LLP. She is the core consultant of Accountingbuzz Global and devoting her times to provide consultation to tax payers in UAE and Bahrain. She has also helped businesses in India and GCC nations to automate the process and transit to cloud computing. She has authored many articles on Bahrain and UAE VAT. She has written VAT manual on Bahrain VAT comprising of all the laws and regulations relating to VAT in Bahrain. She along with her team authors a monthly sector specific guidance notes on Bahrain VAT, UAE VAT and India GST. Her other ventures include Jain Bhuta & Associates, a chartered accountant firm. Accountingbuzz, an online consultation firm devoted to Indirect taxation in India, UAE and Bahrain. Yashika is a qualified chartered accountant and holds bachelor’s in commerce. She has worked with Ernst & Young as part of restructuring team.

+91 8655 707 805 | [email protected]

mailto:[email protected]

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