You run a small or medium size business? You want to reduce your operating costs? You want accounting services of high quality for reasonable money? Then this article is for you.
Do you know why today’s companies prefer outsourcing rather than a full-time accountant?
Let’s figure that out!
Outsourcing is the transfer of some functions of one company to another company, which specializes on these functions.
In this particular material, we will talk about accounting outsourcing. Due to the fact that currently there is a tendency to transfer task solving responsibilities to an endless number of «freelancers», which helps incredibly optimize the costs of a company, this content remains topical
First, let’s overview the strengths of a regular full-time accountant:
- For the large businesses, this option definitely fits much more. You need an employee who will be aware of all the financial affairs at your company and who will only devote time to your business. Usually, large companies keep not only the chief accountant, but also several of his assistants. No doubt, the accounting department of such enterprises are also getting outsourced. Here everything depends on the company that provides these services.
- In the case of a full-time accountant, the manager has a much closer contact with him: he can ask him questions, monitor his work and the deadline for task solving, consult him at any time.
- The full-time accountant immediately participates in all sorts of checks by state agencies, providing them with all the documentation on the spot. Outsourcing represents the company in such cases in a slightly different way: the contractor negotiates the visit and personally carries all the prepared documentation for inspection.
Now let’s take a look at the advantages that outsourcing offers:
- Cost saving 1. In the case of small and medium-sized businesses, you save your money significantly when outsourcing your accounting operations comparing to employing a full-time accountant;
- Wider knowledge and experience.The accounting firm that offers outsourcing has a much greater practical knowledge, because it serves hundreds of various businesses of different sectors. Since such company always have to gain its competitiveness to be “in the line” it is usually perfectly experienced in law, terms of filing and reporting the declarations and many other nuances. A full-time accountant, in this sense, is oriented only on one highly specialized area: his knowledge and experience are very limited by the sector he focuses on. Outsourcing companies, in turn, generate unique solutions for a company’s operating costs optimization.
- Cost saving 2. A business owner who passes his accounting department to outsourcing does not need to spend money on expensive accounting software and monitor its relevance and changes in laws regarding it. The payment for the use of a professional accounting program in the Czech Republic, for example, amounts to hundreds of euros. Outsourcing bears these costs on its own. You also do not need to invite programmers to configure these programs.
- Economy of space. Your firm does not need to store tons of documentation, which is actively collected over the years, and takes up a lot of work space in the offices. Many firms in the Czech Republic are forced to rent storage facilities to store their accounting. In case of accounting outsourcing, your contractor takes it upon himself and under the contract bears full responsibility for your documentation.
- Get insured from the errors. Outsourcing offers its clients insurance of their activities. Insurance covers all cases of an accounting error that will reimburse you for your losses incurred in the case of mistake. Amounts of insurance payments reach millions of czech crowns. A full-time accountant will not pay for this insurance on his own, because you, as the head of your company, will have to increase your expenses, including this one.
- Your accountant never gets sick or takes a maternity leave. When cooperating with outsourcing, your company is insured against the losses related to unpredictable circumstances appeared from the side of your accountant. In the accounting firm there are several of accountants who are able to easily replace each other at any stage of the process. Your accountant, therefore, will never get sick or take a maternity leave;
- Cost saving 3. Full absence of costs for organizing and equipping the accountant’s workplace. For small companies this is a significant costs such as office place, computer, etc .;
- Cost saving 4. There is no need to pay for the professional trainings for your accountant. Outsourcer himself takes care of this at his own expense;
- The exclusion of human error. Each company is led by several specialists, who always check the reports after each other;
- Transfer of responsibility. In case of outsourcing of accounting, you are exempt from any kind of responsibility for your reports;
- More time for business. Control of accounting reports requires extra hours and even days from a manager, which they could devote to the improvement of company’s business strategy.
Cost saving
Let’s look at a specific example of the costs of small businesses in case of keeping the accountant in the office under the contract of employment compared with the cost of outsourced accounting service.
For instance, If your firm has 10 employees, then the average cost of accounting outsourcing in this case will be about 5000 crowns per month. You can use our online calculator to calculate your concrete potential costs.
For comparison, one full-time accountant in Prague will cost you about 37500 crowns per month. His net salary for a five-day working schedule will in this case be 28,000 crowns, the rest will be paid as taxes to the medical and social funds of the Czech Republic. Each next assistant of your accountant will cost you about 30-35 thousand crowns (this applies to medium-sized businesses).
Facts
- Outsourcing of accounting in Europe today is catching up with IT outsourcing and outsourcing of jurisprudence;
- Outsourcing accounting reduces the company’s costs in this area at least 6 times;
- The statistical agency Robert Half Management has conducted a study in which it had been revealed that in the USA in 2015 out of 900 random companies, 50% have transferred their accounting department to outsourcing, and 48% of them have admitted that they are considering this type of cooperation for other spheres of their enterprise;
- According to F&A Outsourcing, accounting outsourcing is recognized as one of the most promising areas in the world. Experts call it «the breath of a new generation of businessmen»;
- Outsourcing accounting is among the 20% of the fastest growing businesses in the world (data orchestrate.com);
- In the Czech Republic, a hired worker covers damage only in the amount of 4.5 of his salary, while the accounting firm is insured for the total amount of damage (data cfoworld.cz);
- In the Czech Republic, firms with up to 50 employees employ outsourcing in the majority of cases, while firms with 200 or more employees are in the minority (ihned.cz data)
- The Czech Institut Svazu účetních have conducted a study that resulted in facts: in the Czech Republic there are 120,000 accountants registered, 70,000 of which are outsourced.
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