Outsourcing is a Secret Ingredient

• Posted on Елена Пермякова
• in Blog
• on May 20, 2021
• Comments Off on Outsourcing is a Secret Ingredient

In conditions of competition and economic instability, it is necessary to minimize costs and improve business processes of companies. One of the optimization ingredients is outsourcing. Let’s reveal the secrets, why accounting outsourcing is interesting for managers.

“If there is something that we do not know how to do better and cheaper
than our competitors, then there is no point in doing it at all;
we should delegate such work to those
who will perform it with a deliberately best result”

Henry Ford, 1930s

Outsourcing concept

Outsourcing is a special model for delegating tasks, transferring a business process or part of it to a third-party organization for a long time. This word means the practice of hiring resources from outside of an organization.

The concepts of “accounting services” and “accounting outsourcing” differ from each other.
Accounting services rendered by outsourcers are one-time. Such services are understood as requests for advice or the formation of quarterly reporting.
Accounting outsourcing is the inclusion of a third-party company in the business processes of the client company. There is a constant interaction. At the same time, the accounting organization remains organizationally and legally a separate unit. The accounting outsourcing includes a complex of daily work:
• formation and processing of primary documents;
• account transactions;
• payroll accounting;
• report delivery;
• control over the deadlines for submitting reports and payment of taxes.
In general, outsourcing of financial functions is one of the most difficult forms of business process outsourcing. There is a need to manage several processes at the same time. For this, managers often do not have enough experience and time.

Development of Accounting Outsourcing

Outsourcing appeared in XIX century. Outsourcing companies experienced evolutionary growth in Europe and North America after World War II. In the 1990s, foreign outsourcing firms appeared in Russia, following their clients — European organizations. There are almost no own accountants in small and medium-sized businesses in the West at the moment. Accounting outsourcing is used by both start-up companies and global manufacturing giants.
Accounting outsourcing has been promoted due to the use of the Internet:
• electronic document flow;
• Internet banking;
• processing of the information remotely (cloud services, remote access);
• sending reports using an electronic digital signature;
• interaction with tax authorities and funds through electronic systems.
It has become more convenient to interact with outsourcing organizations. This simplifies accounting record-keeping and control. Mobile devices remoted from the workplace are used during work. Now the director, while on a business trip, does not have to worry about the submitted report, an electronic report with a stamp from the tax office will be sent to e-mail. Account control is carried out using banking applications on mobile phones.
Business owners are most interested in outsourcing. If earlier managers needed to be convinced of the need to make a decision, today they are independently looking for opportunities to improve business processes, reduce costs, and improve the flexibility of the company. Crisis situations also require cost cutting.

Let me explain with an example how outsourcing is useful in an economic crisis.
In the face of the growth of the dollar in 2014, our client had a decrease in sales. At that time, the organization had a single accountant. She, in addition to her duties, carried an additional burden. We took a photo of the accountant’s working day. It was determined that accounting takes 2-3 hours a day. The manager decided to:
1) distribute among the employees of the company responsibilities that are not directly related to accounting;
2) outsource accounting.
Accounting expenses have been reduced, and a work place has been freed up. The office, where the accountant was located, began to be rented out. Thus, we have reduced costs and obtained a new source of income.

When and what to outsource

It is advisable to apply for accounting outsourcing at an early stage with the implementation of a business idea. This helps to achieve a high level of profitability of the company at the stage of the organization’s formation. The accountant will professionally and correctly debug accounting, select an optimal taxation system for the company.

The company manager contacted us, help was needed in that situation. At the beginning of 2015, he registered an organization. He conducted activities but did not pay taxes through lack of knowledge. The Tax Service informed about the need to pay taxes on time, submit reports on a quarterly basis two quarters after opening. At that time, the accounting was maintained in Excel.
Penalties and fines have arisen due to late payment of taxes and submission of reports. Restoration of accounting in the 1C:Accounting program revealed:
— not all services rendered have certificates of completion;
— some certificates were duplicated.
Missed certificates were formed. Erroneous certificates were annulled. The organization switched to a new taxation system in 2016 in order to optimize taxes. The manager of this company gave up unnecessary workload by transferring accounting to outsourcers. The free time he devotes to the development of the company.
Such situations are often. First-time entrepreneurs are not very familiar with legislation, accounting and tax accounting. They loose control over primary documentation if there is no automated accounting.

When the company already has hired accountants, it is important to think about outsourcing. Each transition to new work principles is associated with certain difficulties. But there is a general improvement in the company’s work after debugging the innovations.

Let me give you another example. The chief accountant resigned from a production organization in the Novosibirsk Region. The director researched the accounting services market, assessed the possibilities of accounting outsourcing. Working conditions with us provided accounting support for less money.
We determined the stages of the accounting transfer. We found points of interaction and the best solutions. We debugged electronic document flow and efficiency of actions.
Reduction of organizational costs is the result of cooperation with us.

The transfer of routine work to outsourcing has a beneficial effect on the functioning of the organization. It is advisable to outsource auxiliary business processes in order to focus on core activities.

Accounting outsourcing or full-time accountant?

There are several advantages of using outsourced accounting instead of a hired accountant. It becomes possible to save on the following:
—- contributions to funds from the accountant’s salary;
— workplaces (rent, equipment, office furniture, stationery);
— software (professional software — 1C, reporting software, legal framework, licenses);
— administrative expenses (electricity, water, office supplies);
— professional retraining.

For clarity, we use the average figures of some accounting costs. Let’s find out the savings in accounting outsourcing:

When using outsourcing, you, along with savings, get a focus on results. Accountants do not have vacations and sick leave, personnel issues are excluded. The daily work of the accounting department is ensured.

Conclusion

Accounting outsourcing is introduced into the structure of business processes of Russian organizations more and more. This is facilitated by crisis situations in the country, the desire of managers to optimize costs and internal processes of enterprises. Transfer of cases to outsourcing improves the management of companies, provides an opportunity to concentrate on the core area of activities.
Now leaders are those companies that own advanced technologies and respond to changes in a mobile way. Outsourcing is one of the ingredients for the proper functioning of companies. It provides a number of benefits.
The choice and the future is yours!