Businesses in today’s environment have embraced outsourcing accounting due to its positive impact on performance. Outsourcing is concerned with contracting an external entity to perform non-core functions in the business process.As a result, the organization avoids maintaining an internal department to perform the concerned function. The accounting function is non-core in a business process and SMEs can outsource accounting services to enable them to focus on the core activities. The increasing trend of outsourcing accounting services is influenced by some factors:
Computerization of transaction processing– the emergence and improvement of information system has led to the transaction process automation. Transaction processing systems create summarized reports that are used by accounting services providers to do accounting work for SMEs.
Pressure to cut costs– maintaining an in-house accounting department is costly. Cost cutting is an integral part of competitive strategies implemented by businesses operating in the contemporary environment that is characterized by cut-throat competition.
The increasing importance of professional accounting- the Kenyan regulatory environment has been changing in line with the dynamics in the business environment. Agencies such as Kenya revenue authority have put high standards for transactions recording and financial statements preparation. As a result, professional accounting is in great demand to ensure accounting activities comply with the existing regulatory framework.
Benefits of Outsourcing accounting services
Best services- outsourcing accounting enables a firm to access services from the best CPAs and this improves the quality of the accounting function’s output. Firms offering accounting services serve many clients enabling them to understand complex problems facing SMEs.
Cost advantage- outsourcing accounting services create a cost-cutting avenue. Maintaining an in-house accounting department is more expensive than contracting an external accountancy firm.
Innovation- outsourcing accounting leads to innovation that is a key business success factor. Accounting service providers are conversant with the emerging technologies and new knowledge in their areas of expertise. They provide advice to service users regarding new techniques, systems, and knowledge that creates the right environment for innovation.
Leads to flexibility in human resources – Outsourcing the accounting function reduce rigidity in human resources as the service provider is only contracted when needed. Maintaining an in-house accounting department can lead to idle capacity in human resources when the accounting services are not needed.
SMEs that are serious about remaining relevant in today’s complex environment must engage a reliable outsourcing partner. At Blue Ocean Outsource we offer professional accounting and auditing services that enable businesses to be more efficient. Contact Us.