Should I build a finance team internally or engage an outsourced accounting firm? What is better for scaling? How will it impact my operating expenses? Will I lose control? Will I save time?
These are important questions when deciding whether or not to engage an outsourced accountant to perform accounting and bookkeeping services for your company. In-depth specialist knowledge and local expertise is essential in this area.
In this article, we highlight 7 key benefits for companies who outsource their accounting and bookkeeping functions.
Accounting and tax compliance in the Philippines is complex – Ask the experts!
In the Philippines, tax compliance and financial reporting is an area of regulation that is revised and updated regularly.
The Bureau of Internal Revenue (BIR) releases tax circulars regularly. The Securities and Exchange Commission (SEC) issues new rules continuously. The Financial Reporting Standards Council (FRSC) and the Philippine Interpretations Committee (PIC) also establish and revise accounting standards and principles when necessary.
Companies must ensure that new requirements/regulations in this dynamic area are quickly identified, understood and applied.
It can be a large and time consuming task for a company accountant in the Philippines with limited resources to keep on top of every change that arises.
If, however, a company hires an outsourced accounting firm, the company is engaging industry specialists whose primary role is to monitor, interpret and implement any new rules and regulations that may arise.
An accounting firm will have the resources and expertise to ensure that every base is covered!
So whether the income tax requirements are changing or the computation of withholding tax is being revised, an outsourced accounting firm can be the best solution for reducing the risks of non-compliance and BIR audits!
Eliminate recruitment issues
The Philippines economy has been growing steadily for the last 10 years and is likely to keep growing according to some commentators. Attracting and retaining top talent in this dynamic economic environment is a challenge for many businesses.
By outsourcing your accounting, bookkeeping services or payroll functions to an accounting company, you can eliminate the lengthy search process for employees and the issues associated with trying to grow and retain an internal accounting team.
Outsourcing can also eliminate uncertainties around resignations, handovers and integration of new staff. An outsourced accounting firm will have in-house expertise across a pool of accountants which could quickly and easily step-in to ensure continuity of services.
This is an important and often overlooked benefit of engaging an outsourced accounting firm!
Access to technology with no capital expenditure
Many companies use an outsourcing model as a way to access IT infrastructure that might not otherwise be available to them.
A company might not have the capital to purchase software and hardware products. A company may also lack the expertise to understand and utilize the technology that best fits their company.
Outsourced accounting firms can remove this issue by facilitating the use of new technology while educating the company on how to make the most out of their accounting processes.
The use of cloud accounting technology is a prime example. Cloud accounting enables information and documentation to be uploaded and stored on remote computer servers. All accounting, bookkeeping and finance related activities can then be processed online with ease.
Accounting through the use of technology is an efficient alternative to the traditional system of accounting. No paper! No need to leave your office! Everything is online.
CloudCfo performs all of its accounting services through the use of cloud accounting technology and smart technology and provides clients with access to top solutions and the most efficient financial processes.
Reduce operating costs
Hiring an outsourced accountant can generate cost efficiencies for a company.
When you hire an internal bookkeeper/accountant, the monthly payments a company is required to make include basic salary, SSS contribution, Pag-IBIG, Philhealth, Group and Health Insurance and 13th Month Pay (at the end of each year only).
This is not all! Additional costs may include meal and travel allowances, cost of computers, screens, desks and other operational equipment, company outings/parties, bonuses, profit sharing (depending on company structure) and more!
An outsourced model does not require so many forms of payment or additional expenses. Generally, the monthly retainer payment will be all that is required to ensure quality of service.
A company’s net income can also be increased through an outsourced model as it can reduce the cost of hiring, training and the other administrative activities relating to the employment of accountants.
In our experience, it can be much more cost efficient for a company to hire an outsourced accounting firm than building a team internally.
Outsourcing can result in the simplification of your financial processes – saving time and resources!
When engaging an outsourced accounting firm, it can be as straightforward as agreeing to the terms of a master contract and confirming a process for engagement.
The outsourced accountant can then manage the process from start to finish, while updating management as required throughout the financial year.
We believe that the most beneficial relationship between outsourced provider and company is where the client and accounting firm work together to achieve their objectives. When a company remains involved in the accounting and bookkeeping process, they will understand their business better – particularly their strengths and weaknesses.
Independent financial analysis
Accounting and bookkeeping functions that are commonly outsourced include accounts payable, accounts receivable, general ledger management, payroll and financial reporting.
However, many companies now outsource the analysis of their financial reports to accounting firms. The accounting firm provides financial advisory services and can fill the position of an outsourced or “virtual” CFO.
By determining patterns in your financials and how the company transacts financially (e.g. receivables collection and payable payments), outsourced accounting firms can have clear and independent insights on how to better streamline operations, develop strategies and generate forecasts and budgets. The company can then make fully informed strategic commercial decisions.
If a company engages an accounting provider that utilizes cloud accounting technology, the company can receive financial data in real time. This enables the company to make quicker decisions at crucial times throughout the financial year – no need to wait until year end.
Accounting specialists can help the company develop and reinforce its governance model by making sure the right processes are in place. For example, an outsourced accounting firm will perform frequent controls such as bank reconciliations, which are often neglected by in-house accounting teams.
As a third party service provider, the accounting firm is one step away from the company and can be impartial. This independences reinforces the safe-guards against potential fraud or errors which may cause financial harm to the company.
Why outsource your finance and accounting services to CloudCfo?
CloudCfo can assist with the full range of accounting services for companies operating in the Philippines. All of this is performed through the use of cloud and smart technology and through the implementation of professional and efficient processes and controls.
CloudCfo is focused on the Philippines market. As such, the CloudCfo team of experts has extensive local knowledge and experience of doing business in the Philippines and particularly within the Metro Manila area. CloudCfo advises clients, from startups, to SMEs to multinational corporations with operations in the Philippines. CloudCfo also has in-depth knowledge and experience of advising clients across a wide range of sectors within the Philippines market.