Finance Accounting

Saturday, March 20, 2010

Why Finance & Accounting Outsourcing For Start-ups and Small Businesses

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It is not uncommon to see entrepreneurs struggling with spreadsheets, outstanding payments & invoicing issues, hiring admin staff and still spending lengths of time dealing with Accounting & reporting issues.

In today's hi-tech environment, businesses are generally very good at deciding which services to specialise in and which to outsource. However, Finance & Accounting support needs are often underestimated by small businesses.

With the exception to Payroll which usually gets outsourced all the other functions are either not fully performed or kept in-house at the mercy of unqualified staff.

This is mainly due to general lack of understanding within small enterprises of what Finance & Accounting functions are and how they support the business.

Big businesses benefit from a fully-running Finance department with dedicated Finance Directors, Financial Controllers, Management Accountants, Accounts Assistants for managing the more routine sales and purchase ledger tasks and Credit Controllers etc.

Small organisations can also benefit from having specialised skills in their pockets but due to small scale they generally opt for hiring an all-rounder to perform all the duties within their 'finance department'. This may work sometimes however for the most it does not provide the effective and efficient support a good outsourcing company can.

One of my clients, a classic modern small business with a turnover of circa £1million running in UK with its success owed to China and Google, had employed a part-time Accountant/Bookkeeper an all-rounder to support all the Finance & Accounting needs.

This model relied on one person and lacked checks and balances and the benefits of specialised skills input for the business. As a result there was inaccurate and untimely reporting, lack of compliance and controls as well as communication issues.

By switching to a finance outsourcing model, my client was able to enjoy the benefits of a fully functioning accounting department just like any big business and he also passed on the duty of care to the service provider.

Considering there are 4.8 million small businesses in UK*, the inefficiencies within these businesses can have a huge impact on the economy as a whole.

Riz Wasti http://www.2Econsultants.co.uk

Article Source: http://EzineArticles.com/?expert=Riz_Wasti

Labels: business finance, finance accounting, outsourcing finance