If there is one aspect of business operations that have to be accurate and precise in all respects, it is your accounting and bookkeeping functions. The reasons for this are obvious. A wrong output of figures will adversely affect balance sheet on which crucial future decisions like enhancement of credit limits largely rest on. Again based on the balance sheet important business decisions have to be taken regarding diversifications, new product launches and setting competitive prices for products and services. All these can go off track if accounting errors creep into its processing.
There is another side to it. Accounts that are accurate in all respects are proof that no scams and fraudulent transactions have crept into the operational side of the business. But it is not the only scam that you have to worry about. Error-prone accounts are often linked to system failures due to the excessive workload on existing staff, lack of advanced and updated hardware and software and trained manpower to maintain them. Putting these things in place requires large investments in infrastructure and recurring expenditure on high salaries. This is something that businesses would rather avoid if alternatives are in place. And the best option, in this situation is to outsource accounting services to professional accounting services provider.
If you are looking to outsource your accounting functions, do it comprehensively. Processing a few heads of accounts in-house and outsourcing others raises concerns in consolidation. But even if you do choose to keep a few minor heads under your direct supervision, there are a few facets of bookkeeping that you should compulsorily outsource to save yourself from grave errors when accounts are finalized. These include major heads like accounts payable and bank and credit card reconciliation which is tedious and requires a lot of software system support.
What then are the common reasons for accounting errors to creep in and why is it that hiring accounts outsourcing services can help in avoiding them –
- Lack of a common code of accounting policies – Generally in any business, different employees handle separate accounting functions – income and expenditure, petty cash, accounts payable and receivable amongst others. Lack of coordination in accounting procedures often results in wrong figures being posted. Outsourcing agencies, on the other hand, have a central processing system where data is fed and processed. This negates any possibility of errors.
- Not following basic accounting principles – It is seen that there is often no clear demarcation between business accounts and personal accounts of the owner. This leads to problems not only in finalization of accounts but in tax preparation too. Outsourced agencies when contracted, will first bifurcate the two and process the business accounts separately. Bank and credit card reconciliation will be done independently of each other so that both entities can be processed in an error-free manner.
- No backup of accounting data – Most businesses consider finalization of accounts at the end of the accounting year without backing up data. Hence any accounting error lingers on and remains undetected further compounding the problem. Outsourced agencies have software in place that processes data accurately and stores it for periods as laid down by law, irrespective of whether raw data uploaded to them is in paper or electronic form. Invoices and vouchers in paper form are scanned and stored while there is no problem with those in electronic mode.
- No regular monitoring of accounts – It is necessary to regularly monitor and track your accounts position if you are to know the state of your financials at any given point in time. Your in-house team of accountants will only give you reports at fixed intervals, say quarterly, half yearly or annually. For that intervening period, there will be no monitoring of accounts and any errors will go undetected. Accounts outsourcing services, on the other hand, will give you updated reports almost on a real-time basis so that you can monitor your accounts and know if there are any discrepancies. Updated reports are also an indication that all your accounting heads are balanced and tallied without any mistakes.
Accurate maintenance of accounts is the very foundation of good bookkeeping practice. You should definitely outsource finance and accounting services to ensure this.
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If you are thinking to outsource accounting services get in touch with Cogneesol. Our team of accounts will ensure error-free accounting functions for you. To know more visit www.cogneesol.com or call at +1 646 688 2821