Being a business owner or a manager for your company can sometimes mean you are the one keeping an eye on everything. Being responsible for your company’s success and making sure everything happens as you have envisioned, is a tough job that you do well. But there is one specific area that should be the same for all companies, something that is only correct without any creative input – accounting.
Today most companies know of outsourcing and use this method with their IT or HR processes. Still, there are many more ways that outsourcing could benefit a company (large and small). Keeping your company’s finances well-tracked and accurate is where an experienced accounting firm can lend a hand.
- 1. So what is outsourced accounting?
- 2. What is not outsourcing?
- 3. Why do companies outsource their bookkeeping?
- 4. What are the benefits of outsourcing your finance department?
- 4.1 No sick or parental leave
- 4.2 No holidays
- 4.3 Changing workload
- 4.4 Professional communication
- 4.5 Up to date information
- 4.6 Best training
- 4.7 Supportive environment
- 4.8 Personal approach
- 4.9 Cost reduction in HR
- 4.10 Cost reduction in IT
- 4.11 Real-time data
- 4.12 Turnkey solutions
- 4.13 Peace of mind
- 4.15 Fraud prevention
- 4.16 Delicate information
- 5. What are the shortcomings of outsourcing your bookkeeping?
- 6. So how should I go on from here?
- 7. FAQ
So what is outsourced accounting?
Outsourcing is hiring another company or individual outside of your own to manage various business-related processes and activities. This is done instead of using an in-house team or an individual.
Outsourced accounting, therefore, means hiring a service that provides a full accounting department experience. This usually comprises everything from the day-to-day transaction coding, accounts receivable, accounts payable, payroll and taxation to managing financial reporting. Few companies like Leinonen also offer extra services like company establishment abroad, taxation and legal consultation.
In some cases, outsourcing is called subcontracting. Outsourced bookkeeping in a wider sense is sometimes called Business Process Outsourcing (BPO), which means that an external company provides part or all of a business function. Less often the more specific term Finance and Accounting Outsourcing (FAO) is used.
It used to be that outsourcing one’s bookkeeping was more prevalent amongst small business owners since that meant getting top-notch service for pennies on the dollar. It is hard to find an eligible person that has the skills, time and resources to analyze financial data, manage bank account operations, accounts receivable and payable. Someone to prepare outgoing invoices, payroll, the annual report and other official reports to authorities like the company’s financial statements. Nowadays, in a world where all businesses are under increasing pressure to reduce cost and increase performance, outsourcing bookkeeping is becoming more and more a strategic choice.
What is not outsourcing?
It is a common misconception that the terms ‘outsourcing’ and ‘offshoring’ are used interchangeably. The main difference in the meaning of the two is the location.
Offshore means that the work or service being bought is performed in another country. Often in a very far away country where the workforce is much cheaper or legislation more favourable.
Outsource means a particular service or form of labour is being performed by a company that is not your own. This does not have any relation to the third-party firm being abroad.
Why do companies outsource their bookkeeping?
Every company is different and knows best when it’s time to move their accounting to an outsourced company. Still, there are some more common reasons for doing this.
- Budgetary issues – Decreased cash flow forces companies to make strategic choices about where to save up. Since accounting isn’t a core process for many, it is simple to find a service provider for that. This also frees up limited resources that can be focused on core competencies, attracting and retaining customers.
- Investor capital – Once investors start looking at your company it is important to be able to show them complete and accurate financials on paper. Being provided with thorough reports may sway them to invest. It is important to raise trust with proper documentation.
- Financing from a bank – When your company is more mature and ready to grow it may need additional financing from a bank. The same applies here, correct and comprehensive financial reports are required.
- Advances in technology – Every day, due to cheaper communications and improved infrastructure, operations are more independent from location. This gives any company a much wider choice of business partners and level of expertise than ever.
- On the other hand, accounting technology advances with the same speed, so a company might not want to get left behind with their bookkeeping. It is resource-draining to try and keep up with all the technological advances of accounting, time and money-wise.
- Significant growth – When sales are doubling every year and the company’s cash flow is increasing, it also means more resources are needed to handle the revenue. To make sure every aspect of the business is still taken care of, it is simplest to outsource.
- Changing the function of accounting – CFOs are pressured to provide support for their decision making and raise the standard of adhering to the accounting legislation and principles. Outsourcing helps a company do that while also streamlining processes that are unnecessarily complicated and time-consuming.
The legal regulations of accounting and finance are more stringent than ever. It has strict rules and laws since authorities and the public relies on such information to make their financial decisions.
What are the benefits of outsourcing your finance department?
Many companies are already using the benefits of outsourcing a business process. But there are some benefits of outsourcing your finance department that are more specific. Now we’ll look into those.
Continuous workflow is important to ensure your business’s finances are taken care of without exception. Revenue doesn’t care about Christmas or crying babies.
- No sick or parental leave – a partner company has an army of employees who can always stand in for each other. This is done without compromising know-how or you having to worry about a thing.
- No holidays – even the best employees need to go on holidays, this is required by the law. Once again this doesn’t become and issue with an outsourced partner.
- Changing workload – during the end of the year report or because of some unexpected circumstances, the workload may change. If at these times the company doesn’t have enough manpower and hasn’t preplanned resources, this could be a hard hit. A large accounting firm can swiftly allocate extra resources for more time-consuming tasks.
- Professional communication – it is good to know that people who are in control of your finances speak the same language. Moreover, it’s crucial to signify the words with the same meanings. When moving your company abroad, there could be a lot of cultural misunderstandings. An international company saves you the trouble.
Superior expertise in accounting is an integral part of a company’s growth. You wouldn’t want an amateur to teach you how to skydive, so why take such a leap of faith with everything your business makes?
- Up to date information – one professional accountant doesn’t stand a chance in the ever-changing world of tax and legislation. A large accounting firm like Leinonen has dedicated significant resources to keeping itself up to date in all areas of finance, not just any specific one.
- Best training – large companies depend on their financial specialists being top notch. It is more cost-effective to train an entire office together, than a small in-house team. Subsequently this means Leinonen type firms have more resources to make sure their people are the absolute best.
- Supportive environment – loads of accountants in one place means an environment where knowledge and experience is shared. It is easy to get help and solve even the most challenging issues in such a team.
- Personal approach – while it may seem counterintuitive that a big firm is able to care and give advice specific to your needs, it shouldn’t be. In Leinonen the vast amount of specialists and accountants means that there is a large choice of support contacts. People are hired based on their ability to value all clients as individuals and offer tailored solutions accordingly.
Time is money and money is time – freeing up valuable time for yourself and your employees could be a gamechanger in terms of business success.
- Cost reduction in HR – hiring people is expensive. Not hiring an accountant lets you save up on fringe benefit costs (health insurance, paid time off, retirement, sick days, worker’s compensation etc). This income could be allocated into hiring someone that can advance your business in a strategic way. Additionally replacing your accountant every couple of years and getting them up to speed in itself is a lot of time and effort.
- Cost reduction in IT – large companies keep up with leading edge accounting technologies and practises. There is no need to build up and enforce your own, since it is an expensive and lengthy process. Trust the standardised processes already in place, don’t research your own apps and systems.
- Real-time data – in business there are risks, but the best way to alleviate them is making sure you always have up to date financial information. Data is processed as it comes in and that could be the competitive edge your company needs.
- Turnkey solutions – if your business has urgent issues related to legislation then you save a lot of time and money getting advice from your one-stop-shop accounting firm like Leinonen. Our accountants work closely with our legal depatments, so there is no need to rush searching for help.
- Peace of mind – it can’t be repeated enough how important it is for a company’s growth to make sure its people spend time working on strategic choices and decision making. Let your specialists nurture business relationships or come up with innovative ways on how to develop a better product. Don’t spend a lot of money limiting your people to something as boring as accounting.
Security is the backbone of running a productive business. Organisational continuity and disaster recovery should be thought of before there is any need.
- Fraud prevention – it’s an unfortunate fact but one is much more likely to experience fraud with in-house accounting rather than outsource. In-house accountants have far more access to confidential information and can persuade others to turn a blind eye here or there.
- Delicate information – as said before, in-house accountants usually have far more access to all kinds of sensitive information. This info could be salaries, disability and personal details. When moving your company abroad it should be taken into account that misunderstandings on the information disclosure basis aren’t uncommon. To be on the safe side choose outsourcing to a big international company that knows the importance of privacy and confidentiality.
What are the shortcomings of outsourcing your bookkeeping?
It depends on the outsourcing company your business chooses, but there are some risks that it’s better to prepare for ahead of time.
Disruption – all change takes time, and so does moving your finance department. Inevitably this means some confusion, some reorganising, etc. Not all your employees are going to be happy with that and therefore might show resistance.
Loss of control – outsourcing your accounting means passing some control of the process and its outcome to a third party. It often is a skill to let go and therefore can take time to get used to. After all if you still spend a lot of time micromanaging then the whole change has been useless.
Of course there are many other concerns people have, but it’s reasonable to talk about these case by case. If you have any such concerns, our support officer will be able to give you an individual in-depth answer.
It is important to keep in mind, that whatever the shortcomings you are concerned about, most probably they can be negated. Whether it’s rearranging your current workforce or being more in control of everything. If in doubt, just contact us and we’ll discuss all the options.
So how should I go on from here?
If, after reading this article, you think that outsourced accounting might be something for you – contact us.
We will map out your business needs and put together a personal onboarding experience. That makes sure the process of coming over to Leinonen is as smooth as possible.
On top of accounting, we offer legal, taxation, payroll and management reporting. The cherry on top amongst our services is helping you set up your company abroad.
The first thing you should do is send us an email so we can schedule a meeting or just give us a call. We would like to know more about your business and to discuss the scope of your needs: number of transactions that move through your account each month, annual revenue, the number of clients that you have, the number of employees that are on the payroll etc.
We will send you a questionnaire that helps us map your needs and requirements. Based on this information we are able to compile an offer. Once we understand how the process works for you currently, we can suggest improvements and how to best move forward with outsourcing.
Please remember that we are always pleased to meet and negotiate the offer as well as agreement conditions and other details. Our consultation is complimentary so you can learn more about our expertise and services.
We provide our services according to our clients’ needs, so there is no necessity to outsource entire accounting and payroll. In fact, sometimes it makes more sense to just outsource some controlling functions.
For example, you can have a junior accountant within your company taking care of day-to-day tasks and documentation, while Leinonen accountants execute controlling functions, money transactions and reporting. The complexity of the outsourced services really depends on your demand.
We can work with our own as well as the client’s preferred software. Most frequently we use programs like Visma, Navision and Fortnox. In the CIS region, the accounting software 1C is used by more than 90 % of the market. This is because generally it is the only software that connects directly to government entities for reporting purposes, and is updated constantly to match the ever-changing legislative environment.
Leinonen Group operates in 12 countries (Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Poland, Bulgaria, Hungary, Russia, Belarus, and Ukraine) with 14 offices. In some countries our services might vary due to local legislative acts. We can help with the legislation that regulates cross-border services, as well as provide Single Point of Contact services if you have business operations in several counties. For more information about specific countries, please contact us.
We only hire the best and therefore have a team of chartered accountants with professional experience in the accounting of diverse businesses. You can also benefit from our tax advisors’ knowledge and expertise.
Many of our offices are certified with ISO 9001:2015 by Bureau Veritas quality certificate, which is also reviewed annually. Additionally, to hiring only the best, we have Finnish values promoted in every local office to regulate and support the work there. If you wish, we can provide references that can vouch for the quality of our work.
In every country, we provide services in accordance with the local laws and regulations. To guarantee the maximum level of privacy we have internal group auditing practices and encrypt most of the handled documentation.
We serve both local and international clients from single-person companies to multi-billion dollar international companies. It can be said that most of our clients are somewhat involved in international trade.
A typical case would be a foreign-owned business, where the foreign owner of the local subsidiary is very interested in following the local laws and regulations. They would like to hand accounting over to a trusted partner who is an expert in those laws and regulations. This way they can focus on their business, while Leinonen takes care of accounting, taxation and reporting formalities.
We do not differ our clients by their size. Small businesses have great potential to grow and what would be better than to grow together. In fact, outsourcing usually makes a lot of sense for small businesses, where there is not enough volume to justify hiring an internal accountant. Having professional outsourced help with accounting can be essential since you pay only for the help you need.
It depends on what kind of project you are thinking of. It really does always depend on the scope and specific requirements of the project. But of course, the best project would be long-term cooperation to support your business.
Operating under Finnish values; over 20 years’ experience in challenging markets; presence in 12 countries and the local know-how there; high-quality group service standards; small enough to care, big enough to deliver.
Client confidentiality is essential to us, as we are sure you can appreciate. Still, we are confident that if you wish, we can ask for permission and deliver the necessary references.
The structure of pricing depends on the nature of requested services and its volumes. Some pricing can be as a fixed fee, some on an hourly rate. One thing you can be sure of is that we have a fair and transparent structure of pricing that you can understand. We can provide you with most suitably tailored pricing once you have returned the Offer Questionnaire or have met with us.