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Outsourcing books of accounts means you are giving another agency or individual the responsibility of performing bookkeeping and accounting on your behalf. Instead of hiring an accountant or purchasing a software tool, you let an external agency do the accounting tasks and then give you the required reports and information you require whenever you need it. You can outsource to an agency that is in the same location as your business or you can outsource to an agency that is geographically far away from where you operate. Outsourcing is often chosen as a way to cut down on the costs of hiring a full-time accountant.
Outsourcing books of accounts can seem like a viable option to many but it has its own set of pitfalls that businesses need to be aware of. Here are some common challenges that businesses face when they outsource.
Lack of control
It is true that no matter how good an outsourcing agency is, you won’t have complete control over it as you would on an employee or software at your business premises. Lack of control can bring with it many other issues that may be quite difficult and even challenging to resolve. For example, it is easy for an agency to commit fraud because they have all the data they need about your business. If you have completely handed over the accounting aspect to the agency then it will be difficult to detect the fraud timely and this is a problem that can get out of hand and cost you quite a bit.
Outsourcing books of accounts to an external agency can uncover hidden costs that you weren’t made aware of in the beginning. This unwelcome surprise can come as a rude shock to your businesses who weren’t prepared for it. Oftentimes, costs are quoted in the beginning but they are just the base price. Outsourcing agencies then ask for a higher price saying that businesses need to pay a certain fee for this service and a certain fee for that service. Businesses feel like they have fallen into the trap because they have already paid the base fees or have already started the onboarding process.
Instant response unlikely
While this problem can depend on where you have outsourced, it is still an issue worth diving into when it comes to outsourcing. When you have an accountant at your firm or when you are working with accounting software, you can get instant answers to your questions. This is not always the case when you are outsourcing. Generally, you will receive an update whenever you ask for it or at regular intervals such as every week. This can make you miss some important opportunities along the way. Moreover, if the agency operates in another time zone then getting instant answers becomes difficult when the time difference is significant.
Lack of knowledge
When you are partnering with an outsourcing firm, there is always a chance that you may end up with someone who doesn’t have the appropriate knowledge required. If the firm does not disclose the information such as who is exactly working for you, then you can land in trouble and you can have credibility issues down the line. An inexperienced individual can make mistakes and these can prove costly because you are depending on them for accurate reporting. This can be a bad sign because it can also cause issues when you file your tax returns and so on. Correcting those mistakes can become costly and the costs simply add up.
Delays in submissions
When you work with an outsourcing agency, there can be delays in submissions. Let us say you have asked for a report every week. If there has been an unforeseen problem that has occurred then it will cause delays. Even though at your location there was no issue, this delay in submission can cause delays if you depended on that information to make a decision or go ahead with a particular plan. This often ends up being costly and causes delays that can slow your business down. Of course, this is only the case when you have chosen an agency with minimal experience.
Miscommunication is rampant
Working with an agency that is based in another country entirely can cause miscommunication and this can cause issues that are not good for your company. It can cause business owners high stress levels. For example, if you specified your need and the agency did not understand it then you don’t get what you need instantly. Or if they misunderstood what you said, then you get the wrong output causing a waste of your time and the agency having to redo it again. If different time zones are involved then it gets even tougher for you to manage because there will be delays.
You can overcome the challenges by opting for an outsourcing agency that is experienced in the field of accounting and that is completely transparent about its costs, work ethics, and so on. However, there will always be an element of risk that looms around when you outsource books of accounts to an agency or to an accountant who is well-versed in accounting. If you want to ensure you get the best of both worlds, then you can opt for an accounting software solution that comes with business management functions that allows you to perform accounting by yourself or by hiring an accountant.
TallyPrime is a software tool that enables you to manage your business and perform accounting functions with ease. It is perfect for a Kenya SME because it is built for MSMEs. TallyPrime is easy to understand which means you don’t have to outsource your book of accounts and risk trusting someone else with your business data. Your business data is completely secure because you can encrypt it so that no unauthorized access can take place. With user management capabilities, you get to set the security levels as per your requirement.
TallyPrime comes with the audit trail feature that allows you to keep track of any changes made to data. This allows you to know if any changes were made and when. The software solution comes with invoicing features whereby you can generate VAT-compliant invoices in minutes without hassles. You can also easily file your returns as you can rely on the accurate business data with TallyPrime. It has advanced inventory management capabilities so you can manage your inventory and keep tabs on your stock levels in real-time. From godown management to expiry date management, you can do it all
TallyPrime has automated features that allow you to cut down on time. It comes with a payroll processing and management feature whereby you can automate salaries and wages. Want insights every week or every day? Then use the reporting feature that allows you to get reports on any aspect of your business. Whether you want information about inventory or you want to know about VAT paid, you can generate hundreds of reports with TallyPrime. You can access your business data from anywhere so business management becomes effortless. Try TallyPrime today!
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