Benefits and advantages of accounting outsourcing

Contacts of the Accounting Company “Saved Assets”

+38 (032) 247-04-00; +38 (067) 673-35-99 е-mail:  za@zkg.ua

Maintaining current accounting at an enterprise is a mandatory function of every company, as well as timely and complete reporting on the results of business activities. That’s why finding a highly qualified, experienced chief accountant is one of every manager’s first and most important tasks. However, finding an accountant who will provide quality services on the right terms and conditions can take time and effort. Indeed, professional specialists often claim high salaries, additional bonuses, a separate office, and other preferences – not to mention the recruitment of one or more assistants, depending on the scope of work and the specifics of the company’s activities. In turn, this sometimes entails high costs, is often unproductive, and needs more economically justified.

On the other hand, hiring a less-than-professional and ambitious chief accountant becomes a real headache for the CEO and founders of a company. Errors made in reporting are grounds not only for fines and penalties but also for administrative and, in some cases, criminal liability. How do we avoid risks in both situations? Is there a middle ground and how to quickly find the perfect specialist for accounting and reporting for the entire life cycle of a company? There is an answer to the most pressing questions – and it is an outsourced accountant.

Freelance accountant: Outsourcing in accounting and reporting at the enterprise and its advantages

To begin with, it is worth finding out what outsourcing is and how it can be applied to accounting in companies in Ukraine and around the world. The concept of outsourcing comes from the English word outsourcing (out – outside, beyond; source – source). In essence, outsourcing is the transfer of certain functions of an entity to third parties and organizations. Thus, accounting outsourcing is the maintenance of a company’s accounting records by specialized firms and organizations without employing accountants. Under Ukrainian law, business entities are not required to have a chief accountant on their staff. A director or an authorized person (with a duly executed power of attorney from the director) may report on the company’s performance. It is quite understandable that the head of a company often needs more time to keep up with the day-to-day management of its activities and develop strategies for promoting the brand and certain goods (services) on the market. And reporting at the end of reporting periods, preparing, reviewing and submitting data requires complete isolation from any other tasks. That is why modern directors, who focus on each business process’s efficiency and economic viability, choose accounting outsourcing. With its help, the company’s top management can deal with their direct responsibilities, so to speak, “on the job.”

One of the main benefits that all clients of the Accounting Company “Preserved Assets” receive in accounting outsourcing is a professional liability insurance contract with each client company for UAH 5 million. This document acts as an insurance policy for the company. It protects it from the consequences of any unintentional errors, or the so-called “human factor,” that may be made in the current accounting process – from the smallest to the most significant. The insurance contract not only confirms the Accounting Company “Preserved Assets” readiness to be fully responsible for the work of each specialist accountant providing outsourced services but also emphasizes the confidence in the high professionalism, business responsibility and professional level of specialists.

The most obvious advantages of accounting outsourcing are:

• The ability to engage leading specialists who have passed a rigorous selection process and have repeatedly proven their professionalism in handling the company’s accounting;
• Access to an accountant to clarify any issues and receive consultations six days a week, except for Sunday (and not Saturday and Sunday, as is the case when the company employs an accountant);
• The working day of the outsourcing accounting company “Preserved Assets” on accounting, auditing, taxes and financial activities of enterprises is 12 hours, and not 8, as provided by the legislation of Ukraine for employees hired on a labor contract;
• Interchangeability of outsourced accountants: This allows for a quick and painless change of accountant if necessary and ensures that in case of illness, vacation, or absence from the workplace for other reasons, one outsourced accountant will be temporarily replaced by another. Such an approach protects the owners of the client companies of the Accounting Company “Preserved Assets” from difficulties and the accumulation of acute and urgent issues in the absence of the chief accountant, while illness and leave are mandatory stages in the work of even the most experienced and responsible staff members;
• A decent reputation of specialists, their experience, regular communication with leading accountants in Lviv and Ukraine, as well as with representatives of fiscal and regulatory authorities of the region;
• The ability to select a specialist in the chosen industry, trade or service sector with significant practical knowledge and skills in outsourced accounting with specific specifics. This allows the client to avoid hiring a specialist whose level of knowledge and experience is significantly higher (and, accordingly, requires higher remuneration or additional preferences at the expense of the employer) or significantly lower (which is a risk of making mistakes and a prerequisite for sending them to advanced training courses, workshops and receiving paid consultations on several issues);
• Saving efforts and time of top managers (director, head of HR, etc.) required to find the perfect chief accountant for a particular company – in the case of accounting outsourcing, in certain cases, a whole team of professional accountants may initially start working with the company, from which one leader is then selected for ease of communication.

These advantages are very significant, but they may only sometimes be decisive, although they significantly impact the service’s value and integrity. Although over time, almost all business owners and directors begin to clearly understand the benefits listed here, in most cases, the positive decision to start using accounting outsourcing is mainly due to the financial benefits of this type of cooperation.

Financial benefits for the company from accounting outsourcing

Most business owners believe that any project is beneficial only when it brings in money or helps to save the company’s costs. And this approach is justified for absolutely all areas of business in Ukraine. So, how does accounting outsourcing help increase a company’s profits? First of all, by saving costs. Here are just the most obvious benefits of accounting outsourcing for businesses:

1. Savings on the payroll.

Hiring a highly qualified chief accountant for a small or even medium-sized enterprise (micro-enterprises are not included) is very expensive. Starting from the salary alone (as a rule, it is UAH 300,000-6,000,000 per year for a decent specialist) and ending with additional preferences in the form of:

• a separate office and equipment of a comfortable and ergonomic workspace (from UAH 20,000 to 100,000 per year)
• a company car and reimbursement of fuel costs (from UAH 100,000 to 350,000 per year);

2. Savings on the current expenses of the company

related to the organization of the workflow for the accountant, namely on the payment of:

• service devices for mobile communication and work (phones, laptops, related devices) – from UAH 5,000 to 50,000 per year)
• software and regular license renewals – from UAH 2,000 to 5,000 per year;
• maintenance of equipment and workspace (services of a system administrator, cleaner, energy and heating costs, etc.) – from UAH 20,000 to 50,000 per year;
• Provision of current professional periodicals and the means necessary for work and energy recovery (stationery, napkins, soap, drinking water, coffee and tea, etc.) from UAH 4,000 to 20,000 per year.
• Savings on overtime pay for a full-time chief accountant, if necessary.
• Saving money to be spent on advanced training of an accountant and payment for accounting consulting services if the situation requires it.

The cost of such services sometimes reaches tens of thousands of hryvnias per month. To see for yourself, browse the Internet for offers by searching for “accounting services price Lviv,” etc.

3. Saving money on expanding the staff of accountants

during the company’s economic growth (which also entails the corresponding costs of organizing a workspace for the accounting department).

4. Savings on fines and penalties

in case of accounting errors or inaccuracies: While an employee can be charged a maximum of one month’s salary and no more than 20% of the total monthly income, an outsourced accountant or the Accounting Company “Preserved Assets” is fully financially responsible for errors in the work of specialists.

5. Tax savings:

The costs of accounting outsourcing are not burdened with more than 34% of taxes and fees. They are fully deductible, thus reducing the basis for calculating income tax.

Thus, accounting outsourcing has several organizational advantages and financial benefits that significantly impact the quality of the company’s overall performance. In particular, it improves operational accounting and reporting to fiscal authorities and several business processes related to recruitment, organization of accountant’s work and monitoring of its efficiency. It is the best way to insure against unprofessionalism or accidental errors in the work of a company’s cost and revenue accountant.

The ability of an accountant to be in touch almost around the clock and seven days a week, to receive free urgent advice from colleagues, to engage additional specialists in certain urgent cases: all this opens up new prospects for business development, legal tax depreciation and a significant reduction in annual expenses for maintaining a staff of accountants – up to several million hryvnias annually.

Accounting outsourcing is a modern, efficient method of accounting without burdensome financial investments, potential economic risks and unpredictable human factors. The obvious benefits make accounting outsourcing a leading tool for business in Ukraine and globally.

(1 - 5.00 - 5)