Financial compliance outsourcing refers to the process of hiring a third party to manage the financial functions of an organisation. This way, entrepreneurs can solely focus on expanding their business and enhancing the quality of services that they are providing their customers. Keep reading to know some benefits that you can reap from outsourcing compliance.
Top 5 Advantages of Outsourcing Compliance
Below are 5 main advantages of financial compliance outsourcing that can benefit ventures immensely:
- Aids in saving both time and money: Continuously staying updated with the latest introductions in financial laws can become a daunting task while managing a venture. For this, a team of experts is necessary to ensure that there is strict compliance with the financial regulations such that you can stay away from legal issues.
- Access to the latest technologies: Outsourcing financial compliance is beneficial as it can help you to stay ahead of your competitors due to the usage of the latest technologies. There are several cloud-based accounting software that makes financial operations less expensive for your business. Moreover, there are scopes of automating the process for quicker outcomes.
- Availability of professional services: One of the best things about outsourcing financial services is that you can be sure that there are experts for handling your tasks and providing high-quality services. They have enough knowledge and experience to accurately maintain financial records, tactfully handle challenges, and minutely monitor all business transactions.
- Greater flexibility and scalability: Outsourcing compliance helps in catering to the personalised needs of your customers. This is beneficial for retaining your customers and building their faith in your venture. In this way, your business can reach out to more people, scaling it up to greater heights. Moreover, it increases your business’ output such that it can easily match future needs.
- Enhanced finance processes and controls: During business expansion, it can become challenging to maintain accurate records of every transaction. Moreover, it can be difficult and time-consuming to maintain a healthy cash flow. Outsourcing financial services can ensure that there is a structured cash flow with sufficient backup in case of any financial crisis.
Objectives of Outsourcing Financial Compliance
The primary objectives behind outsourcing financial compliance are as follows:
- Increased focus on business development generating more revenue
- Minimise expenses without hampering the quality of service
- Quick achievement of business goals due to absence of distraction
Elements of Outsourcing Financial Compliance
The different elements of outsourcing financial compliance are as follows:
- Bookkeeping Services
In this process, there is a methodical maintenance of records for different financial purposes. It usually includes preparation of bills for the services, tracking the number of receipts generated and maintaining invoices provided by the suppliers. Moreover, it keeps records of payment and loan disbursements to ensure smooth functioning of a company.
- Year-End Accounting Processes
This includes preparation of annual financial reports, verification of ledger balance, and maintenance of profits and loss account for year-end. Additionally, experts prepare management accounts for the company and provide advice and support during preparation of financial statements.
- IFRS Advisory Services
This service usually includes determining compliance with IFRS principles, filing IFRS applications, checking applicability of IFRS principles in different countries, and so on. India follows Indian Accounting Standards based on IFRS.
- Audit Reporting
Here, professionals review the profit and loss statement of a company to ensure that a reconciliation of assets and liabilities assess risks associated with carrying out the audit for an organisation and lastly checks balances in your business.
- Accounts Management
This service helps your company in producing half-yearly and full-yearly management, identifying the risk-associated areas and suggesting steps to prevent them. Additionally, they also provide a report to management on the operation of those accounts.
- Ledger Management
There are professionals helping you with tracking customer payments and managing cash flow, receivables, and supply chain in a company.
- Annual Preparation of Accounts and Taxes
It helps in assessing individual returns, corporate tax returns, property tax returns, partnership tax filing and returns, and capital gains tax and returns.
- Preparation of Budget
This service aids your company in budget estimation, management and implementation thus keeping a check on useless expenses.
Things to Consider for Outsourcing Compliance
Below are some things that you need to consider before outsourcing compliance
- Evaluate their services to confirm their strengths and identify the scope of improvement.
- Review the terms and conditions associated with their service.
- Check the quality of their service and how well-trained they are.
- Assess if there are risks associated with their service.
- Determine resources that they will need to effectively run the compliance program.
Viewing the plethora of benefits, it becomes highly profitable to opt for financial compliance outsourcing. It would help in efficient management of finances and focus better on other business aspects.
