Pros And Cons Of Doing In-House, Outsourced, And Overseas Bookkeeping
Bookkeeping is essential for every business. There are business owners who prefer to do their bookkeeping in-house, while others prefer to outsource it. Some choose to outsource it overseas.
All three services offer different workflows when managing bookkeeping and each of them comes with pros and cons.
To help you decide whether what solution best suits your business’s needs, we outline below, the benefits and drawbacks of in-house, outsource and overseas outsourced bookkeeping.
Benefits of In-House Bookkeeping
An in-house bookkeeper has a number of benefits. Here are some of them:
- Internal Control
A business that has in-house bookkeeping has more direct control over how the financial situation is handled. Business owners can maintain strict control over the daily performance of bookkeeping and can obtain detailed financial information at any time.
- Secured Financial Data
The level of privacy and confidentiality is higher in this practice. You can ensure your company's financial data is being kept private and is accessible only by authorised staff inside the business.
- Readily Available
Having an in-house bookkeeper means that you can reach out at any time of the day. If you have an emergency or need to know the status of any financial position, you can quickly get in touch and get the information you need.
Drawbacks of In-house Bookkeeping
There are significant advantages in having an in-house bookkeeper. Some business owners opt for this solution as they feel like they have full control over their books but in reality they might be facing these problems:
Higher Cost Incurred
In many cases, costs are a crucial factor for business owners. Bringing an in-house bookkeeper into payroll requires taking into account not just the salary, but also overhead costs and other expenses.
You will get burdened with insurance coverage, payroll tax, superannuation, holiday pay, office space, and more. Unlike with outsourcing, you’ll only pay for a monthly fee and this frees you from all those added costs.
Recruitment Process and Training
This is the most exhausting part of hiring an in-house bookkeeper. The process of interviewing candidates and hiring them can take weeks, and training them on systems and procedures is time-consuming.
It might be difficult for business owners without substantial experience in bookkeeping to determine the right candidate. You may end up hiring the wrong person.
Potential Internal Fraud
Fraud is more likely to occur when the books are kept in-house by a single employee or a small team. If you have a few employees who have access to the books, creating fake expenses and pocketing the money is too easy.
BENEFITS OF OUTSOURCED BOOKKEEPING
Though outsourcing bookkeeping might not be suitable for every business, it can often provide a better benefit and less expensive cost than in-house bookkeeping.
Outsourcing your bookkeeping can provide you with the following benefits:
Controlled Cost
The main reason small businesses work with outside talent is to save money. Instead of using a full-time employee, outsourcing your bookkeeping means you only pay for what you need.
If you outsource, you know exactly what you are paying for, and you don't have to overpay for services or time that aren't used every month.
Improved Focus on Core Business Activities
Outsourcing can free up your business to focus on its strengths, allowing your staff to concentrate on their main tasks and on the future strategy.
Minimizing Risk of Fraud
Having one person oversee all financial details in your business increases the risk of undetected theft.
Fraud can be avoided by having multiple people oversee your financial accounts, and proactive checks and balances to identify red flags.
DRAWBACKS OF OUTSOURCED BOOKKEEPING
Prior to any decision regarding outsourcing, the following represents some of its potential disadvantages:
You Lose Some Control
It makes sense that when you outsource, you lose control over how tasks are being performed. However, the issue should not be a major concern if you hire people you know and trust.
Less Communication
Small businesses often experience difficulty in maintaining effective communication with their 3rd party bookkeeping firm. While communication is easy when working with in-house staff, it can sometimes be difficult when working with outside business partners.
Lack of Real-Time Visibility
There are times that you need quick access to your bookkeeping files. If the bookkeeping team is not onsite, you may not get the information you need right away.
ADVANTAGE OF OVERSEAS BOOKKEEPING
There is much fear associated with overseas bookkeeping among business owners. Some hesitate because their financial data might be at risk, while others fear lack of expertise.
To shed light, here are some of the benefits you can expect when you outsource overseas:
Professionals At An Affordable Rate
A wide wage gap exists between Australian and Overseas workers. Bookkeepers outside Australia are likely to earn less than bookkeepers based in Australia.
However, this does not necessarily mean quality has been compromised. Economic differences play a role in the wage difference between Australia and countries outside Australia.
It is possible for businesses to save up to 60% on staff wages by outsourcing their bookkeeping functions overseas.
Plus, You'll save on technology and infrastructure since you won't have to provide desk space or computer equipment to your bookkeeper.
Business Growth
Your offshore team can help you reach new levels of results and efficiency, which gives you more time to focus on your business needs. You can take advantage of this to expand your business services and offerings.
Adding an offshore team increases your capacity to take on more work, increasing profitability for your business.
Work Around the Clock
Outsourcing bookkeeping functions overseas provides considerable advantages in terms of time zones and holidays. This means you can enjoy Melbourne Cup Day without worrying about your books.
DRAWBACKS OF OVERSEAS BOOKKEEPING
Overseas bookkeeping can provide many benefits. Here are some drawbacks that business owners should be aware of before choosing an accounting firm for their accounting and bookkeeping needs.
Familiarity with Australian Taxation
Tax laws vary from country to country. A small error in your BAS statement or incorrect tax rate application can result in a penalty from the ATO.
This is why it is crucial to ensure an overseas bookkeeper you’ll work with has an extensive knowledge with Australian taxation and is up to date on all the latest regulations.
Security Concerns
When business owners consider outsourcing their bookkeeping overseas, security is always a major concern as hackers proliferate and become more sophisticated in their methods of stealing financial information.
Losing sensitive client data, such as login credentials, credit card information, business transactions, or financial reports, can have disastrous consequences.
However, it is important to keep in mind that no data is 100% safe, whether it's online, offline, or written in a notebook.
Limited Supervision
It is difficult to monitor and control the bookkeeping of your company when it is outsourced to another country. You lack direct control over how your bookkeeping is managed on a day-to-day basis.
CHOOSING THE RIGHT BOOKKEEPING SOLUTION FOR YOUR BUSINESS
YOUR BUSINESS WILL GROW IF YOU CHOOSE THE RIGHT BOOKKEEPING PROVIDER. TAKE THE TIME TO EVALUATE ALL OF YOUR OPTIONS BEFORE CHOOSING A PROVIDER THAT WILL MEET ALL YOUR REQUIREMENTS AND WILL BE A GOOD FIT FOR YOUR BUSINESS.
If you decide that outsourcing your bookkeeping functions overseas is the right move for your business, we can help you get started with your search.
Bookkeeping Central is an Australian-owned bookkeeping firm that offers quality and affordable bookkeeping services across Melbourne and Sydney through its overseas assets. With over 10 years of experience, Bookkeeping Central has helped hundreds of small to medium businesses across Melbourne and Sydney with their bookkeeping needs.
We understand how private your company's financial information is. Bookkeeping Central takes security very seriously and always follows strong security protocols.
Our employees are trained on cyber security practices and are kept up-to-date with the latest cyber security threats and scams targeting businesses. We also employ modern security measures to keep client applications and data safe only for trusted devices and users who have access level privileges.
If you would like to spend your time more wisely and run your business successfully while having peace of mind that your finances are in good hands then book a FREE CONSULTATION with Bookkeeping Central HERE or call us today at 1300 855 763.