As a business grows, the accounting function often becomes more involved than simply recording transactions and keeping the books up to date. There are more reports to prepare, more questions to answer and, of course, tax and compliance requirements to stay on top of.
For some businesses, building a larger internal finance team makes sense. For others, working with an external accounting firm can provide the support they need without having to build the entire function in-house.
But what should you actually expect when you outsource your accounting?
Outsourcing can mean different things to different businesses. For some, it may simply mean having the bookkeeping taken care of. For others, it may include accounting, financial reporting, VAT, Corporate Tax and ongoing support.
Whatever the arrangement, outsourcing should not simply mean sending your invoices and bank statements to someone outside the business and receiving a set of accounts in return.
There should be a clear understanding of what is being handled and what the business can expect in return.
The accounts should stay up to date
This is the obvious starting point, but it matters.
Transactions should be recorded regularly, accounts reconciled and outstanding items followed up rather than allowing them to accumulate.
Up-to-date accounts also mean that when management needs a figure or a report, the information is available without having to first bring the books up to date.
You should know what the numbers are telling you
An external accountant does not necessarily need to produce a large management report every month.
What matters is that the financial information provided is relevant to the business.
Depending on the business, this could include financial statements, receivables and payables, cash information or comparisons with previous periods.
The objective is to make the numbers easier to understand and use.
Tax should not be an afterthought
VAT and Corporate Tax are closely linked to the underlying accounting records.
A good accounting arrangement should take these requirements into consideration throughout the year rather than treating tax compliance as something to deal with only when a filing deadline approaches.
This also makes it easier to identify information or documentation that may be required before the return is prepared.
There should be someone to speak to
One of the reasons businesses outsource accounting is to have access to accounting expertise without building a larger finance function internally.
That means being able to raise a question, discuss an unusual transaction or understand something in the accounts when it matters.
The relationship should not feel like a process where information goes in and a report comes back with no opportunity for discussion.
The scope should be clear
Not every outsourced accounting arrangement needs to cover the same things.
A business may need bookkeeping and reconciliations, while another may also require management reporting, VAT, Corporate Tax or broader financial support.
The important thing is that the scope is agreed clearly from the beginning, including what is included, what information the business needs to provide and how the work will be managed.
Outsourcing should make things simpler
Ultimately, the purpose of outsourcing accounting is not simply to move the work from one desk to another.
It should give the business reliable financial records, timely information and access to the right support, while allowing management to focus on running the business.
The right arrangement will depend on the business, but those are reasonable things to expect from an accounting partner.
E Craft Global provides outsourced accounting and bookkeeping support to businesses in the UAE, including financial reporting, VAT and Corporate Tax support.
