Bookkeeping and accounting are two functions which are extremely important for every business organization.
In the simplest of terms, bookkeeping is responsible for the recording of financial transactions whereas accounting is responsible for interpreting, classifying, analyzing, reporting, and summarizing the financial data.
Bookkeeping and accounting may appear to be the same profession to an untrained eye. This is because both accounting and bookkeeping deal with financial data, require basic accounting knowledge, and classify and generate reports using the financial transactions. At the same time, both these processes are inherently different and have their own sets of advantages. Read this article to understand the major differences between bookkeeping and accounting.
Every business is exposed to different challenges so there is no rule of thumb to dictate accounting and finance strategies. An ongoing debate regarding set up of permanent accounts department vs outsourcing has always confused business owners. It is important to understand that for some businesses, in-house bookkeeping is a necessary evil. Businesses who can avail any of these need to analyze both monetary and non-monetary aspects while decision making.
UAE labor laws are stringent and greatly protect employees from exploitation. Basic salary and basic rights definitely squeeze out finances. Comparing the cost of outsourced bookkeepingto in-house bookkeeping can provide you a logical basis to make the right selection.
Non-monetary aspects equally require strong evaluation while comparing In-house vs outsourced bookkeeping and accounting services. Sometimes extra finances trade-off with added value. So overall impact should be observed keeping both monetary and non-monetary aspects under consideration. Below are important non- monetary aspects to consider for.
Outsourcing companies are target and task oriented. They possess expertise in financial reporting irrespective of any other factor. Focus on core accounting & finance duties enable them to efficiently carry out financial reporting. In-house accountants are sometimes substituted for other tasks as well. Assigning other irrelevant tasks ultimately burden them with pending works. All this result in a total mess. In-house accountants many times window dress financial reports instead of processing the remaining financial records. Transparency is greatly questionable in such circumstances.
Cost of outsourced bookkeeping is definitely balanced out with the high level of expertise. Experience matters a lot in accounting and finance. You can hire much experienced CA/ACCA/CPA level staff in the less budget from Markef than employing the full-time employee.
In many cases, actual skills are revealed at finalization of accounts. Erroneous and improper month-end or quarter-end reporting can literally ruin all your efforts. By contacting the most reliable accounting and finance outsourcing company you can be stress-free.
Internal controls only work when there is a counter check. Vesting entire accounting & finance responsibilities in one or two hands is basically an invitation to fraud. The key solution to this risk is segregation of duties. Peer review can further alleviate the issue. Unfortunately, small businesses deter such arrangement.
The alternative route is to consult an outsourcing company. Workflow is designated among different tiers with the intention to cross-check the performance. This ensures mitigation of fraud to the maximum.
Cost of outsourced bookkeeping is clear and precise with mentioned duties and tasks. Contrary to this, hiring a permanent in-house accountant will not only cost you the basic salary but also other associated allowances.
Many times businesses miss this very basic calculation while estimating their working capital and ultimately face cash flow constraints.
A pro advice can never be compared to junior level staff. Years of experience coupled with continuous training is definitely a big advantage to outsourcing companies. A junior accountant definitely lacks farsightedness when interpreting the forecasted cash flows and financial statements.