For businesses in Ghana, outsourcing is booming. According to a report by Elix-IRR, Africa is seen as the next frontier in outsourcing. Seen as the world’s fastest-growing region and hub for growing investment, African countries like Ghana are embracing the outsourcing culture for business processes.
Some of the most commonly outsourced business functions have been software and app development, marketing, and accounting. With many more companies offering specialised services, it is becoming much easier to outsource your business’ accounting and finance function.
As a business owner, choosing to outsource can be a valuable financial management tip for entrepreneurs trying to keep their business costs under control. On the other hand, outsourcing your accounting function comes with a loss of control and sometimes unforeseen costs. So how can businesses tell whether it’s the right move? By weighing the pros and cons of outsourcing your accounting function before making a decision.
An Outsourced Accounting Function Can Save You Money On Expert Labour
According to Salaryexplorer.com’s estimates, chartered accountants in Ghana can earn between GHS 2,140 and GHS 7,010. However, for small and cash-strapped businesses, the cost of full-time salaries and operational expenses for an accounting department can easily overwhelm profits. This is particularly applicable to the business’ accounting and finance function since the positions in this department require employees with specialized training or professional accounting certifications like ACCA or AAT.
However, outsourcing your accounting function means businesses can remove the overhead costs of having an accounting function in-house. Also, outsourcing removes supplementary costs like benefits and employee taxes from your payroll. This further reduces the costs incurred by the business, while ensuring that you stay up to date with the latest tax regulations and requirements.
Gain Better Control Of Your Business Finances
By gaining access to well-trained and experienced accounting personnel, a business gains useful insights into its cost patterns and budgetary practices. Most accounting and finance outsourcing businesses are also well trained to offer tax planning and minimisation advice. For business owners, this can be incredibly valuable in reducing their business’ tax bills at the end of the year and adopting business tax planning strategies in the lead-up to the tax submission deadline. Finally, business owners can also benefit from specialised financial advice and access to common bookkeeping knowledge for entrepreneurs, such as understanding their cash flow forecast, balance sheet, or the accrual accounting concept (preparation concept used for most business accounts preparation) – as well as the terminology that goes with it.
Outsourcing Accounting Does Not Always End Up Being Cheaper – Or More Straightforward
A possible downside to outsourcing your accounting function is that you may end up paying more if complications arise. Because most freelanced or agency accountants charge by time instead of a flat fee, you may find yourself facing hidden fees you have not budgeted for. Some outsourcing firms may have hidden fees in their contracts of service, such as additional fees for account amendments.
Lastly, many outsourcing firms may not be familiar with local taxation and business accounting regulations. For instance, the tax year in Ghana runs from the 1st of January to 31 December. So, while there certainly are upsides to outsourcing your accounting function, it does require businesses to consider all sides of it.
Author: Briana Hilton