Maintaining a successful and stable business is not an easy task because it requires expertise in every profession. Now, the importance of finances is known to everyone, especially when someone is running a business. And to manage those finances every business requires expert accounting. But what makes accounting a headache for business owners? Accounting has a direct impact on a company's financial health and stability, and a small mistake can lead to huge losses and, in some cases, legal issues and bankruptcy.
So most business owners and entrepreneurs get stuck in between In-house and Outsourced Accounting. As accounting and auditing can't be ignored or compromised, top-level authorities sometimes make wrong decisions when choosing the right one. Both In-house and Outsourced Accounting & Auditing are good, but every organization has different requirements. Here, we are going to discuss In-house vs. outsourced Accounting & Auditing in detail so that every entrepreneur will make the right decision for his company. So, let's start.
What is Accounting?
Before going deeper, let's take a quick note about Accounting. So accounting is a process or concept that deals with daily transactions, cash flows, debt, and everything related to money, including the management of assets. The whole process is done through creating, updating, and deleting financial records and generating statements based on purchase & sale and credit & debt. The accounting services provide an overview of the company's financial condition, expenditures, and of course profits.What is Auditing?
Auditing is a practice done by accounting or finance experts to verify the accounting process, data, and results. Simply put, auditing services measure the accuracy of the accounting and finds gaps & flaws if they exist. Auditing is done to cross-verify the financial condition of a company as per its official claims. Auditing builds a positive image of the company in the market and directly impacts investors' trust.In House Accounting & Auditing: An Overview
As the name implies, in-house accounting and auditing means the company or the organization has its own team for accounting and auditing. In-house means having an internal team for every process or task. Simply put, you don't have to hire an agency or company. In-house accounting and auditing are part of the finance department of an organization, and every member of this team has a strong base in accounting, maths, statistics, etc. Similarly, in-house auditing means having a specialized internal team for auditing.Outsourced Accounting & Auditing: An Overview
Outsourcing is very common nowadays, and everyone is familiar with it. Outsourcing means sourcing teams from outside of the organization in order to perform specific tasks. Today, multiple outsourcing agencies are available in every domain. So, in the case of outsourced accounting & auditing, a business straightly hires an agency which will perform all accounting and auditing tasks. The company has no relation with the process, and they only want timely results with proper communication.In House vs Outsourced Accounting & Auditing: The War Begins
After knowing accounting & auditing and in-house & outsourcing, it's time to start the battle that every business owner has to face. So, to make the comparison interesting and straightforward, let's discuss some important factors that will help choose the winner. So here are some factors that should be considered while opting for in-house or outsourced accounting & auditing.● The scale of the Business
This is very important because you will make half of your decision from here. Every business has different requirements, but all requirements increase or decrease as the business expands or shrinks. In the case of large-scale businesses, where thousands of high-amount transactions take place every day, in-house accounting & auditing are preferred. This is because in-house accounting provides you with more control over your financials. Most importantly, if you have a large-scale business, maintaining a special department for accounting & auditing is not a big deal. But in the case of small or medium businesses, maintaining a team will be difficult as it requires a lot of resources. In that case, preferring outsourced services is a good idea. It will not only save your resources and efforts but also provide you with more quality work in less time.● Budget
Now, the second most important factor is budget. Sometimes, even big firms prefer outsourced accounting & auditing because there are budget issues. Having an in-house team is not easy. From hiring to training and salary to retention, the whole process not only requires money but also a major chunk of time. On the other hand, outsourcing makes things easier as it is inexpensive and doesn't require other resources like training, etc.● Quality & Security
One can't ignore this to take his business to the next level. When it comes to quality & security, outsourcing is a champion. This is because when you hire an agency for accounting & auditing, you will get work done by industry experts. Such agencies have a huge team of highly skilled and experienced professionals, so there is no reason to worry about quality. Similarly, your data will be at minimum risk because the agency will face serious legal issues in a data breach. But this is not true with in-house teams. Firstly, acquiring highly experienced and skilled professionals will disturb the company's finances. Even if you hire only highly skilled people, you have to train them specifically for data security. While expanding the staff, there is a high chance of a decrease in quality, and one can't do anything.In House Accounting & Auditing: Pros & Cons
In-house accounting is a highly beneficial practice, and currently, many reputed and well-established organisations are using it. But in-house teams don't fit every firm. So here are some pros and cons of in-house accounting & auditing.Pros
- ● Provides more control over data
- ● Continuous monitoring and real-time metrics
- ● Highly effective for large scale organizations
Cons
- ● Expensive in most cases
- ● Limited flexibility
- ● Comparatively less efficient
- ● Accuracy may be compromised
Outsourced Accounting & Auditing: Pros & Cons
Outsourcing has become a new tool for companies to exponentially increase the growth. But not everything is perfect, and so is outsourcing. Let's have a look at some pros and cons.Pros
- ● Less expensive
- ● Quality & Effeciency at its best
- ● Timely and highly flexible
- ● Quick in terms of extra services
Cons
- ● Not well suited for organizations with huge data
- ● Auditing may be compromised
- ● Less control over key metrics and real-time data
- ● Less secure in the case of an untrusted agency