Today, companies are outsourcing to lower cost countries such as India and China. The question is: “Should your Company outsource business accounting services?” Argument for Outsourcing Business Accounting Services in Mississauga or Toronto
The argument for outsourcing business accounting services is that it is less expensive to perform these services in Indian and China than in Canada, because of lower labor costs in those countries. Additionally, because of the time zone difference, Canadian companies can have their business accounting services completed over night in either Indian or China, and ready for them in the morning to review. This may seem appealing for those seeking small business accounting services or even big businesses that are looking to maximize administration cost efficiencies.
Argument Against Outsourcing Business Accounting Services in Mississauga or Toronto
However, there are numerous disadvantages for companies that outsource their business accounting services offshore, which outweigh any benefits realized:
1. Language Barrier
A language barrier may arise, making it difficult to effectively communicate the requirements that a company has. If the requirements are misunderstood, then the results could be disastrous.
2. Labor intensive
You should not outsource, because your staff must manually scan or fax all documents (e.g. invoices, receipts, bank statements, etc.) to provide an offshore provider a copy of this data. This is very time consuming and therefore adds to cost of outsourcing.
An offshore provider will not be available during regular business hours, while your local provider in Toronto or Mississauga will be. You may have an urgent question on your financial statements or accounts while your offshore provider is asleep!
4. They’re not accountants
Offshore companies that provide outsourced business accounting services are primarily focused on processing accounting transactions as fast and efficiently as possible. While this sounds good, it’s really not.
By only looking at transactions, offshore companies are unable to interpret the financial information for you, which is the most essential part of business accounting services. For example, questions such as “What is my return on investment?”, “Why did my gross margins decline?”, “Is my company as profitable as it should be compared to the competition?”, cannot be answered by offshore outsourcing companies. The big picture can only be identified by an experienced Chartered Accountant.
5. Interactive communication
In many situations, it’s difficult to communicate with another person by only using the phone or email. Human interaction is essential where the subject is at least moderately complex. Business Accounting Services are complex in nature and require in-person discussions with the business owner. Your local provider is readily available to meet with you for those discussions. Offshore providers are obviously not able to do this.
6. Security of Information
In today’s electronic age, business owners must be aware that their proprietary information can be stolen when it’s transmitted over the internet or via other electronic channels, such as scanners or faxes. Would you want to risk transmitting sensitive source documents, including customer invoices, to an offshore provider through a scanner of fax? Probably not.
Additionally, offshore Business Accounting Service providers usually require remote access (via the internet) to your server in order for them to complete their job, which poses another security risk to you.
In contrast, your local provider of Business Accounting Services in Toronto, Mississauga or office near you, does not require the use of a scanner, fax, or internet to gain access to your company’s information. Rather, your local provider can physically work at your office, if you prefer, which ensures the security of your company’s information.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.