In today’s world of ever-expanding accounting complexity and growth in competitive global markets, deciding whether to outsource your company’s consolidation needs can be a difficult but important decision.
Factors that may impact your decision include amongst others your company’s size, the need for information to aid your business decision making processes, the legal requirements of your local jurisdiction, the technical accounting expertise required to prepare consolidated financial statements and the cost of meeting your consolidation requirement needs.
As with all business decisions, there are many considerations when making the choice to outsource your consolidation needs.
It’s more cost effective than having in-house staff as you avoid overhead employee costs such as insurance, paid time-off, payroll taxes, retirement costs and similar expenses. You also save on office space costs.
Cost saving becomes even more prominent when you factor in years of experience. Outsourced accounting solutions offer decades of collective accounting experience for less than the cost of a single staff hire.
Employing consolidation specialists may also require investing in specialised tools and such tools don’t come cheap. Outsourced specialists typically roll the cost of these tools into their own operating expenses.
Managing an in-house consolidation department takes time. Outsourcing gives you the time back to focus on your business and the tasks generating the income for your company.
Preparing consolidation reports in line with financial reporting standards and legal requirements includes an element of risk.
Having the expertise of an entire accounting team to hand can help reduce the risk of non-compliance and unreliable financial reporting. With their wealth of experience they can identify errors and provide foresight into potential future implications.
Technical expertise and quality of work
Your objective is to provide high-quality products or services to your customers. Consolidation service providers have the same objective – to provide you with high quality services, complying with relevant business and tax laws.
Outsourcing provides you with the benefits of full-time knowledge on your team without incurring the round-the-clock cost for it and you can be at ease knowing you’re benefiting from specialists in their field.
Not to mention that by outsourcing you’re effectively buying the required specialised tools and knowledge without doing any of the actual ground work yourself.
Outsourcing allows for quick and easy expansions or cutbacks. Whatever your plan is for your company, having access to a dedicated team giving you different plans and options will help you reach your goals.
Considerations of outsourcing
Control and insight
Outsourcing your consolidation function means you have less direct control over the process. While managing in-house staff provides more direct control, service providers aim to provide clear and easy channels of communication, making sure you’re a part of every step… Your service provider is there to support you with what can often be time consuming data entry and report building functions.
Confidentiality Accounting information is, in most instances, highly sensitive. Communicating this information through unsecured channels, whether sensitive or not, could make the company susceptible to the loss of information. Protecting clients’ information is part of service providers’ processes. Investing in advance antivirus programmes and automated data monitoring solutions protects both the client and the service provider.
Scope and costs
It’s important to set clear expectations with your service provider from the start of the relationship and to keep communication channels open at all times.
Assessing your consolidation needs
The process of preparing consolidated accounts is a complex operation and requires solid accounting skills, a mastery of specific computer programmes and excellent organisational competencies.
While assessing the option to outsource, it’s important to look for service providers who have a wide range of resources at their disposal, providing you with great flexibility. They should tailor their services to your needs. They should also have highly experienced and technically competent employees that specialise in fundamental areas such as IFRS requirements and tax compliance.
Having high quality consolidated reports will give your company a competitive advantage, allowing for clear communication with different stakeholders and potential investors.
The decision to outsource your consolidation needs is usually based on a thorough cost-benefit analysis. After performing this analysis, most companies discover that outsourcing this complex task into the capable hands of experts is cost and time effective.
Find out more about our IFRS and Consolidation services here.