No matter what sector you operate in, having a well-structured accounting system is necessary for all businesses. While many businesses have made the transition to an outsourced accounting service, many still prefer to have their accounting department in-house. Such entrepreneurs don’t realize the risks and costs associated with an in-house accounting department.
Here are some of the reasons why your in-house accounting department is wasting your company’s money:
Possibility of fraud
Entrepreneurs often begin businesses in a field that they are good in, which means they probably aren’t experts at running the other crucial components of the business. While HR and marketing skills are something you can learn on the job, and through experience, accounting is a skill that takes years to learn and perfect.
Employing an in-house accounting department gives power to these individuals to prepare your accounts and financial statements. You run the risk of internal fraud with an in-house accounting system. Experts reveal that you can lose up to 5% of total revenue each year in accounting fraud. Misrepresentation of figures can get your organization into a lot of trouble.
Having an accounting team on your payroll is also quite expensive. Fulltime bookkeepers and accountants are expensive to hire, and the recruitment process is also very complex. You also have to provide these employees with benefits, the total cost of which is more expensive than hiring an accounting service.
Mistakes can be costly
Mistakes are bound to happen with in-house accounting too. The sheer volume of financial information generated each day can be too much for someone with insufficient experience. Such mistakes are often hidden and come to light when the financial statements need to be prepared.
However, when you outsource your accounting to a reputable firm, they will do their best. They guarantee expert services, and their team is likely to double-check all entries to ensure there are no discrepancies. Unlike in-house accounting, a third party service has a reputation to maintain.
Outdate financial training
When you hire an accountant, their certifications and skills are probably up-to-date with the industry. However, over time, many do not bother to update their skills and knowledge. As a result, your company could end up using obsolete accounting standards or software. Tax rules also change every few years. Noncompliance with these changes can result in an audit or fine.
3Alpha LLC is a renowned company that works to improve the capabilities of clients. Our teams work to improve data access and transmission within an organization with our expert services. We also have accounting specialists onboard who help with bookkeeping, accounts payables, receivables, and tax advice so that you can focus on your core operations. Our other services include CAD drafting services, data entry, and more. To find out more, contact us here.