Singapore SMEs often face numerous challenges in managing bookkeeping and accounting processes. These processes are tedious and time-consuming, yet essential to the running of a company. Proper accounting and bookkeeping help your company attract and retain investors, comply with local accounting regulations, and make critical business decisions.

Some standard accounting and bookkeeping challenges Singapore SMEs face are time limitations, lack of knowledge, and human error. 

Time Limitations: Busy small business owners may not have enough time to spend on accounting and bookkeeping. They may rush through the process, and this could compromise data accuracy. 

Lack of Knowledge: Not all business owners have in-depth knowledge of accounting best practices and regulations. They may lack the expertise or experience to prepare their financial records properly. 

Human Error: Manual bookkeeping and accounting have a high risk of human error due to the monotonous and repetitive nature of the tasks. Outsourcing these accounting functions helps small business owners save time and money. 

How do you know if outsourcing is right for your business? This article explains the benefits of outsourcing your accounting processes. 

The Burden of In-House Accounting

Most business owners think maintaining an in-house accounting department gives you more control over accounting processes. However, you may spend more time, effort, and money hiring a team of in-house accountants.

• Overhead Costs

When hiring an in-house accounting team, you will incur office rental and utilities costs. 

• Wages

You must pay your in-house accounting team’s wages, including bonuses, medical insurance, and overtime.

• Employee Turnover

Employee turnover leads to disruptions in work during the handover process. You may spend precious business time handling employee-related issues such as offboarding, performance reviews, salary negotiations, and benefits. You could have spent this time working on other core business operations.

• Increased Risk of Fraud

An in-house accounting team is highly familiar with your business’s operations. They have more knowledge of the company’s financial processes, including any loopholes that one can exploit, making it easier for in-house employees to commit fraud and embezzlement as they can cover up discrepancies internally. 

Cost-Benefit Analysis: In-House vs. Outsourcing Accounting

This section compares the estimated costs of hiring an in-house accounting team versus outsourcing your accounting functions.

According to Payscale, Singapore’s average annual accountant salary is $52,000 ($4300 monthly). Considering overhead costs like office rental, employee welfare, and utilities, hiring a team of accountants may incur more costs. 

On the other hand, outsourcing accounting to an accounting firm can cost up to $500 to $900 yearly for a high-quality package catered to SMEs. 

Save more when you outsource accounting to an accounting firm. Such cost savings are significant for SMEs with a lower yearly revenue.

Save Time: Focus on Core Business Functions

Cost savings aren’t the only thing you enjoy from outsourcing your bookkeeping and accounting to a team of professional accountants. It frees up time for core business functions critical for your business’s future direction.

• Access to Expertise and Latest Tools

A professional accounting team grants you access to industry expertise and cutting-edge accounting tools, including premium accounting software. These might be too expensive for your SME to purchase.

Professional accounting firms invest in specialised tools, they have up-to-date knowledge about accounting and audit best practices. These skills help perform their primary accounting duties for SMEs efficiently.

Accounting service providers are experts in helping firms organise their accounts and have experience handling the financial records of SMEs across different industries. When you outsource, you will enjoy higher-quality accounting.

• Flexibility and Scalability

Outsourced accounting services are highly versatile and scalable. Most, if not all, accounting firms offer custom packages for client companies. Packages catered to SMEs are affordable, comprehensive, and tailored to their needs. 

Outsourced accounting services can also be scaled up to accommodate your business’s expanding operations. They can also expand your service package to include additional outsourced processes like payroll and audit.

Case Study: Singapore SMEs Benefit From BPO Outsourcing

BPO helped many Singapore SMEs survive during the pandemic. BPO (business process outsourcing) usually includes outsourcing accounting, bookkeeping, payroll, and other services to third-party professional service providers. 

BPO helped reduce costs and was a crucial line of support for SMEs who needed to keep operating costs as low as possible during the pandemic. BPO continues to be popular for SMEs even after the pandemic.

Conclusion

Outsourcing accounting helps SMEs that may not have the financial capabilities to compete for skilled talent or expensive software. Thus saving time and effort directed at in-house accounting. 

CorrectCounts Accounting Services provides various accounting services for payroll, bookkeeping, and auditing in SMEs. Our expertise and experience help your business save time and focus on core operations.

Contact us to find out how we can help you.