This is a question we are often asked by small business owners – in this article, we take a look at the subject and give our thoughts on where an outsourced accountant can add maximum value.
Below we have outlined 7 reasons to consider outsourcing your accounting function.
Why are businesses wary of outsourced accounting?
Before we start on the reasons why we believe outsourced accounting makes commercial sense for most growing small businesses,
The obvious starting point is that money is a very personal topic and many founders and small business owners are wary of sharing the true state of their business. Will people judge them for their profitability (or lack thereof)?
While this does make complete sense, we believe the benefits far outweigh the negatives of having an accountant providing insight into how your business can run better.
- Does admin and compliance thrill you as a business owner?
Reason number one to consider outsourced accounting relates to admin and compliance – red tape is a major issue for SMEs in South Africa with a variety of different annual returns (CIPC, B-BBEE, SARS, COIDA etc.)
Unless you have a burning passion to do admin, your time is invariably better spent investing in the core function of your business.
Another key consideration here is if you and tendering or looking to supply to many of the big mining and finance houses, they are going to require extensive documentation. There is no point missing out on procurement opportunities because you don’t have your documentation together.
2. Accountants study the rule book
Take for example the Employment Tax Incentive (ETI) – this is a regularly missed SARS rebate that many employers don’t claim. Similarly there are tax benefits when investing in skills solutions such as the Section12H tax break.
Unless you are passionate about studying the tax codes, surely it makes more sense for you to outsource this to people who focus on this?
Your accountant will identify opportunities such as these and integrate them as part of your operations without you having to study tax legislation and stay up to date with all of them.
3. Put time back in your pocket when you outsource your accounting function
Being an entrepreneur means that your time is your valuable commodity – by outsourcing a dedicated resource to handle these issues, doing your invoicing, following up on debtors etc.
As the business owner or entrepreneur, your time is better spent developing products, knocking on doors and servicing your existing client base.
4. Take the emotion out of debt collecting
As a small business, debt collecting will always be a challenge particularly if your revenue is concentrated around a handful of key accounts.
Very often you will be building close inter-personal relationships with your key clients and it is never easy then having to chase outstanding invoices.
De-personalise this part of the business by adding an outsourced accounting function where an external third party is now following up on outstanding funds.
5. Improve your pricing power with an outsourced accountant or bookkeeper
One of the great things about working with an outsourced accountant is that they are exposed to the nuts and bolts of other businesses and industries.
Not only can they look at the work you are presently doing and guide you as to whether you are actually working to a viable profit margin, they can also provide input into similar types of businesses and give you a sense of whether you are pricing accurately.
We believe our partnership with SME.Tax is further enhanced through the use of the SME Snapshot tool as it gives you an overview of key business metrics that will help you run a smarter business.
6. Use your outsourced accountant to give you an independent viewpoint of your business
It is important to distinguish between the bookkeeping function and the advisory services provided by an accountant who understands your business and its finances.
In the earlier point, we discussed how your accountant can look at things like profitability, but the advisory function goes much further than this.
An external set of eyes can look at your expense lines and help you as the entrepreneur to focus on your core business.
7. An outsourced accountant is a great asset when applying for SME finance
We recently assisted a client in the energy space to raise R500 000 in working capital through our partners from LulaLend.
The outsourced accountant was quickly able to pull together a combination of historical financials and management accountants and the loan was granted within 48 hours of the application being received.
If you are a business in Gauteng (Rosebank, Parkhurst, Rivonia or Sandton) and you are keen to discuss an outsourced accountant for your business, you can reach out to us by completing the form below or e-mailing marc@sme.tax
