Why Contact a Financial Management and Accounting Consultant Even if You Do Not Plan to Outsource
The pandemic affected all sectors of the economy. Consumer-related businesses suffered the most.
This is retail, tourism, transport, and the service sector. Numerous lockdowns forced entrepreneurs to do an unscheduled reassessment of their business, adjust the workflow, and change the financial management and accounting approach. The latter two aspects faced repeated changes in pre-pandemic times due to innovations in state legislation. To adapt to new conditions, companies increasingly resort to accounting outsourcing or outstaffing. Nevertheless, there is another way to look at specific processes from the outside.
Why are companies switching to outsourcing?
Outsourcing gained traction in Ukraine. Every year, more and more owners decide to delegate various tasks to the contractor. Here are some crucial reasons to outsource:
- dismissal of the chief accountant or staff of accountants
- frequent staff changes and inability to find a replacement quickly
- accountant’s maternity leave
- there is no need for a full-time employee for small firms
- reduce the cost of setting up and maintaining a finance department
- financial and legal liability for errors
However, Ukrainian owners are not always ready to fully transfer financial management to a contractor. From their vantage point, outsourcing can somewhat reduce the efficiency of data acquisition. In large companies, managers choose an in-house specialist over an outsourced one to ensure quick response. However, there is still a need to consult an independent expert on accounting issues.
Considering that the use of outsourcing services is very flexible, the company decides for itself which areas of accounting to transfer to set up the most efficient workflow. This can be either a bottleneck area, like processing primary documents or the entire accounting process. If the company needs an outsourcing company specialist to be on-site, this is also possible. Large companies use this model to improve workflow efficiency.
In addition, the specialists of the outsourcing company have extensive experience in various industries. Therefore, they can act as a consultant on existing processes. For example, offer automation in an accounting program or use electronic document management in a company, etc.
Along with the full transfer of tasks, outstaffing is also popular when a contractor company finds the right specialist. In this model, the company that provides services employs a specialist officially as a member of its staff. A particular contract between the contractor and the business regulates such relations. It stipulates the scope and timeframe of work. For example, if a particular task requires five hours of working time, the customer pays for the time spent and not for the contractor’s full day’s work. This is a definite advantage when it comes to reducing the cost of the payroll fund.
The pandemic has also shown just how unpredictable the world can become. Furthermore, although every business must consider all the risks, no one knows what “virus” tentatively speaking will appear tomorrow and how quickly you will have to adapt to it. Therefore, if you are not 100% sure that you are going the right way in a turbulent period, attracting a third-party financial management and accounting consultant will provide some clarity.
Why is outside perspective helpful?
The need to attract a consultant arises for various reasons. One of the most popular is to change management or owners to evaluate the effectiveness of the accounting function or evaluate the competence of the accounting department.
Sometimes a company may hire an ineffective employee but see the results only later. Even the most advanced software in the hands of an incompetent employee can lead to losses. For example, it is essential to specify the exchange rate daily when calculating foreign currency transactions and not leave this indicator by default. Over time, this can significantly distort the data and cause tax violations.
There is also a need to find innovative solutions for organizing finances. In practice, some specialists find it challenging to adapt to the fast rhythm of the company. They can do their usual work very well, but they do not offer anything new.
Foreign businesses often request financial advice when launching a new project in Ukraine. In this case, companies need comprehensive assistance in accounting and taxes as well as legal and personnel issues.
Large foreign companies are usually systematic and organized in processes, so they are interested in entirely different services. They already have their policies, processes, and software products for maintaining the entire accounting or accounting section. Therefore, they need the advice to understand the Ukrainian legislation. Since the latter is very volatile and ambiguous, foreign businesses used to working in stable conditions are not ready to independently calculate a tax strategy to maintain break-even operations.
Another of the most common reasons for attracting a consultant is the desire to get an independent opinion to evaluate the effectiveness of financial management and accounting. There are unplanned situations when you need to contact an external expert, for example:
- a competitive market environment that requires the owner to make operational changes in the business
- the need to bring the organization to a whole new level in its field
- unprofitable activities of companies
Consultants usually have various experiences, so that external counselling may be helpful even when there are no apparent reasons for it. For example, if you want to get an expert assessment of the current state of affairs, find out what processes and in which way can be improved, harness international practices to enhance the company’s activity or reduce the personnel management and accounting cost, the consultants will be more than helpful.