Previousy, we introduced accounting systems for SMEs. Regardless of what a business does or how big it is, accountants always have a place in ensuring they run smoothly. Early on, small business and SME owners might find it sensible to handle accounting responsibilities themselves, however as a business grows these tasks undoubtedly become more complex and time consuming. When this happens business owners are often hesitant to engage an accounting firm when their prior arrangements were working fine. In this article, we look to provide five ways that hiring an accounting firm can help a business.
How an accounting firm can help you:
1. Save Time to Focus on Other Key Business Activities
Small business and SME owners are hindered by their need to handle all aspects of their company, accounting is often overlooked. To review and examine every financial detail of a business takes time that many do not have. When one lacks accountancy knowledge, reviewing financial details takes even longer and has a high chance for errors.
Outsourcing accounting related work to an accounting firm can save time on both simple and complicated accounting tasks. The economies of scale offered by a professional accounting firm allows SMEs access to a pool of resources and knowledge larger than what in-house accountants can typically provide.
2. Save Money by Accessing Professional Knowledge and Avoiding Penalties
Hiring full-time accounting staff to work in-house is often less economical than engaging a professional accounting firm. In respect of accountants, business owners have to incur costs to acquire tools, resources and provide regular supervision to enable them to perform their job responsibilities. Accounting firms will often have staff who are utilizing up-to-date accounting software such as Xero.
Engaging an accounting firm can save costs as they typically base their fees on the volume of transactions and time spent on providing support. These conditions are variable to the level of the company’s business activities. As such, engaging an accounting firm can possibly save more in expenses as compared to employing in-house accountants which is a fixed cost to company. Accounting firms can also save businesses from pitfalls through their knowledge of local accounting practices, tax compliance and planning. Incorrect tax return filing, missing deadlings or an incorrect understanding of local regulations might lead to non-compliance. In the event of non-compliance, heavy penalties and fines may be imposed.
3. Provide a Better Understanding of a Company’s Financial Performance
Business owners can improve the profitability of their business by having access to quality financial information and the ability to analyse the results. Accounting firms can define various financial measurements and reports to analyse the financial health of a company and to identify any red flags for the company.
Accounting firms can also help create business forecasts and budgets to develop company business strategies. By helping clients understand what aspects of their business are the most profitable and the key details of their cost structure, the company can make an informed decision to reallocate resources to improve profitability.
4. Improve Cash Flow Management
Accounting firms can provide tips and implement tools such as Xero to improve cash flow management.
At the FastLane Group, we provide tips and implement tools such as Xero to improve clients’ cash flow management. Every month, we provide a cash flow report that is made available in Xero so our clients know precisely what money is flowing in and out.
With our help, SMEs will be able to recognize when their receivables and payables are due and how to structure their cash flow accordingly. By anticipating their coming cash flow movements, an SME can structure their payment cycles with vendors and improve the receivables collection from clients in such a way to maximize their cash reserves.
5. Seamless Audit Coordination
As discussed in Hong Kong Audits – Audit Reports and Audit Opinions Explained, accountants play a critical role during an audit. Pursuant to Hong Kong’s Companies Ordinance, all Hong Kong incorporated companies are statutorily required to audit their financial reports on a yearly basis.
Accounting firms can assist greatly during an audit. Firstly, they can address complicated accounting questions and act as a company’s point of contact with their auditors. When an audit is conducted, auditors will examine a company’s financial statements to determine if they are in compliance with Hong Kong taxation laws and accounting and auditing standards. When these financial statements are well prepared there is a good chance that an audit will go smoothly. Auditors will also be able to direct their questions towards the accounting firm and relieve the burden from the business owners.
Having an accounting firm manage and prepare your financial statements can ensure greater compliance in the event of an audit and the company can enjoy a seamless audit review with the help of an accounting firm coordination especially in a tight reporting deadline.
The FastLane Group is an accounting firm that understands SMEs. As a Xero Platinum Partner, we have extensive experience in helping our clients build better businesses. Please contact the FastLane Group for assistance!