How the outsourced accounting outplays in-house accounting?

How the outsourced accounting outplays in-house accounting?

Accounting, in spite of being a support function, plays a very vital role in the dynamics of a business. Traditionally, companies have believed in setting up an in-house accounting department. But due to the advancement of technology, outsourcing has gained utmost importance. Businesses whose sole objective of outsourcing was cost-cutting earlier are now looking it up as an opportunity to free up their manpower and resources for other more important matters. Outsourced accounting helps an organization in improving the efficiency and effectiveness of its operations.


Before deciding between in-house or outsourcing of accounting operations, let's glance through the pros and cons of outsourced accounting vis-a-vis in-house accounting -

1. Resources: - Outsourced accounting services provide expertise and better-quality owing to the fact that the human resources handling the tasks are more competent in the specific skill set required. They undergo continuous training and gain expertise in handling accounting operations. By outsourcing non-core areas, in-house resources can be used to achieve targets and perform more important tasks.


2. Control:   With the accounting head at the helm of major accounting operations of in-house accounting, the risk of fraud remains very high especially in medium-sized businesses. It becomes easy for the concerned person to manipulate the records and show fake expenses for months and years. Internal controls may not be able to deduct a probable fraud or error. With outsourcing services, transaction processing and report analysis are conducted in close monitoring which controls the operations and minimizes the risk of fraud or error in books.


3. Accuracy and effectiveness: - Due to multiple level reviews by the own and outsourced staff, financial reporting becomes timely and accurate. Also, the stringent deadlines are given to outsourcing agency and streamlined procedures which make the whole process far more effective.


4. Costs: - Outsourced accounting functions help in cutting costs. A predetermined monthly fee has to be paid to the outsourcing third party depending upon the decided plan. Whereas, a in-house accounting is more expensive option where time, efforts and resources have to be spent in training and managing the employees.


5. Confidentiality: - As compared to in-house accounting, outsourcing can be a serious threat for data breach since the organization shares key financial confidential data with the third party.


6. Synchronizing the deliverable: - Though Outsourcing involves cost-cutting and effectiveness, it becomes difficult for the in-house resources to coordinate with outsourced staff to get expected deliverable within a specified time-frame.


7. Compromise in the quality: - Outsourced vendor may compromise the quality of the output because of handling various organizations at the same time. His inability to handle the complex accounting issues may also attract financial and legal implications for the organization.


After analyzing the pros and cons of both the sources, outsourced accounting seems more efficient and cost saving than in-house accounting. Although there some cons or disadvantages of outsourcing the accounting operations, if the outsourced third party is experienced and professional, the cons get eliminated. Experienced third-party vendor adopts strict measures to protect the confidential data providing the best quality services. For any accounts outsourcing requirement you can reply or write us at

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