Melissa Jacobs explains, through a case study of one of her clients, how this presents a number of benefits.
Outsourcing your accounting is very common practice for small businesses, as they most often don’t have the budget to employ their own resources. One less thing for the entrepreneur to worry about!
Outsourced accounting for bigger businesses also presents a number of benefits, especially in terms of cost savings and expertise. The best way to explain this is through the use of a case study of one of our clients, who approached us in 2019 to take over a number of their company’s accounting functions.
Basic information of the business, who has chosen to remain anonymous, as follows:
• Sector: Manufacturing within the construction sector.
• Turnover: R110-million per annum.
• Number of staff: 55.
• Number of accounting staff: three (two permanent, one consultant) with a cost to company of R900 000 per annum.
• Saving achieved by outsourcing: R720 000 per annum.
Business owner pain points: The business owner had the following frustrations with his accounting staff:
• There were two permanent long-serving employees who had become complacent over the years, with a decline in their efficiency, output and attitude.
• Due to the annual salary increases over the years, they were being overpaid for the value they were adding and compared to current market-related salaries.
• The staff were not keeping themselves abreast with best practices and changes to legislation.
• They were set in their ways and refused to adopt and upgrade to newer, more efficient software.
Solution:
The business owner retrenched two of his accounting staff, terminated the external accounting consultant, and outsourced the following to us:
• Processing of daily cash book.
• Allocation of customer receipts.
• Month-end journal entries.
• Finalisation of monthly management accounts.
• Vat submission.
• All tax submissions.
• Tax planning: both company and personal (shareholders).
• Monthly PAYE and UIF.
• Workmen’s compensation returns, filing and Department of Labour liaison.
• Audit file preparation.
• Annual financial review.
The business retained the customer invoicing function and the supplier capturing function.
The Benefits Of Outsourcing:
• Access to a chartered accountant who will provide sound financial advice.
• Significant cost savings.
• No frustration with employing the right accounting staff in the event of staff turnover.
• No lack of continuity in the event of internal staff changes.
• No need to keep up to date with complex legislation changes – your outsourced partner will do that.
• Access to the best tools and best practice.
• Removal of three work stations and all associated costs (office furniture, office space, computers, electricity, tea/coffee/staff meals etc.).
• Three less staff to manage within the office environment.
• No absenteeism to worry about.
• No bonuses and leave pay to worry about.
• No retrenchment costs in the event of retrenchments.
Where to from here?
Should you be interested in looking at outsourcing your accounting function, contact Melissa on melissa@mjacc.co.za to schedule a no-obligation discovery session where we can gain an understanding of your current needs and assess if you will sufficiently benefit from outsourcing.
FOR MORE INFO:
- melissa@mjacc.co.za
- 087 821 7110
- www.mjacc.co.za