skimping on accounting may be bad for business

Why being cheap on your accounts can cost you in the long run

There’s an old adage about time and money, and it is never more relevant than when it comes to finance. It makes perfect sense to outsource many of the process related chores in your business – accounting services like book-keeping or payroll – so you can concentrate on what matters. But which aspects should you release to get the most bang for your buck?

The trick is freeing up your employees: by reducing the time they spend on the day- to-day, they can focus on the bigger picture. After all, isn’t that what you pay them for? Of course it is, but you need to be wary of cheap solutions.

Having your neighbour’s daughter take on book-keeping duties once a month can seem like a good idea. She knows how to keep a tidy ledger, it saves you having to do it and, most of all, she’s cheap. However, you also know that other old adage, you get what you pay for. Yes your books are being kept in order, but what services are you not getting? Experience for one.

It’s perfectly reasonable that you don’t want to invest in a full service chartered accountant. Your business might not need it, or it’s young and you can’t really afford it. But you need to consider the long term impact of low-cost services like your neighbour’s daughter.

Invariably they’ll be using out of date systems that aren’t a good match for the needs of your business. Twinned with a lack of expertise, you can be left with a fragile system that in the worst scenario exposes your business to financial instability. While it seems that everything is ticking along ok, can you really be sure? And do you have the time to dig deep and find out?

The same applies at the end of every financial year – tax time. It’s an ugly job but someone’s got to do it, and low-cost services may be ideal for simple, domestic accounts; but not your business. It’s a complicated beast that needs the attention of agile, experienced minds who understand the nuances of the tax system and how they apply to you. A poor choice here could lead to an audit which will involve hours and hours of time you simply don’t have. At best. Audit’s don’t always end well.

Outsourcing book-keeping and other ancillary financial services is a good idea. The right choice can lead to improvements in system processes that will save you money. It frees up time so you and your staff can focus on what you do well, growing the business. But you need more than someone who passively stores numbers and logs transactions. You need people who can visualise the scope of your business, now and into the future. People who have ideas and solutions that integrate with your plans. People who offer expertise, experience and efficiencies.

They’re certain to cost you a little more in the short term, but save you time and money in the long run. After all, buy cheap, buy twice.

We’re currently offering a free consultation to help assess your needs and build the right financial platform for your business.

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Why your business needs a VCFO and not a bookkeeper

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