Role of Accounting in a Business
As a savvy business owner, you will easily agree that the role played by professional accounting for your businesses bottom-line as well as for legal compliance cannot be overemphasized. Forget the glitz and razzmatazz of slick marketing launches, power dinners and choreographed press briefings. The real story of a company’s performance is told by those neat rows and columns of numbers.
As the adage goes, numbers don’t lie and with just a glance at your business accounts it should be possible to ascertain the financial health of your company. The accounting market has undergone something of a revolution in the past couple of decades. Today, there is a motley collection of companies touting accounting solutions such as everyday bookkeeping and filing of tax returns. But taking into account the crucial role played by accounting for your business to operate profitably, you should take time before leaving the task to an outsourcing third party.
Advantages of Outsourced Accounting Services
Vendors of outsourced accounting services invariably tout their services based on the premise that by outsourcing your accounting operations with them you will be freeing up crucial time and resources to focus on the core functions of your business. But, as is usually the case with such issues, there is more than meets the eye at first glance.
Benefits vs Cost
Admittedly outsourced accounting services will free up resources geared towards back-end operations and may spur more sales and production. The big question, however, is whether the benefits which accrue from the switch outweigh the cost of paying the outsourcing services provider. In certain cases, businesses have realized too late that the cost and effort involved in implementing the outsourced accounting service are too huge to justify any profitability resulting from the new arrangement. This is invariably the case when the business is new in the field and their sales volume has not risen high enough to justify incurring outsourcing expenditure.
As a business owner you should also keep in mind that outsourcing accounting services does not equate to completely hands-off involvement in financial record keeping. You and your employees will still have to be involved in recording and collating revenue and expenses. The figures are collected from the different departments of your company and them availing them to the outsourced accounting services provider. You should consider whether the effort and time spent in doing this sort of preliminary record keeping, added to the cost of the overall service has a positive impact on your company’s bottomline.
Your decision to enter into the arrangement should only come after you have ascertained that either the required records are readily available or involve negligible inconvenience/costs and that the fee charged by the vendor is reasonable.
Timely and detailed information
One of the most obvious benefits of engaging proficient outsourced accountancy services provider in Singapore is that they will be able to produce, in timely fashion, detailed figures of account to offer insightful views of a company’s performance for use by the company’s management. Such information is crucial for those charged with executive powers to ascertain the profitability of the business as a whole and to decide on what direction to take in the future.
As a Singapore business owner, you need to consider the skill level of the staff working in your company before deciding on the best solution for your accounting needs. There is always great demand for proficient accountants in Singapore. To attract the best accounting talent joining the market, Singaporean firms compete fiercely with each other to attract the best brains to their paid ranks.
Skilled and professional accountants
In a bid to raise the standards and guarantee professionalism, the Singapore government revamped regulations governing the sector in 2013. One of the most significant developments in this regard was the establishment of the Singapore Accountancy Commission (SAC), a body charged with the responsibility of establishing and enforcing standards in the profession. Moreover, all new accountants have to undergo the highly respected Singapore Qualification Programme (Singapore QP).
As an up and coming Singaporean company, you may not have the wherewithal to recruit and remunerate such top shelf talent. But through the medium of an outsourced accounting services provider, you can ensure that your books are meticulously kept in order. This assumes additional importance when it comes to filing tax returns at the end of the year. Outsourcing your accounting services guarantees you will never miss the strict deadlines.
Compliant with ACRA
The importance of professionally done accounts goes far beyond compliance with tax laws however. It could be the essential difference between your company landing a lucrative contract or perhaps even attracting moneyed investors and going burst. This is because the Accounting and Corporate Regulatory Authority (ACRA), Singapore’s governing body for business accounting charged with the sole oversight role in accounting and governance matters, has put in place a rating system used to rank companies for compliance with its standards.
ACRA’s rating system follows a simple colour-coded scheme. The code denoting the company’s negative or positive rating is displayed right against the company’s name in ACRA’s Bizfile database and this information can be accessed on the public search portal. For a publicly listed company to earn a positive rating, it needs to hold its AGM every year and within 15 months of the previous meeting. A newly incorporated company is required to have held its first AGM within 18 months of incorporation for it to earn a positive rating. Just as well, ACRA requires that the accounts tabled at the AGMs must not be older than six months for a private company and not older than four months for a private company if the rating awarded is to be positive. A positive rating is also dependent on the company filing its annual returns within 30 days of the AGM.
Reputable accounting firm
From the foregoing it is easily apparent that having a reputable accounting firm handle your business accounts is essential for achieving and maintaining a positive public profile in Singapore. In turn, this bodes well for a company seeking to appeal to potential business partners, investors and even buyers as impeachable corporate governance and financial self-discipline are essential considerations in all these scenarios.
As we have established, the benefits you stand to enjoy after engaging a proficient accounting firm to handle your business accounts on outsourcing terms are legion. That said though, you need to carry out a comprehensive analysis of the potential benefits and costs of that change before reaching any agreement with the outsourcing vendor. If the associated costs can be justified, it may be the most significant corporate decision you will make for your business. It is certain to help your brand shore up its credibility in the marketplace and spur on exponential growth.