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Apart from accounting services companies, SMEs are also recommended to adopt cloud accounting software

For small and medium-sized enterprises, accounting is a crucial part of the daily operation. However, for small-scale enterprises (especially start-up companies), they have to consider whether to spend extra cost to hire specialised accountants to handle company accounts. For this situation, it is typical to use a third-party accounting services company to handle accounting affairs. In fact, enterprises can also efficiently solve accounting-related matters with the help of the cloud accounting software.

Benefits of outsourcing accounting services

Enterprises require accounting services including bookkeeping, auditing, account management, tax declaration, and preparation of financial statements, etc. Bookkeeping, being a very important item among them, is to systematically handle all daily income and expenditure, transactions and other financial items of the enterprise. In addition to the experience and professional knowledge related to these tasks, what's more important is that accountants must make every accounting process and every account of the enterprise comply with Hong Kong's "Inland Revenue Ordinance" and "Companies Ordinance" and ensure that enterprises will not be held legally liable or involved in legal disputes due to accounting errors and omissions.

The role of third-party freelance accountants or accounting services companies is to handle the above accounting affairs for small and medium-sized enterprises that do not have accountants in the company, so as to save the company's internal expenses.

Things to consider before using an accounting services company

However, before deciding to use the services of an accounting firm, SMEs should also consider the following two factors in particular.

1. Data security issues

Financial data is sensitive information, and companies should ensure that the information is well protected. The financial status of listed companies, such as earnings performance, is required to be disclosed because it involves the interests of shareholders and the public. However, for companies that are not listed on the stock exchange, financial data is a business secret and should be kept confidential.

Even if the accounting services company has a good reputation, using a third-party service company will always involve additional risks. No matter in the process of transmitting data to the accounting company or in the internal operation of the accounting company, there will be the possibility of data leakage (e.g. intercepted or stolen by hackers). If an enterprise handles accounts with traditional paper receipts and documents, there is a greater possibility of loss or damage, which may be irreversible and will have a negative impact on the company's financial database and tax processing procedures.

2. Flexibility in communication and time cost

Although outsourcing accounting services to a third-party company can save human resources and time costs for internal accounting and taxation matters, the company still needs to create accounts for the new payment transactions every day. So the employees have to continuously liaise and coordinate with the personnel of the third-party accounting services company which incurs labour cost. Depending on the size and complexity of the accounts, this handover process may take longer than expected to complete. What is more, if it involves handing over sensitive data to a third party outside the company, multi-level approval may be required within the company to access the relevant data, which will further take time for internal staff to process. This aspect should also be considered before outsourcing accounting services.

SMEs is recommended to use cloud management software if they need accounting services

Accounting services firms are not the only option for SMEs. ISL provides cloud-based financial and trade management systems, Envision X and e-M-POWER, for the built-in general ledger, accounts receivable and accounts payable modules that simplify the accounts for the company and allow enterprises to efficiently handle accounting affairs and save manual processing time. Moreover, the company's financial information will be kept in an encrypted and secure cloud server and will not be leaked to any third party.

For businesses whose accounts are not overly complex, as long as the founder or senior staff possess the basic accounting knowledge, they are able to handle the accounting affairs of the SMEs themselves. This could be an alternative apart from choosing an accounting services company. If you want to know more about the application of cloud software in enterprise accounting, please contact the professional team of ISL. We will tailor the most suitable solution for your business and scale.

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