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Benefits UAE Businesses Can Realize From Outsourcing Accounting And Payroll Services

Every business, from aspiring startups to mid-market firms and large enterprises must maintain accounting, payroll and other statutory records. They are necessary for two main reasons: financial management and legislation compliance.

Without a systematic and comprehensive payroll and accounting system in place, unexpected errors can occur. Inaccuracies and errors can have an adverse impact on a company’s ability to efficiently track income, expenditure and profitability as well as other quantitative financial information.

With the recent changes in Commercial Companies Law, Value Added Tax (VAT) and Excise across the UAE, structured financial planning and tracking are more critical than ever.

One of the best ways to realize the benefits of well-managed financial operations is through outsourcing accounting and payroll services. Outsourcing provides significant cost savings and enables organizations to focus on core business functions.

If an entity is hesitant to bring on outsourced accounting services as a partner, explore the considerable benefits of this collaborative partnership highlighted below. From leveraging new technology to boosting an organization’s bottom line, read on to learn how an entity can benefit from this arrangement.

1.Improves productivity

Time is a precious commodity for organizations of all sizes.

Leading organizations know that any time spent on accounting and payroll will directly impact critical ongoing business functions. Any time spent on accounting & payroll tasks results in less time focused on product development, customer service and employee management.

With the right outsourcing partner, organizations can delegate the full cycle of accounting services from accounts receivable and accounts payable, working capital optimization, and treasury and cash management tasks.

This allows for better workload management, enabling an organization to focus on opportunities to realize higher revenues.

2.Reduces overhead costs

At its core, outsourced accounting services in the long run are a cost-optimisation tool.

If an organisation is unable to justify a full time employee for part time work, outsourcing is an cost efficient way of optimally using financial resources and pay only for services which are required. Eliminating recruitment, training and retention expenses associated with an internal accounts department allows for more efficient use of available resources.

Paying only for what is necessary and critical, an organization can save considerably in fixed employee costs especially when cash flow is a challenge. This is especially critical for startups where financial resources are scarce and must be put to best use. In many cases it could mean the difference between success and failure.

For mature firms, outsourcing certain “nice to have” accounting functions and reports can generate significant and credible results without necessarily committing to long term costs thus achieving a good balance between costs and results.  Such cost savings can be channeled into other areas such as research and development, marketing and information technology.

3.Assures greater control over governance and compliance

With more stringent compliance standards becoming commonplace, ensuring that accounting and industry standards are adopted and followed has become imperative. Establishing a robust financial reporting framework as a combination of internal and outsourced resources enable organizations to better control risks, streamline procedures, and improve compliance.

For small- and medium-sized enterprises (SMEs), outsourcing accounting operations to a reputable accounting firm in Dubai ensures your organization has access to industry expertise not readily available. Their depth of knowledge regarding accounting standards and complex tax regulations greatly limits the risk of internal fraud and compliance lapses.

Outsourced accounting services ensure that organizations achieve accurate financial reporting and greater transparency, providing assurances that the financial records comply with International Financial Reporting Standards (IFRS) issued  by the International Accounting Standards Board.

4.Creates a competitive business advantage

In 2019, data breaches reached an all-time high, with over 3,800 breaches reported to have hit organizations. What’s more, nearly 90 percent of these breaches were a result of external threats.

The rise of data breaches means data security is a top-of-mind concern for all organizations.

It is often difficult for SMEs to invest and maintain internal critical IT infra-structure to preserve the confidentiality of its accounting records especially in their early life cycle.  This leaves them exposed to external threats compromising their confidential business information.

As accounting firms are duty bound to maintain confidentiality of their client’s data, they generally invest in necessary software and IT infra-structure, benefits of which can be availed by SMEs without paying a high price.  SMEs therefore reap the benefits of a secure information platform without investing significant resources and gaining access to secure accounting software, procedures and practices.

5.Maintain confidentiality

Rewarding better performing employees differently from average performers within the same grade without alienating other employees can be a challenge for any employer.  Intentional or unintentional access to confidential  payroll information can demotivate employees rather  than encouraging them.  Confidentiality of payroll data is best maintained when that data is accessible to a very few in the organisation on a strictly “need to know basis”.  Outsourcing of payroll function maintains confidentiality of data employees significantly as the outsourced service provider is not in day to day communication with employees within an organisation. 

Recording of payroll details in the accounting records can also be achieved without sensitive payroll data(say by a combined journal entry).  If a Cloud based software is used, only authorised persons can view details of the payroll and without storing such data on an internal server.  Overall, outsourced payroll function is a load easily taken on by external providers rather than internal full time HR personnel.

The above scenario is also true for accounting records especially when a branch or representative office is in the UAE and the parent company would like to hold financial information confidential.  Outsourced accountants who report directly to the parent company and have minimal contact with local managers are more likely to maintain confidentiality than in-house personnel who report to the local manager. 

Overall outsourced accounting and payroll services are best placed to maintain confidentiality over extended periods of time.

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