Understanding the cost of outsourcing can be confusing. In a field where there are so many options, it is difficult to determine the cost of the accounts and what actually defines this outgoing. Here are six factors that can help you determine the cost of an accountant and why.
On a pure labor cost basis, the number of transactions your business conducts will dictate a portion of the price with an accountancy firm. Quite simply, if your business conducts a few transactions throughout the year, it will cost less than a business that has thousands of transactions.
An important role of an accountant is to account for the business incomings and outgoings on an accrual basis. This shows you, and others, what financial transactions have occurred, how and where?
2) TOTAL REVENUES
Much like the number of transactions, the value of transactions and therefore revenue will have an impact on the cost. Large transactions can often be more complex but more importantly, they carry risk.
It is vital to ensure that if your business is conducting high value transactions, the outsourced accountancy firm has the capability and experience to align with your business. This can come with a price.
3) COMPLEXITY OF BUSINESS
An accountant’s cost is also affected by the complexity of your business. A single office in a single location will have a very different price to the one that is read across several jurisdictions for instance. The makeup of a business complexity can follow a few guidelines:-
- How many entities does your company have?
- Is it a single company dealing only with customers or is it a holding company with many entities serving different functions below?
- Where are the business (es) based?
- What activities are they carrying out?
- Is your business based locally, regionally, globally or offshore?
- Bank Accounts:
- How many bank accounts are to be served?
- The number and type of transactions will be monitored.
- d) Business Model : Various businesses have inherent complications. A single owned proprietorship conducting consultancy services will be much simpler compared to a contracting business having continuous contracting services.
4) INTERNATIONAL ACCOUNTING STANDARDS
An accountant’s cost can also change based on their ability to conform with the International Best Practices. It is important here to align your business to your accountant. An accountancy firm is only as good as its employees and often they would have gained their certifications from abroad first. What is the make-up of the company and to what best practices do they adhere? A big four company will cost you more but has the strength to back and certify your accounts to global standards. Do you need the auditing power of a big four company or will a base level to international mid-tier group perform the task effectively?
5) ANALYTICAL AND MANAGEMENT SUPPORT
If you cannot measure something, how can you improve? It is very important to ensure that your accounting firm can give you the reports you need. These vary from business to business and from C-level to C-level. Everyone wants something different based on what is important to them.
The difference of cost can also change with this factor. Many low to mid-tier firms will not have the ability to customize report for your business. They will use accounting software and will pull out reports in that standard. The more effective firms will tailor it to exactly what you need.
However, the cost of getting the exact figured you need can be outweighed by its significance to your business. Getting improper or ineffective reports can affect your decision-making ability and the future of your business.
When choosing an accounting firm in the UAE, you must understand the experience of that company. Aligning your company, its jurisdiction and activity to the skill set of the accountant is vital.
When evaluating the company, you can ask for references or details of the company that have similar stature and activities to yours. Most accountants will give you a list of the big companies that they have worked for or work with, but it is important with alignment to your business – the answer is no. Choose a company with experience in your field, your location(s) and with a proven track record of success.
The cost of experience can be high. For an accountant, landing a multinational can affect its own pricing model. Make sure you align your business with the correct skill set to attain the best results.