Should you do your own bookkeeping using latest technology or just outsource?
Outsourcing is the business practice of hiring a party outside a company to perform services that traditionally were performed in-house by the company’s own employees and staff. The presumption for choosing to outsource is that the outside party can perform cost-effective service without significant dilution in quality. Since outsourcing agreements are variably priced, it gives necessary flexibility to the company to stay flexible. Usually, only non-core operations are outsourced.
Automation in the context of accounting means the reduction/elimination of manual data entry to expedite the production of financial statements. The time and cost savings can be passed on to the client, thereby enabling the accounting firm to focus on the provision of consultative strategic advice to add more value to the client.
Artificial Intelligence Applications in Accounting and Tax: While structured data is governed by well-defined fields that contain well-specified information, AI relies on rules of natural grammar, context, and culture. AI uses machine learning to get trained by experts in the field, once trained it will continue to learn through ongoing interactions which are reviewed by experts and fed back into AI system.AI can quickly provide a range of potential advances and recommendations backed by evidence. H & R block and Sage Intacct have already announced that they will use this technology. Smaller accounting firms currently don’t have the capacity to build the technology, however, these firms can benefit from being nimble enough to catalyze the implementation of technology.
Outsourcing the accounting function brings benefits in the form of reduced cost and provision of expert services. The business owners should do a cost-benefit analysis wherein the price quoted by the service provider should be compared with the cost of doing the accounting and tax work in-house over a long period of time (3-7 years) instead of short period. A common mistake made by many businesses is that although they might be able to frame an operating budget, they tend to ignore the capital cost of improving technology in-house, which can prove costly . Outsourcing service provider should be chosen carefully to ensure that the provider has sufficient capacity to keep up with rapid tech changes in order to continue the supply of best quality services at affordable prices.