Businesses around the world have had their share of challenges in the recent past. Over four million small and midsize businesses in the US were permanently closed after the lockdowns. Virtual accounting services for businesses have emerged as a strong pillar for companies to manage compliances, regulatory reporting and effective management reporting.
Navigating the challenges and complexities of the business world gets harder, if you are not well prepared. When your business is growing or looking for ways to improve, accounting helps you track things. It helps your business assess where and how the resources are spent. It helps you track avenues for growth, opportunity and progress. However, access to strategic finance and accounting data is not always easy. Entrepreneurs and business owners often need to spend a significant amount of time in accounting to stay on top of their company needs.
Virtual accounting services can be a good alternative for small and medium sized businesses to keep their financial operations, regulatory compliances and bookkeeping in order. It can save time, money and strategic insights for business growth. Here’s a look at the pros and cons of virtual accounting services for your company.
1. Regulations & Compliance
Every business needs to stay compliant with local rules and regulations. This is often a tedious task as the laws and rules keep changing. Businesses need to spend a lot of key resources and management time to stay compliant. Not to mention the stringent penalties, legal, criminal proceedings involved in neglect of regulations and compliances.
Virtual accounting services can provide end to end compliance as per the laws of the land. They can help a business focus on their core operations and let the virtual accounting teams take care of everything else. So, when it comes to filing income tax returns, regulatory and compliance reporting, the virtual accounting team prepares and files the reports as per applicable laws.
2. Strategic Financial Data
When your business is growing, you need access to key financial metrics at your fingertips all the time. This is important for raising capital, taking loans and planning your company expansion. The virtual accounting services can help you with real-time updates and data whenever you need it.
In addition to managing your monthly bookkeeping and financial data, they can also provide you structured reports for assessing your business. Virtual accounting takes care of things like financial budgeting, planning, cost benefit analysis, fixed asset analysis, resource costs, tax structuring etc.
Good understanding of the financial data is key to running a successful business. Virtual accounting provides in depth expertise to reduce overhead costs, plan and operate the business with better financial measures.
3. Online Bookkeeping Services
Virtual accounting services can help a business manage its bookkeeping with ease. The online bookkeeping services can provide management with monthly reconciliation reports, track all incomes, expenses, assets and inventory etc.
The bookkeeping services provide all assistance for preparing financial reports like income expenses, profit & loss, cashflow, trial balance & balance sheets. These are automatically sent to the management with up to date reporting.
Virtual accounting not only provides the company with all financial reports, but presents an overall picture of the organisation. It helps the company track its data for interest paid on loans, pending principal amount, track ROI on projects & assess overall books for the business with greater accuracy.
4. Better Financial Insights
Financial insights can make a huge impact on the overall health of a business. The virtual accounting team with its expertise in finances often provides invaluable insights. These insights are often driven by automation, data analysis and deep knowledge of finance & accounting.
If a company is reporting a loss for a specific quarter, the software can report the loss proactively and also the reasons for the loss. For e.g. Company ABC is expected to report a loss of $200,000 in Jan-Mar quarter, the reasons for the loss are outlined as below:
i) Penalties due to delay in Mining project
ii) Man power unavailability due to Corona
iii) Upfront Capital expenses
The insights can be based on data and industry expertise. Infact, the software driven insights can also provide remedial suggestions for businesses. The software and virtual accounting acts like a virtual CFO for the company providing it real time strategic inputs for increasing cash flow, profits and overall financial health of the organisation.
5. Vetted Processes
The virtual account team provides organisations with vetted processes and complete support for business management. They have predefined account calendars for companies. These can help companies with taxation services for employees, improve tax planning, manage state and federal compliances and assist with end to end needs for business management.
The virtual accounting team uses the latest tools and technologies to manage your business accounts. As a business, you don’t have to worry about bills, vouchers and documents, the virtual team takes care of all this for your business. Timely and accurately preparing financial reports can save a lot of money as well as company resources. A full time accountant for a small & medium size business often costs more than virtual accounting services.
Cons of Virtual Accounting Services
i) Data Privacy & Confidentiality
Financial and accounting data needs a lot of transparency and security. When a virtual accounting team takes over, having the confidentiality agreements and security for your business is paramount. It is imperative that your company’s data remains private, confidential and never shared with third parties. A trusted virtual accounting team must be able to assure these aspects.
ii) Vendor Lock Ins
It may be possible that your virtual accounting team has a lock-in period. You may want to clarify at the beginning your long term horizons and needs. If you are not satisfied with the expertise of the virtual accounting teams or their services, it should be easy for you to switch to some other service provider. In case of switching, you should be able to get up to date accounts and data for your company.
Overall, more businesses are relying on outsourced expertise for accounting. Virtual accounting increases reliability, creates structured processes and improves the overall coordination for regulatory reporting. It is a way businesses can focus on building the core value proposition and grow their business, leaving accounting and compliance matters to the experts.
