The criteria for selecting an accounting company

Article by an expert PKF BPO Sadowska-Malczewska (Karolina Koszyk - Sales Project Manager)

Milestones for choosing an accounting office

We have been observing increased activity of companies providing outsourcing services on the market for a long time. New companies are established, and the existing ones invest a lot in promotion, thanks to which they increase the portfolio of their clients. This behavior is a response to the need of Polish entrepreneurs who  increasingly often decide to delegate some tasks outside the company.

What services can an entrepreneur outsource?

The scope of services is very wide spread, starting from cleaning services, transport, marketing, through training, logistics, and ending with legal, accounting and HR and payroll services. It’s also worth mentioning why companies decide to outsource. By working with outsourcing companies, entrepreneurs can focus on performing their core operational activities that help generate the company’s profit. Summarizing, outsourcing increases efficiency and positively influences the company's profitability.

Regardless of what kind of services they are, it is good to pay attention to several important issues when selecting the right business partner for yourself.

Analysis of the situation in the company

First and foremost, it’s good to do an internal analysis and think about what your company really needs and whether outsourcing is a good solution. Well, that's not always the case. Sometimes, after the initial analysis, we come to the conclusion that at this point in time it’s enough to implement a few changes inside the organization that will give us the results we expect. Before starting the search outside, I recommend conducting such an internal analysis, so that it does not turn out later that expectations won’t match the reality. When conducting such an analysis, you shouldn’t focus only on the tasks and effects that we expect, but also on the costs that we incur when performing specific activities. As you probably know, when estimating cost, apart from standard expenses directly related to a specific department or specific activities, we should remember about additional expenses, such as office space cost related to persons performing certain activities, cost of recruiting new employees or the cost of introducing a new employee to duties. We should also remember about the cost of time we spend on providing information to the outsourcing company that will support us.

What choice do we have?

After conducting this analysis, it’s worth doing research on the market and getting to know the companies that spark our interest. Personally, I recommend asking your peers for a recommendation of an outsourcing company. It is worth learning from people who have already chosen an outsourcing company. Why? Because these people have already gone through the entire process of selecting an outsourcing company, sometimes they’ve switched from an initial company to the company they work with now and, above all, know what should be given special attention. Such people know how to create a communication path between the company and the outsourcer.

It is worth using the knowledge and experience of others, because thanks to that we can save not only time and hassle, but also money. We should remember that the success of our company depends not only on our actions, but also on the choice of a reliable contractor with whom we cooperate.

Below I’ll present a short list of the most important issues which should be considered when choosing an outsourcing company.

Matching needs and requirements

Another important aspect when choosing an outsourcing company is its capability to adjust to our needs and requirements. When running a small-scale company, you should not target huge outsourcing corporations, because both the cost, the mentality and the scope of services may be inadequate to your needs and vice versa. Bear in mind that low cost don’t always go hand in hand with high quality services. It is worth checking the opinions about the company, but also verifying said references by contacting these clients directly in order to obtain first-hand information.

If a potential contractor provides high level services, it is possible that he will encourage us to verify these recommendations. It is also a good practice to check the company in the debtors registry so that we can be sure that we plan to start cooperation with the company without financial problems.

Communication, common language and mutual understanding

When we manage to choose a few companies that spark our interest, it is worth meeting with its representatives. Personally, I believe that this is the most effective way to define the needs as well as principles of cooperation. Currently, due to the restrictions related to the coronavirus, the best and easiest way is probably a teleconference.

It is important to make sure that we share a common understanding with the potential business partner, so that we can avoid severe misunderstandings at a later stage. A very important aspect is to write down the scope of activities and expected results from such a meeting. This will not only save time and money, but also help the outsourcing company prepare an offer tailored for us.

Remember that by providing partial information in the inquiry, we may contribute ourselves to increasing offers unnecessarily in price. This is due to the fact that outsourcing companies, when pricing such an offer, won’t be able to exactly predict all activities and tasks, therefore it’s estimate will incur an additional amount that covers the risk.

It is also important to ensure that at this stage the availability of the future project coordinator / supervisor is established to enable smooth contact between both companies. Unfortunately, it is common to see situations where companies end their cooperation not because of the quality of service or the price, but because of bad communication between both companies. Therefore, it is worth asking whether in such cases it’s possible to change the Project Coordinator / supervisor assigned to us or what else can be done to improve such contact.

Multidisciplinarity i.e. comprehensive service

It’s highly valuable checking whether the company is constantly familiar with all changes in law and taxes. This can determine whether it will be appropriate support and advisor in legal and tax matters. It will also inform us, for example, about the facilities we can use. The multitude of changes in regulations and formal requirements may overwhelm not only entrepreneurs but also the accountant himself. It is therefore worth paying attention to how many employees the accounting office employs, whether they also cooperate with tax advisors or lawyers. It is impossible for one person to be an expert on everything. If we choose an outsourcer who has employees with a wide range of competences, we’ll certainly be better informed about the most important changes in the law and the deadlines that we must meet.

Undoubtedly, having one outsourcer for several areas and services is a great help and can make things simple. Even if we are currently not interested in, for example, our accounting office dealing with both accounting as well as HR and payroll matters, it is worth ensuring such an opportunity for the future. It will certainly be an advantage to have experts in the field of finance, legal and tax advisory, controlling and management reporting. A wide range of competences with one contractor makes the support faster (because they already know us), shortens the commitment of our employees (for example due to the fact that we do not have to contact various suppliers), gives a much greater probability that the outsourcer will catch both threats and the opportunities that may arise in our business.

Modern systems and technologies

The world is on the move and the advancing coronavirus pandemic has accelerated digitization and automation, which will continue to change the way many processes work in companies. It is worth asking whether the company also provides modern solutions that will allow e.g. for electronic circulation of documents and employee matters, which in turn improve the circulation of documents (Workflow). Access to systems and platforms for employees, where employees can obtain information related to their employment, contracts or pay slips are becoming more and more popular. Reporting systems, to which the managerial staff has access (management desks), are useful - thanks to which they can obtain financial or employee data at any time. When selecting companies that provide accounting and HR and payroll services, it is worth considering financial and accounting programs as well as HR and payroll systems offered by a given company. A mismatched accounting system may increase additional costs or extend the waiting time for financial data.

Systems that will facilitate, for example, checking active VAT payers and the White List of taxpayers may be useful tools. The implementation of such systems not only ensures the security of our tax settlements but also allows us to save time, both for us and for the accountant. Thanks to automated processes, our contractor's work will be much safer and more effective.

Formal and legal aspects

We have proven recommendations, processes, systems, but that's not all ... Let's check if the company has the necessary authorizations to provide the services it offers, and whether the entity has civil liability insurance, and if so, in what amount. It happens that accountants make mistakes. We’re all human. It is important that an accounting office takes responsibility for the mistake made. Knowing that the office has insurance, the sum of which is sufficiently high, we have a much greater probability that in the event of any error, it will cover the consequences of its error and stand to correct it.

It is also good to include within the contract fixed dates or timeline that’ll apply during the duration of the services provided. Such provisions may be subject to possible contractual penalties or payment suspension. From the point of view of the ordering party, you should also specify in detail the obligations that fall within the scope of the base price and which will be classified as an additional service. Often, outsourcing companies use a low base price to then transfer many tasks to additionally paid services, which in total completely changes the originally competitive price. Suddenly, it turns out that the company that seemed the cheapest to us at first glance becomes one of the most expensive..

Finally, I recommend checking whether the given company is an active VAT payer, as the offices have already started to enforce the refund of wrongly deducted taxes (it should be noted that the entity that is frequently checked is not aware that it has been removed from such a registry).

The choice of an accounting office or any outsourcing company may seem quite complicated, but it’s definitely worth the effort, because it’s usually a cooperation for many years, and establishing a transparent communication and clear expectations included in the contract will certainly facilitate future cooperation for both parties to the contract.

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