The Hidden Costs of Not Hiring an Accountant for SMEs
Businesses today, especially small to medium enterprises (SMEs), are under enormous pressure to cut costs while delivering on their objectives.
After cutting extraneous costs, it’s natural for businesses to turn their attention to minimizing overhead and cutting back on the essentials. Some businesses may stretch internal financial resources instead of consulting outside experts, or not engage an accountant at all.
At Ursa, we urge leaders to carefully consider these decisions when it comes to their accounting partners.
Many leaders are under the impression that standard roles, like accounting, are more of a cost center than they are a profit center. This misconception is common across the industry - according to a report published by Onpay, only 30% of SMEs work with accountants.
We are dispelling these myths. Leaders need to be informed about what they will miss by forgoing accounting services or only relying on an internal team. These hidden costs include:
1. Losing access to a diverse suite of capabilities
When relying on in-house resources, the bias is towards a narrow set of experiences, capabilities, and even ways of thinking. Hiring an external service provider gives businesses access to a new and diverse suite of experiences and capabilities. An external service provider’s business model required handling diverse clients across industries and company sizes, and across different functions of accounting. This gives them a wealth of experience to pull from and makes them a more agile resource than in-house teams.
2. Opening SMEs up to compliance issues and undue stress
Compliance is a tricky issue. The odds of being found in noncompliance are unknown, yet the risks of being found to be noncompliant are serious and can threaten even a long-standing business. For those not adept in dealing with compliance issues, this can be a source of anxiety and uncertainty. By delegating financial compliance issues to accountants, leaders can minimize their business’ exposure to penalties, late fees, and other compliance-related consequences. This frees leaders’ bandwidth, allowing them to have more time to devote to other business operations and to engage in strategic planning without worrying about this element of their financial future.
3. Losing a rare unbiased perspective
It can be liberating when a business owner has someone to rely for unbiased opinion/support. There is nothing better than being backed up or questioned by someone who has sufficient and objective data on your business, but comes from an entirely different perspective. This is a rare resource that is not available when seeking inputs from family, friends, colleagues or board members.
4. Losing a point-person for reporting, process and system expertise
Accountants, especially fractional CFOs and experienced external service providers, become experts in the suite of financial skills needed to enable business growth. External service providers are often called on to manage growth, operations, and financial reporting for businesses experiencing or planning for growth in the future. The tasks make up the core function of their roles. As a result, players in the external service provider space hone these skills and bring their expertise with them to your company. Internal service providers’ roles rarely focus on these skills to this extent, and as a result, relying on them for this set of capabilities is often slower and less accurate than simply going to the experts.
Clearly, accountants can offer more support than meets the eye.
It can be challenging to find the right partner for your accounting needs. Why not trust the experts?
At Ursa Consultants, we partner with you in maximizing your business potential.