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Virtual Accounting Solutions vs In-House Accounting: Which is better?

Nowadays, businesses are facing a dilemma; virtual accounting solutions or In-house accounting. Which one is better for their businesses. In-house accounting refers to the system of having a permanent team of employees to take care of the finance and accounts for the business. In contrast, virtual accounting solutions refer to outsourcing finance and accounts-related tasks to a third-party organisation on a contract basis.

This piece of writing explains the meaning of virtual accounting solutions and the testing of both methods on certain parameters to determine which system out of the two is better for businesses to take care of their needs related to finance and accounts.

What are virtual accounting solutions?

Whenever the term virtual accounting is used, it refers to the outsourcing of finance and accounting services for a business. Virtual accounting solutions refer to the comprehensive coverage and catering to the finance and accounting needs of an organisation by a third company in a virtual mode where the requirement of maintaining a permanent in-house finance and accounts team is done away with.    

Parameters of testing the two methods

Both the systems of virtual accounting solutions and in-house accounting are tested under the following heads:

1. Cost-efficiency

It is a no-brainer that maintaining an in-house accounting and finance team is an expensive affair which includes the cost of hiring, remuneration, benefits and onboarding costs. On the other hand, availing of the services of a virtual accounting team removes the huge costs involved in maintaining an in-house team.

The team outsourced to offer virtual accounting solutions works for many clients simultaneously, which means that they have surplus capital. With this advantage, the outsourcing teams have the necessary capital to maintain relatively bigger and highly specialised teams with better infrastructure. With this cumulative apparatus, the virtual accounting teams are able to deliver better quality services at a fraction of the cost compared to in-house accounting teams. This means a business availing the virtual accounting services stands in a better position compared to in-house teams.

Further, the businesses that have switched over to virtual accounting solutions have increased time at their disposal because they no longer need to manage their in-house teams and direct the saved energies in further developing their businesses.

2. Extent of flexibility

The regulatory landscape for businesses is rapidly evolving, and non-compliance with such changes can attract huge monetary penalties and may even lead to the stoppage of business operations. This requires the businesses to not only be regulatory complaints but also take advantage of such changes. This can only happen if the businesses maintain research and development teams who are constantly monitoring the regulatory changes taking place and guide businesses accordingly. However, small businesses and start-ups do not have enough funds to scale up their teams and maintain a separate research and development department to track regulatory changes.

Additionally, as the business expands, it becomes difficult for the in-house accounting teams to cope with the increased workload. Here, the virtual accounting team can provide the much-needed flexibility required for the business’s growth and actualise its true growth potential. Moreover, businesses work in cycles; sometimes, the business is on the boom and sometimes on the bust. The flexibility to quickly scale up and scale down is better met with virtual accounting solutions.

Further, virtual accounting solutions offer the option to pay for only those services which you require. These firms offer such engagement plans and customise them according to the needs and preferences of their client. For example: if the needs of your business require only book-keeping, VAT^[1] return filing and payroll management only, you can accordingly choose a plan and not pay for other conventional services. Virtual Accounting solutions come to the rescue of such businesses.    

3. Access to a diverse set of expertise

While availing of the virtual accounting solutions, a business can access the services of professionals with a diverse set of domain-specific expertise in finance and accounting practices. An in-house team simply won’t be able to match the years of experience and services offered by a full-blown virtual accounting firm.

Moreover, a virtual accounting firm will have access to world-class technological solutions such as expensive software tools to cater to their ever-growing practice. For an in-house team to have access to such expensive software tools will lead to added costs.

Further, the costs incurred by the business in the training and retention of the in-house teams to match the same level of expertise also add to the overhead costs of the business. Thus, it is economically wiser to maintain virtual accounting and finance teams for small and medium businesses.    

4. No downtime

The fact that accounting process is highly data-driven; it is the availability of high-quality data at the right time that will allow the management to take timely and proactive decisions. The drawbacks faced with the in-house team hover around hours of availability and limited production work. On the other hand, a virtual accounting firm will not have such an advantage and provide excellent turn-around proving to be beneficial for your organisation at the time of expanding your clientele.

Furthermore, a virtual accounting firm is always a call away should any assistance is required with accounting and financial information. On the flip side, in-house team members may be on leave on some days and which can slow down the response time to make key management decisions.    

Conclusion 

The above discussion clearly points to the fact that it is advisable for small and medium-sized companies to avail of virtual accounting solutions over in-house finance and accounting teams because of the above-mentioned factors such as cost-efficiency, flexibility, diverse set of expertise and quick turn-around of service to not just survive the competition but to stay ahead of the competition. However, big corporations have the requisite monetary strength and can afford to maintain in-house teams, especially catering to their in-house needs, which will benefit them in the long run.

Why don’t you call Enterslice and get to know how we can propel the growth of your organisation with our VCFO services.  

Read our Article: Why Outsourced Accounting Services are Beneficial for a Company?