Practical advice of service providers

Company profile

Target

Advice of service provider

Representative office of an international company starting its activities in Russia from «0» level.

It is necessary to provide accounting and tax accounting in accordance with Russian standards and submit reports according to corporate requirements.

Use of outsourcing model seems the most optimum because volume of accounting operations is not great and does not require hiring of a full-time accountant. Also there is no necessity to enter into details of accounting according to Russian standards. Professional provider has experience of adaptation of internal corporate policies to Russian reality, has English-speaking specialists in the staff and can provide consultancy  (tax and legal) support in the development stage of company’s business.

Company of “medium size business” segment, providing services, having minor volume of primary accounting documents.

Company needs an accountant of rather high professional level by with low salary.

Here it is reasonable to transfer full accounting and tax accounting to an outside agency. In this case company does not bear any expenses for materials and tech equipment (work place setup, support and updating of special accounting software, subscription to reference legal databases, medical insurance, etc.), reduces its tax and accounting risks, improves quality of accounting and tax reporting.

Company of “medium size business” segment, dealing with wholesales having large volume of primary accounting documents.

Company needs as minimum 2 accountants, one for processing and preparation of primary documentation and chief accountant.

The following variant of organization of accounting function is possible: accountant processing primary documentation belongs to the company’s staff but function of chief accountant is transferred for outsourcing to a professional provider. In this case risks are brought to minimum if accountant makes a mistake due to existence of highly qualified specialists in the provider’s staff an due to high level of automation of work. Also procedure of tax audits and audit inspections becomes easier. Provider’s internal structure contains a department for methodology, which provides consultancy on complicated issues both to clients and directly to specialists of the provider.

Large geographically-dispersed holding, production enterprise having large financial and accounting department

Optimization of accounting and financial service, decreasing in tax risks.

One of possible variants is transfer of full accounting and tax accounting to a professional provider. The provider of outsourcing services bears full responsibility for organization of accounting and tax accounting of the company, builds structure of accounting and taxation department, attracts necessary resources, automates and optimizes accounting function. 

Objections

Comments of service provider

Outsourcing may and should be cheaper due to economy in scale of a provider. It is necessary to make correct comparison of expenses for keeping of own subdivision and cost of provider’s services. Normally when making a decision on outsourcing of financial function they compare cost of provider’s services only with amount of accountant’s salaries that is not quite correct. Analyzing cost of internal accounting function it is necessary to consider cost of holding of respective specialists and cost of recruitment one ones, their training, payments for mobile telephone services, insurance, depreciation of equipment, cost of renting an office, cost of setup, updating and support of software.

Provider does not know specific character of a Client’s business

When choosing a partner it is necessary to specify if a candidate has professional experience in realization of projects in your field, ask for recommendations form other companies-clients of the provider. Providers with large experience have invaluable experience, library of practical solutions for companies of different industries, employ accountants having relevant professional experience. Otherwise a provider hazards his professional reputation.

For large geographically-dispersed companies it is not reasonable to transfer accounting for outsourcing because efficiency of accounting and information exchange goes down

Large geographically-dispersed holdings have the following main reasons to use outsourcing of accounting: their business quickly develops, companies constantly develop new markets and increase amount of business units, companies try to escape from growth of non-core subdivisions. Outsourcing companies may offer ready solutions from their experience and management does not need to reinvent a wheel when organizing financial function.

«Leak» of information, loss of confidential data

Choosing a provider one should pay much attention to compiling of service agreement, which clearly defines rights and liabilities of the parties, zones of responsibility and rules of cooperation. A provider signs relevant nondisclosure agreement and bears professional financial responsibility for undertaken obligations.