For many companies, the accounting team is one of the most important factors that determines the success of the business. In some cases, they even rank above lawyers, bankers and IT managers due to the important role they play in handling company financials. And while in-house accounting used to be the norm, many companies are now choosing to outsource their bookkeeping and accounting. Advances in technology, such as lease accounting software that automates the record-to-report process for financial reporting standards, make outsourcing a more cost-effective alternative. To help understand which option is best for your company, here are some of the advantages and disadvantages that come with both in-house and outsourced lease accounting.
The most important thing when it comes to hiring an accountant, whether in-house or outsourced, is how well he or she can perform lease accounting tasks. This means looking for someone with hands-on experience who requires minimal training and can do their job well from the beginning. With in-house hires, it’s important to evaluate candidates properly and understand their qualifications. Even if they have a lot of experience, make sure that their experience and expertise fit with the needs of your company. Also, you want someone that doesn’t require a lot of supervision and that catches on quickly.
When it comes to outsourcing, the need for having to interview dozens, and sometimes hundreds, of applicants is eliminated by accounting firms being able to offer you a qualified expert from the moment you make your request. Such firms are staffed with knowledgeable and experienced accountants, which means training will be minimal, if needed at all. Another advantage of outsourced accountants is that their firm usually requires them to undergo continual training and stay up to date with all accounting knowledge.
Quality of Work
With in-house lease accounting, the chance of errors in reporting increases as the number of accountants hired to manage a company’s financials is often limited. Additionally, the entire responsibility of accurate reporting and accountability relies on a few employees.
With outsourcing, the reputation of the accounting firm is on the line, reducing the risk of error. Furthermore, to ensure their accountability and that the job is done properly, they perform their own verifications before submitting any financial statements.
When deciding between in-house and outsourced accounting make sure to also consider the costs associated with hiring each accountant. With in-house, aside from the employee’s annual salary you also have to keep in mind the benefits, like health insurance and 401K, and the paid time off. With outsourcing, there is usually an up-front service fee and an hourly rate. As such, you still have to pay for all the services provided but you don’t have to spend anything on overhead costs. Service prices do vary based on the complexity of the job, but it still tends to be the more affordable option even for small businesses.
Regardless of whether you prefer to have your lease accounting done in-house or to outsource accounting professionals, make sure that whichever option you choose is the best for your business’s financial needs. It’s for this reason that you should keep in mind the key differences between the two when choosing one for your company. With the help of lease accounting software, like the one provided by Yardi Corom, compliance with all financial reporting standards can be done easily and accurately to avoid any challenges with your company’s financials.
Yardi Corom is a simple and comprehensive accounting, lease and workplace management solution for CRE tenants. Our cloud-based software solution increases efficiency and accuracy across your entire lease portfolio: manage leases and subleases, track key lease data, centralize transactions and become FASB/GASB/IFRS compliant. To learn more, you can visit our website or schedule a meeting with our team.