Many organizations learned hard financial lessons during the recent economic crisis. Most of those companies that survived the downturn did so because they had control of their finances during these critical times. If your company does not have an effective risk management strategy in place, now is the time to take it off the to do list and put it into action. Work with an outsourced accounting department to develop internal controls that will mitigate your company’s risk.
The first of three key components to a risk management program is operations. Day to day tasks in a company must be done in a manner that is both effective and efficient. Internal controls need to become a regular party of daily activity, not an afterthought or a “when we get around to it” task.
The expertise of an outsourced accounting department is a great start to improving company operations. The sad fact is even many large businesses do not conduct financial operations in compliance with Generally Accepted Accounting Principles and this increases their risk. Hiring accountants rather than simply bookkeepers adds a set of guidelines designed specifically to reduce risk, bias and unethical activities. Internal financial operations turned over to accounting services are lower risk because they are conducted under these principles.
One reason many businesses floundered or failed during the downturn was they were caught by surprise. Many of these organizations didn’t have a clear picture of their company’s financial position. Events occurred so quickly that reports from the previous quarter were quickly outdated. Decisions were made based on old information, and this proved to be disastrous.
Outsourced accounting departments provide ongoing analysis and reporting that businesses need in today’s economy. Although financial operations have been moved outside the company, the availability of secure internet connections allows client businesses to still have full, live access to their books. In fact outsourced accounting services offer many organizations better access than their internal departments can. Armed with current information, managers make better decisions and companies thrive.
Businesses are forming partnerships with outsourced accounting departments for a variety of reasons but one of the leading motivators is the confusing web of financial regulations. Catastrophic financial events in this country have led to sweeping regulatory reform, and it is difficult for even professional accountants, much less busy executives, to keep up with the latest developments.
Changes in tax codes, documentation requirements or investment laws can suddenly leave a company in a tenuous legal position. Ignorance of the law does not protect an organization and the larger the company the more likely it will become the target of government or private investigations. Accounting services are necessary for understanding and complying with these laws and protecting the company from liability.