Finance & Accounting – Meaning

Finance & Accounting are critical processes for any organization, primarily involving the maintenance of the company’s financial accounting records and preparation of quarterly and annual financial statements from these records.

These statements are an important tool in the hands of the management to exercise control on the entire organization. Various legal enactments also make it mandatory for organizations to prepare financial statements.Government Agencies like the Securities Exchange Commission and the Internal Revenue Service require that the companies governed under their jurisdiction, must issue financial statements prepared as per the SEC Rules, to the public.

Finance & Accounting Services – In-house or Outsourcing

Finance & Accounting services are an extremely critical part of any organization’s processes and the financial statements have to be of accurate and as per the legal norms. Well prepared statements help in complying with the law and also enhance the company’s image in the market. They also help in giving useful information to various interested parties like the Stakeholders, Lenders, Government Agencies, and Financial Institutions.

But, the process of preparation of financial statements involves various intricacies and requires specialized skills. One example of a critical aspect of preparing financial statements is an ‘Anchor’. An estimate used to determine the value of an asset is called an anchor.

The organizations usually have two choices for Finance & Accounting services viz. hire skilled accounting professionals on the rolls of the organization or outsource it to a specialized agency that provides Finance & Accounting Services. Both these options have their pros and cons which have to be weighed before taking a decision.

Hiring skilled professionals gives the organization a lot of control over the Finance & Accounting processes since the professionals are on the organization payrolls. But, keeping them on the rolls is an expensive option, since, owing to their skill, such professionals come at a high price.

On the other hand, outsourcing the Finance & Accounting processes to an external agency gives the organization an advantage of using the Finance and Accounting services of an agency that is specialized in this and comes with a proven record of having performed and delivered for other organizations. This also offers the company a huge cost benefit, since the external agencies hire a cheap but qualified work force to carry out the work. The flip side however, of hiring an external agency is that company has to depend on a third party for carrying out a critical process.

In recent times, the trend of hiring external agencies to carry out the finance & accounting services has picked up. This is the case especially in small and mid-sized organizations that don’t have a dedicated staff of employees to look after the financial accounting needs. Organizations from sectors like insurance and banking also have started looking into the possibility of hiring external agencies to help ease the burden of the extremely critical and complex processes that exist in these highly regulated sectors.

A few points that an organization looking to hire an external agency to provide financial accounting services are – selection of the firm on the basis of its track record in the past, the level of transparency it has in its work and the quality it delivers in the actual implementation of the services. Some of these providers with a proven track record are Genpact, Accelcia’s Finance & Accounting Services.