Having a good relation of trust and transparency with the accounting firm is very important for an enterprise as they are responsible for assisting in vital financial decision making needs. When that level of understanding or comfort goes away, an enterprise might start considering switchingtheir accounting firm.
However, switching accounting services in the beginning of the year is considered to be beneficial as it avoids the level of complexity in the processes, a business would face if changed in miear.
Reasons for Switching To a New Accounting Firm
1. Insufficient Understanding of your Business Basics-
A good understanding of business model of a company is very essential even for an accounting firm to implement accounting processes customized as per business requirement within legal framework. When an accounting firm is not able to grasp the business model or fails to understand your business needs, it results in inefficiency of financial performance.
Inability to contact with your accounting firm when needed can lead to a lot of frustration and delay in decision making process.
When the business feels that they are paying more than the services promised to be offered by the accounting firmor when they feel that they can get same services at much lower cost.
4. Change in Technology –
Industry undergoing changes in terms of technology require latest up-to-date software for their business. Therefore, when the software used by one accounting firm becomes obsolete or outdated, you might want to switch your services with them.
Pros and Cons of Switching Accounting Firms
•Save Money –
There are firms which might be providing same services with equal efficiency at much lower cost than your current accounting firm. Therefore, switching to that firm might result in optimum utilization of moneyfor your business.
•New Ways of Performing –
When switching to a new accounting firm, business evaluates and looks for the one who has more knowledge and expertise than the previous ones or uses new methods of technology.Introduction of new accounting firms, therefore, can bring in new way of thinking and new ideas to the organization making it work in a more efficient manner.
•Clear Picture of Work –
One of the major reasons (non-availability), for switching goes away when the new firm understands the required scope of work and ways to be available for the needs of the business at all times.
•Full Knowledge of Business –
The current accountant knows everything of your business. All the needs and objectives of the business are already known to the accounting firm. Switching might lead to explaining everything from scratch which can be time consuming.
Although switching might result in less upfront cost in the long run, you might face some extra indirect costs initially such as training of new firm and making them understand the business.
•Disturbance in Organization Structure –
Sometimes, handover period creates disturbance in the current working situation because no new projects can be undertaken in that period. It takes time for a new firm to understand the business and its objectives. Also, ongoing projects also get delayed in the process of switching.
There is always a certain level of risk attached to working with any new association which depends entirely on its way of working with the business. It’s arduous to evaluate its actual capability in a couple of months.