Years ago, changing payroll service provider was considered a headache as all the data provided by the company to the outsourcing partner had to be inputted manually. Changing vendors meant going through all the implementation and training cycles again with the new vendor.
But today with the change and advancement in technology and cloud based computing, switching service provider is not considered as difficult as it wasearlier. Though there are only two ideal time period in which your company should think of doing so:
• The start of the quarter
• The beginning of a new year
One should try to change companies as early in the calendar year as possible to make life easier of all parties involved as there is less data to transfer from your old system to your new one.
Whereas, some of the common reasons an organization can think about while switching to another payroll service provider are:
Poor Customer Service– One of the most important services of a payroll service provider is not actual payroll but their customer service like TDS applicability and ways to reduce TDS liability which is well advised by a legal compliant team only. All the services provided by them will not matter if they don’t communicate well with you, i.e., if your questions are not answered.
Too Time Consuming– If you’re spending too much time to manage and engage with the payroll system, then you should definitely think of switching to another partner. Payroll should be fast and easy, i.e., accurate as time is considered money and if one gets stuck with the training and on boarding processes on a regular basis it may get impossible to grasp the benefit out of it.
Accuracy and Consistency– For every company, accuracy is usually the top priority. Errors and mistakes can be corrected but repeated mistakes can turn out to be expensive for your company. It is therefore necessary to maintain consistency and integrity with the company at all times.
Growth– As the company grows, payroll fluctuates and so does your payroll needs. If the payroll system is unable to evolve with the needs of your company, then a better and more adaptable payroll system should be adopted.
Right pricing– If you feel the service provider is not providing with all the services it charged for and the payroll is incurring more cost than return it promised then you should switch to another partnerdetermining and evaluating ROI factor.
Therefore, you should consider all the above while making a decision of switching your payroll service provider. There is no point in keeping the present service provider if he is not providing what a company requires.
Bank reconciliation is the process of verifying the integrity of data between bank records and company’s financial records. It begins with matching the balances in an entity’s accounting records for a cash account to the corresponding information on a bank statement. It is therefore a necessary process which can sometimes become too long and monotonous.
Here are some of the common reasons for preparing Bank Reconciliation Statement:
1.Unpresented Cheques -Whenever cheques are issued by the firm for payment, they are entered on the credit side of the bank column of the cash book immediately. Whereas, receiving person may not present these cheques on the same date. This causes the difference between cash book and pass book as the bank debits the firm’s account only when cheques are presented for payment.
2.Unrealized Cheques– Cheques deposited into bank are debited by the firm immediately which in turn increases their bank balance. Whereas bank credits firm’s account when these cheques are actually realized, i.e., after few days. Hence, the difference remains till these cheques are cleared.
3.Dishonor of Cheques– Firm credits its account as and when it deposits a cheque with the bank. However, the information of cheque being dishonored is received later to the firm. As a result, difference remains till it is debited back in the account.
4.Errors in Recording Transactions- While preparing cash book, firm might make few errors like missing out sale entry or other important transactions, wrong balancing, and recording transactions in other ledgers which should be recorded in cash book, etc. All these lead to the difference in balances between cash book and pass book.
5.Stale Cheques-A cheque issued by a firm to a payee but not presented for payment by the payee within the local banking law of six months becomes stale. The amount already credited in the bank column of cash book of payer creates the difference.
6.Credit Transfer– Sometimes, the debtors deposit money directly into the firm’s bank account without giving any notification to the firm. In this case, bank credits the firm’s account but the same is not recorded in the cash book. Therefore, difference occurs.
7.Direct Debit– In some cases, firm gives instructions to bank to pay amount due directly to the payee on due date. This way, bank debits the firm’s account but the firm forgets to make an entry in the cash book.
To know more about Bank Reconciliation Services, call us at+91-8130464163
Accounts payable is a liability due which needs to be paid within the specified period to avoid default. Accounts Payable Process is mostly outsourced as it increases the pain and chances for errors from receipt to invoice processing. It enables a company to focus on core business and work efficiently.
While for some companies, it might not be practical to outsource whole Accounts Payable Department but keeping some functions in-house to enhance the efficiency of their entire Accounts Payable Process.
Accounts Payable Outsourcing offers following benefits to a business:
Reduce Upfront Costs- Having your own in-house accounts payable technology, infrastructure and staff can prove to be very costly for a company. On the other hand, outsourcing these services can help to reduce the upfront costs by enabling a company to convert fixed costs into variable costs.
Timely Payment- For small and medium sized businesses, proper cash inflow and outflow is very important as they have limited cash sources. Not having a sound AP process hampers the working of a company by incurring huge losses. While, having accounts payable services outsourced helps a company to pay bills and invoices on time and also get the early paying bills discount maintaining a healthy supplier relationship.
Increase Efficiencies- The rationale for outsourcing is that it is usually better for an expert service provider to perform nonstrategic activities. Outsourcing model enables an organization to offload transactional functions to third party service provider’s expertise and gain the importance to focus more on higher value and analytical tasks.
Better Resources- With the changes in technological advances; every technology investment carries the risk of being obsolete and being more expensive than planned. Outsourcing service provider having accounts payable as its core function has the latest and updated technology software. Therefore, it assumes and manages all the technology risk.
Control on Excess Payment- By doing P2P process verification, entire flow of Accounts payable transactions are checked and better assurance is achieved in terms of correct payment to vendors. Vendor invoices are correctly checked in terms of approved rates and quality.
Each employee relies heavily on payroll to be able to get paid the right amount, to the accurate bank account and on due time. And as the organization grows, payroll processing becomes a tedious and complex process which in turn directly affects the employees.
Hence it righteously makes sense to outsource Payroll Processing. Still some businesses hesitate to outsource because of several myths associated with payroll outsourcing .
Here are some of the myths with their corresponding facts to make your decision easier:
MYTH 1: Handling payroll in-house is cheaper as compared to outsourcing
FACT: It is more expensive and complex
By handling payroll in-house, you are spending more money than partnering with a payroll processing company. These costs vary from procuring the appropriate technology to training people, regular maintainence and having proper infrastructure. So it is therefore considered more efficient to outsource payroll service to a company who has the required expertise and resources.
MYTH 2: Setting up payroll is a onetime process
FACT: It is an ongoing process
Many companies believe setting up a new payroll system is a one-time process. Whereas in reality, there are various updates, law amendments and calculations to be made related to payroll on a regular basis. Hence, it is very much an ongoing process.
MYTH 3: Payroll refers to only salary calculation
FACT: It is much more than just salary calculation
Payroll includes much more than just calculating employee’s salaries like handling employee information (leave data, attendance data), making deductions, computing tax declarations, company benefits, health insurance, etc. Payroll professionals know how to handle everything to save you a big headache.
MYTH 4: Any HR person can do the payroll processing
FACT: Only payroll expert can manage payroll process effectively
HR professionals have their own set of tasks and deadlines which generally lead them in making mistakes like data inaccuracy and wrong calculations. This can hamper your overall time and productivity of employees. Hence, only payroll experts who have payroll processing as their core function can manage it effectively.
MYTH 5: Payroll processing is beneficial only for large businesses
FACT: Every business benefits from payroll processing
Many businesses see payroll outsourcing as an extra cost for their business. They believe that only large businesses can benefit from it in terms of cost and efficiency. In reality, it helps every business (even small and medium business) to focus on their core business function and avoid other miscellaneous costs associated with payroll handling.
It is very important for every company to have reliable Accounting and Book- Keeping systems with proper checks and controls. A company cannot take correct financial decisions without correct Accounting and bookkeeping system in place.
As the company grows and matures, its financial tasks increases and the need to outsource other tasks also increase. Accounting and book keeping being among those tasks are most commonly outsourced.
Here are five reasons why you should consider outsourcing accounting and book keeping.
1. Improving focus:
By outsourcing financial activities, Management gets quality time to focus on core business functions to grow the overall business. As the resources are limited in case of small and medium sized businesses, they benefit more from outsourcing accounting functions.
Outsourcing helps in getting best financial services from the people who are trained professionals and whose sole focus is accounting as their core and only function is accounting and book keeping.
3. Cost effective:
Outsourcing accounting and book keeping prevents company from hiring new employees for this work which in turn saves the cost of salary, software applications and providing them with a working space. Cost of outsourcing turns out to be less than the cost of hiring new employees.
As the business undergoes change, it may need to throttle the accounting and book keeping activities. Using a third party provider makes it possible to easily manage (increase or decrease) these services by simply telling the service provider of the changes required.
5. Better technology:
Third party service providers have these outsourced services as their core activity, having all the latest updated software for this purpose. Whereas the companies having other core functions do not understand or have access to such latest technology.
Having discussed the reasons as to why a company should choose accounts outsourcing, a company should also know whenis it the right time to opt for accounts outsourcing services?
When to Opt for Accounts Outsourcing?
1. Beginning of Fiscal Year
The beginning of business’ financial year is considered quite a right time for considering accounts outsourcing as there is no backed accounting work left and third party can start performing it’s services from starting with new rules and policies of its own.
2. End of Fiscal Year
On the contrary, when the business is having troubles in closing its books of accounts or is unable to correct some of the missteps from the current year, opting for accounts outsourcing services at the end of financial year, hence, can prove to be solving such problems.
3. Before Filing of Taxes:
For filing correct taxes, it is necessary to have accounting work on track. For that a team having full knowledge of accounting terms and policies is required so that there are no errors left in accounts before filing of taxes. Hence, having your accounts outsourced before filing of taxes is considered beneficial for the business as they have full knowledge of doing the same.