4 Ways to Reduce the Accounting Costs for Small Businesses

ibntech Registered Posts: 3
Accounting is a significant part of the business. It also commands a significant sum of money. One of the many objectives of accounting is to reduce costs so it is only appropriate that a company’s accounting department operate at the most efficient price point available. This can be achieved by controlling and analyzing cost reduction targets in the department.

Cost Reduction
The easiest way to reduce costs and increase your profit is to introduce a cost control and reduction program throughout your company, including the accounting department. Choose your cost reduction targets wisely or else you risk crippling your company development. Consider cost-cutting from a marketing strategy viewpoint — you create value by focusing on producing what the client needs — and from an accountant’s perspective — by eliminating waste. Assess your organization as a whole.

5S Analysis
The 5S analysis implies five steps (beginning with the letter S) for reducing the costs by eliminating waste: sort (dispose of all useless items); straighten (reposition furniture and equipment to best serve the process flow); scrub (clean the work area); systematize (establish schedules for regular cleanings); and standardize (incorporate the 5S system into standard company operations, including a monitoring process). 5S is a methodical process applied gradually to avoid disrupting the entire company.

Outsourcing Bookkeeping Services takes place when you contract with an outside provider to conduct some of your company’s recurring internal activities. You can outsource routine activities, such as financial bookkeeping, accounting and reporting, in order to reduce your costs and to increase efficiency. Some of the reasons for outsourcing include reducing operating costs and capital investments; access to more affordable technology, skills and expertise; accelerated growth; and improved credibility and image through association with expert providers.

Back-office Accounting
Back-office accounting refers to administrative functions that support but are not directly involved in the operations of a business, such as accounting or human resources. The front office, on the contrary, represents the client-facing part of the firm and includes the roles that focus on working with and for clients, such as business development or sales. By locating your back-office accounting in low-cost areas, you can reduce the costs of your accounting department.

Why should you reduce accounting costs?

Small businesses need to grow. To grow, a small business must make wise decisions on where it would spend its money. The business’s accounting department serves to reduce its costs but the department itself needs money to operate. One wise decision would be trying to reduce all the costs as much as possible, one area being the accounting department. With everything that this article has taught you, dear reader, you must already realize that there is a huge plethora of ways to accomplish this task and you are not limited to just one. Good businesses use these wide arrays of options for reducing accounting costs. Great businesses mix and match them according to their needs.

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  • Rishiroy
    Rishiroy Registered Posts: 2
    Accounting's main purpose is to reduce cost and figure out gaps and opportunities for directing money. This humongous task requires dedicated accountants but hiring one would require you to spend a huge chunk of your money. However, you can't run away from this cost. There are things you can do to reduce them like:

    Handling the accounting yourself (if you have the skills and expertise)
    Outsourcing accounting to professionals on a small budget

    For example, Business Guru is a firm that handles all sorts of accounting for small businesses on a budget. That's the best option in my experience. Hope this helps.
  • Neillaw
    Neillaw Registered Posts: 307 Dedicated contributor 🦉
    Not too sure about this post.

    5S's came from the automotive industry but it never involved scrubbing the desk.

    Do you want to hire an organ grinder or his monkey. You can cut costs in this area by bringing in less qualified people or people without the experience but in the long run it will cost more money to correct the mess they cause.

    I've been on the end of a accounts department that hasn't been run correctly due to the owners wanting to pay peanuts instead of getting a proper job done. In the long run it's better to pay that little bit more but get more quality information from your accounts department which will assist in the driving forward of the business.

    As a licenced member you want to receive what your worth which is totally opposite to the post.
  • myaccountsconsultant
    myaccountsconsultant Registered Posts: 1
    Great Post and very Informative!
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