Outsourcing Accounting
Outsourcing accounting is a natural and cost-effective solution for many businesses. A qualified accounting firm provides accounting and tax expertise, keeps track of regulatory changes, prepares tax returns and financial statements, and offers a stable, long-term professional background for the company’s operations.
As businesses grow, however, an increasing number of financial, controlling, and administrative tasks may arise that go beyond traditional accounting. In such cases, replacing the accounting firm is not necessarily the solution. More often, the right approach is to complement outsourced accounting with an in-house finance professional, controller, or finance manager.
The Changing Role of Accountants
Twenty years ago, the work of accountants was primarily focused on processing accounting documents, preparing tax returns, compiling annual financial statements, and fulfilling regulatory obligations. Documents were typically received in paper form, bank transactions were entered manually, and company managers often received information about the company’s financial position only on a monthly or quarterly basis.
Digitalization has fundamentally changed this. Online invoice reporting, electronic banking data, cloud-based document management, integrated enterprise resource planning (ERP) systems, and automated data connections now enable much faster processing. General ledger reports and supporting schedules that once required several hours to prepare can now be generated much more quickly when proper system integrations are in place.
Changing Expectations of Managing Directors
At the same time, the expectations of managing directors have evolved. Today, many businesses want to know more than:
- How much VAT needs to be paid?
- Has the tax return been submitted?
- What was last year’s profit?
- Was the annual report filed on time?
Increasingly, managers are asking questions such as:
- Which business line is the most profitable?
- What will our cash flow look like over the next three months?
- Why do actual results differ from the budget?
- How would hiring a new employee affect profitability?
- What inventory level can we safely finance?
- Which customers regularly pay late?
- How are our costs developing compared to the previous year or the budget?
- What level of revenue is required to achieve the desired return on an investment?
These are important and legitimate management needs. However, they are no longer purely accounting questions. Around the world, the modern finance function has evolved beyond processing historical data toward decision support, performance analysis, risk management, and financial planning.
Accounting and Corporate Finance Are Not the Same
Accounting and corporate finance are closely related disciplines, but they serve different purposes.
The Purpose of Accounting
The primary purpose of accounting is to properly record a company’s business transactions, fulfill accounting and tax obligations, and provide a reliable picture of its financial position, assets, and profitability. The fundamental objective of accounting regulations is to produce objective, reliable, and fair information.
The Purpose of Corporate Finance and Controlling
Corporate finance and controlling, on the other hand, primarily support management decision-making. They focus not only on what happened, but also on:
- Why it happened;
- How it compares to the plan;
- What consequences it may have;
- What actions should be taken next.
What Is the Difference Between Accounting, Finance, and Controlling?
Simply put, accounting provides the reliable and compliant financial data foundation. Controlling and financial management transform that data into decision-support information.
In a well-managed business, the two functions work closely together, but they do not necessarily have to be performed by the same person or service provider.
Which Tasks Can Be Effectively Outsourced to an Accounting Firm?
Accounting outsourcing works most efficiently when tasks are clearly defined, standardized, properly documented, and can be performed independently of the company’s day-to-day operations.
Typical examples include:
- Recording incoming and outgoing invoices;
- Posting bank and cash transactions;
- Recording miscellaneous accounting entries;
- Maintaining fixed asset registers;
- Calculating and posting depreciation;
- Performing monthly, quarterly, and annual general ledger closings;
- Preparing VAT and other tax returns;
- Calculating corporate income tax and local business tax;
- Preparing and filing annual financial statements;
- Reconciling general ledger and subsidiary records;
- Reconciling intercompany balances;
- Providing accounting support during audits;
- Payroll processing;
- Preparing payroll-related returns and notifications;
- Administrative tasks related to onboarding and offboarding employees for payroll purposes;
- Preparing annual payroll and tax certificates;
- Providing regular accounting reports.
Of course, not every accounting firm offers the same range of services. For example, our firm also provides international tax, transfer pricing, payroll, EPR, product fee, and system implementation support, while others specialize primarily in traditional accounting and tax compliance services.
Therefore, when selecting an accounting firm, it is worth evaluating not only the monthly fee but also the actual scope of services, professional expertise, and experience within the specific industry and operational environment of the business.
What Does “Full-Service Accounting” Really Mean?
The term can be misleading because different companies and accounting firms may interpret it differently.
In general, full-service accounting means that, based on the documents and information provided by the client, the accounting firm:
- Maintains the accounting records;
- Prepares tax returns;
- Performs necessary ledger reconciliations;
- Compiles annual financial statements;
- Carries out the accounting and tax-related tasks defined in the engagement agreement.
However, it does not automatically mean taking over the company’s entire finance function.
The Following Activities Are Not Necessarily Included:
- Business approval of supplier invoices;
- Initiating and managing bank payments;
- Collection and debt recovery communication with customers;
- Daily cash flow management;
- Preparation of annual budgets;
- Preparation of regular forecasts;
- Budget-versus-actual variance analysis;
- Financial evaluation of sales and procurement decisions;
- Drafting employment contracts and other labor law documents;
- Preparing complete group-level or shareholder reporting packages;
- Daily communication with banks and financing institutions;
- Operating the company’s internal administrative processes.
These activities may also be outsourced, but they are generally not considered traditional accounting services. Therefore, when selecting an accounting provider, it is advisable to clarify exactly what is included in the service package and to be cautious if a fee appears unusually low, as it may cover only the most basic accounting activities.
When Might an In-House Finance Professional Be Necessary?
There is no universal revenue or employee threshold above which every company should employ its own accountant or finance manager.
A business generating several billion forints in annual revenue with relatively few, well-structured transactions may have simpler financial administration than a smaller company processing thousands of transactions every month while operating multiple locations, inventories, cash registers, and employing a large workforce.
For this reason, the decision should not be based solely on revenue. Operational complexity often provides a much more reliable indicator.
1. Daily Financial Presence Is Required
If payments, bank balances, overdue receivables, incoming invoices, and short-term liquidity need to be monitored continuously, an in-house finance professional who understands the day-to-day operations and works directly with management can be highly beneficial.
2. Complex Invoice Approval Processes Exist
When multiple departments, cost centers, projects, or business locations are involved, someone within the organization typically needs to coordinate:
- Who ordered the service?
- Was the service delivered?
- Which cost center should bear the expense?
- Has the invoice been approved?
- When should payment be made?
While accountants manage the accounting and tax treatment of invoices, business approval and verification of performance generally remain the responsibility of the company.
3. Regular Budgeting and Forecasting Are Required
If the company prepares annual budgets, monthly forecasts, budget-to-actual analyses, or detailed profitability reports by business unit, continuous internal information gathering becomes essential.
The accounting firm can provide historical and actual accounting data. However, sales forecasts, workforce plans, planned investments, purchasing assumptions, and business expectations must be developed internally by management and operational teams.
A controller or finance professional typically coordinates this process effectively.
4. Tight Monthly Reporting Deadlines Must Be Met
In international business groups, monthly financial reporting is often required within the first few business days of the following month.
This demands substantial cooperation between the company and the accounting firm.
Although the accounting firm can complete the financial close, collecting and validating internal information often requires an internal finance coordinator.
5. There Are Extensive Management Reporting Needs
If management regularly requests analyses by business unit, product, project, customer, or cost center, the requirement has moved beyond basic accounting into the area of management information and business intelligence.
Meeting these needs typically requires an individual who understands not only the general ledger but also the company’s business model, commercial operations, and decision-making processes.
6. Financial Administration Occupies a Full-Time Position
A simple but practical rule is that when banking, invoice approvals, cash flow monitoring, debt collection, management reporting, and related activities require continuous daily attention, hiring an in-house finance professional may become more efficient and cost-effective than relying solely on external providers.
Is an In-House Accountant or Finance Administrator the Right Solution?
When a company outgrows a fully outsourced model, management often assumes that hiring an internal accountant is the next logical step.
In reality, the challenge is not always a shortage of accounting capacity.
What may actually be needed is a finance administrator working alongside the accounting firm, coordinating daily banking activities, invoice processing, payments, receivables tracking, and documentation management.
The Hybrid Model Often Works Best
For growing mid-sized businesses, a hybrid finance model is frequently the most effective solution:
- The accounting firm handles bookkeeping, tax filings, financial statements, and payroll where required;
- An internal finance professional manages daily financial operations and coordinates information;
- A controller prepares budgets, forecasts, and management analyses;
- The managing director and finance manager make business decisions;
- Legal counsel handles employment law and contractual matters;
- The auditor independently reviews the financial statements.
This structure offers several advantages. The company benefits from the expertise, backup resources, and specialist knowledge of an accounting firm while also having an internal professional who is present on a daily basis, understands business processes, and can quickly provide the information required for accurate accounting.
Which Metrics Matter More Than Revenue?
When determining the most appropriate financial operating model, it is advisable to consider at least the following factors:
- The number of incoming and outgoing invoices processed each month;
- The volume of banking transactions;
- The number of bank accounts and currencies used;
- The number of employees;
- The number of business locations and cash registers;
- The volume of inventory movements and stock keeping units (SKUs);
- The proportion of domestic, EU, and non-EU transactions;
- The number of related-party entities;
- The number of cost centers, projects, and business units;
- The expected monthly closing deadline;
- The level of detail required in shareholder reporting;
- Banking and financing obligations;
- Audit requirements;
- The frequency of management reporting requests;
- The volume of daily financial decisions;
- The degree of integration between ERP, accounting, and financial systems.
A single metric rarely provides a reliable answer on its own. For example, invoice volume is important, but the nature, value, and complexity of the transactions are equally significant. A small number of high-value or highly specialized international transactions may require greater accounting and tax expertise than a large number of simple domestic invoices.
What Should Be Considered Before Outsourcing Accounting?
The foundation of a successful outsourcing relationship is not the price quotation but the clear definition of responsibilities and expectations.
Before requesting proposals from accounting firms, companies should carefully consider the following questions:
1. Which Activities Are Actually Being Outsourced?
Does the company intend to outsource accounting, payroll, tax compliance, or part of its day-to-day financial administration as well?
2. How Frequently Is Financial Information Needed?
Is an annual, quarterly, or monthly financial close sufficient, or is shareholder reporting required within a few business days after month-end?
3. Who Will Provide the Information Required for Accounting?
Who is responsible for:
- Verifying business transactions?
- Approving invoices?
- Providing accrual information?
- Performing inventory reconciliations?
4. What Type of Management Reporting Is Expected?
Will a trial balance and statutory profit and loss statement be sufficient, or are reports by cost center, project, or business unit also required?
5. Who Will Be Responsible for Budgets and Forecasts?
Who will provide the assumptions regarding:
- Sales;
- Workforce planning;
- Investments;
- Financing requirements?
6. Which Activities Require Daily Presence?
If a process involves multiple approvals, decisions, and internal consultations every day, it may be more practical to keep it within the company.
7. Where Are the Responsibility Boundaries?
The engagement agreement should clearly define:
- Which activities are performed by the accounting firm;
- Which remain the responsibility of the company;
- Which are handled by other advisors or service providers.
Realistic Division of Responsibilities Is the Foundation of Successful Cooperation
An accounting firm creates the greatest value when it is viewed not merely as a document-processing provider but as a professional partner operating within clearly defined and transparent responsibilities.
At the same time, effective cooperation requires active participation from the client. Accountants work based on the information and documents provided to them, therefore timely and accurate reporting depends on:
- Submitting accounting documents on time;
- Proper documentation of business transactions;
- Prompt resolution of outstanding questions;
- Timely completion of internal approvals;
- Accurate maintenance of inventory and other supporting records;
- Early communication of business plans and significant changes.
The more complex an organization becomes, the more important it is to establish clear cooperation frameworks in advance.
Conclusion
Outsourcing accounting does not simply mean handing over a company’s finances to an external service provider. Rather, it is a matter of creating a well-designed division of responsibilities.
Traditional accounting, tax compliance, payroll processing, and statutory reporting can be outsourced effectively to a qualified accounting firm with the appropriate expertise. However, day-to-day financial operations, payment coordination, budgeting, forecasting, controlling, and management decision support often require internal involvement or additional financial services.
There is no single model that works equally well for every business.
The most important question is therefore not whether accounting should be outsourced, but rather which activities should be outsourced, under what responsibilities, and within what cooperation model.
When these roles and expectations are clearly defined from the outset, accounting becomes more than a mandatory administrative function. It becomes one of the foundations of stable, transparent, and well-managed business operations.
Looking for an Accounting Firm That Also Supports Your Financial Processes?
Discover our services and entrust your accounting to professionals who not only handle accounting and tax compliance but also help establish efficient and transparent financial processes that support sustainable business growth.
