When to fire your accountant?

The right answer is, don’t rush to let your accountant go, because good accountants are hard to find.

A high-quality accountant who uses modern technological solutions – up to and including AI – can do more for a company than ever before. An accountant can be closer to a CFO’s skillsets than a data entry role.

But you have to consider when it is worth outsourcing accounting services and when to retain the accountant on the payroll. This was the topic of a recent discussion on an Äripäev business daily's radio programme “Kasvukursil”, featuring Coop Bank’s head of business customer daily  banking Erje Mettas, Grant Thornton’s head of accounting Gaily Kuusik, and Jobbatical’s CFO Glen Madis.

To outsource or outbid

One might expect outsourcing accounting service to cost more than paying a staff accountant. Not always, said Kuusik. “If I’m a micro-enterprise, I probably can’t offer an accountant 160 hours of work every month. Outsourcing service would be more economical,” said Kuusik.

Kuusik added that it’s important for businesses to map what skills they need. Some accounting functions are not needed every month, and here accounting firms can come in handy, offering a person with specific abilities for a specific situation.

For example, accounting service can be ordered once a month around the time that salaries are paid out, when the workload for one accountant would be very intensive. “For example the time period from receiving input information on wages, timesheets, etc to the payment of wages is very short. While most of the time, a company’s accounting might only have work for one person, the person’s eight-hour working day might not be enough when payroll comes around,” said Kuusik.

Start-ups need dedicated accountants with an appetite for building things

Even growth companies that are receptive to automation can’t forgo people. Jobbatical, a start-up that develops employee migration technology, needs to build new systems on a monthly basis. “So you could say that our chief accountant is basically a project manager who is building the company,” said Jobbatical’s CFO Glen Madis.

Even if a company focuses on building the company and invests all its resources there, outsourcing might still seem attractive for saving on some of its needs. “It’s so simple. No need to directly increase the size of the team. That does away with the need to spend on recruitment in human resources department,” said Madis.

Banks seeing many outdated attitudes

Banks view outsourcing accounting service in a positive light. “Accounting firms have trustworthy automation in place and use modern software,” said Erje Mettas of Coop Bank. She explained that this might translate into a lower hourly price of service compared using old software or keying everything in manually.

Mettas said the Estonian market has more companies that simply can’t shake old habits. “They tend to say that their people are used to uploading and downloading those individual files; they don’t want to even try to develop this area and make things more sophisticated,” said Mettas. But Mettas said that anyone who realizes the wisdom of digitalization stands to gain from it. “We can be there for them with advice in that case,” added Mettas.

To hire a private accountant or one from a large provider?

Would it be best for a company to outsource accounting to an accountant who works for several businesses part-time, or to a large accounting firm? It depends on the situation. What’s important is that the accountant should be up to date with the latest software and know how to use them.

There are several advantages in going through an accounting firm. “We invest to keep our people up to date with changes in legislation. But the other reason for outsourcing is that the Estonian market is constantly changing from the customer’s view as well: volumes fluctuate a lot today and tomorrow and depend a great deal on the international market and international economy. And an accounting firm has the capability to expand – or contract – with the customer,” said Gaily Kuusik.

Advantages of automation and e-invoices

“Currently Estonia has about 170,000 companies liable for payment of tax, but only about 14,000 of them use e-invoicing, said Mettas of Coop.

There are plenty of reasons for using e-invoicing as well as general automation and use of machine-to-machine interfaces, said the guests of the radio programme.

• There is less chance of human error. There can always be situations where uploading PDF files results in double invoicing or there is an extra or omitted zero in the sum when data is moved around or entered. An automatic e-invoicing system reduces the possibility of such human error.
• It saves time. Downloading invoice files, approving them, uploading and sending them out can take its share of time.
• It saves money. “The average e-invoice costs 74 cents, while PDF processing and all of the associated expenses amount to about 1 euro and 37 cents. In effect, every invoice costs a euro more than an e-invoice if it is a PDF,” said Mettas.
• A better night’s sleep regarding taxes. E-invoices allows service providers to avoid costly mistakes. A machine-to-machine interface lets the tax authority check tax declarations after they have been automatically uploaded to the system.
• Easier movement and tracking of information. There is an erroneous belief that e-invoices make things start happening automatically in the background and that suddenly managers and accountants will no longer know what is going on. But the machine-to-machine interface provides an added layer for moving information and invoices more easily. At the same time, the software prevents anything from being overlooked.
• E-invoices and automation compensate for the lack of good personnel. Functions that get automated tend to be the time-consuming and boring, repetitive ones. Thanks to e-invoices and automation, accountants will have more time to focus on the actual work and not as many accountants need to be on the payroll.
• Avoiding falling behind the times. When e-invoices become the norm, early adopters could enjoy certain advantages. Fortunately, e-invoicing isn’t something you need to deal with yourself; there are plenty of service providers and advisers for companies both big and small.