Running a successful business in the UK, merely generating income and managing clients is insufficient. Bookkeeping is critical for knowing cash flow, controlling expenses, generating financial reports, and keeping everything in place for tax and compliance requirements.
The problem is that having an in-house bookkeeping team can be costly and time-consuming, especially for SMBs.
Hence, more and more UK companies are considering outsourcing their bookkeeping needs to India.
India has emerged as a prime outsourcing hub for finance and accounting services, offering businesses access to skilled bookkeeping professionals, cutting-edge technology, flexible options, and even reduced operating expenses, without the need for a massive in-house team.
But why do UK businesses outsource bookkeeping to India?
The answer is bigger than simply saving money.
With access to skilled professionals, scalable support, better efficiency, improved workflows enabled by technology and more, outsourcing in the UK can help owners and finance teams spend less time on mundane bookkeeping and concentrate on business growth.
In this guide, we explore the reasons why UK companies outsource bookkeeping to India, the benefits, the most popular services, costs, challenges involved, and key things to pay attention to when hiring an outsourcing service provider.
What Does Bookkeeping Outsourcing to India Mean?
Bookkeeping outsourcing means hiring an external accounting or bookkeeping provider to handle some or all of your company’s routine financial record-keeping activities.
A UK business can use bookkeeping India team rather than having to hire a full-time bookkeeper in the UK.
The outsourced team can complete a variety of activities as outlined in the agreement, including:
- Recording sales and purchase transactions
- Bank and credit-card reconciliation
- Accounts payable and receivable
- Invoice processing
- Expense management
- Payroll support
- Financial reporting
- General ledger maintenance
- VAT bookkeeping support
- Management accounts preparation
- Data entry and bookkeeping administration
Financial decisions are generally left to the UK business and the outsourcing team is responsible for managing the agreed bookkeeping processes.
Why UK Businesses Outsource Bookkeeping to India
1. Access to Skilled Bookkeeping Professionals
The availability of a vast pool of accounting and finance professionals is one of the leading reasons for outsourcing bookkeeping services to companies.
India boasts a significant pool of finance and accounting experts who have experience in handling international accounting procedures and are proficient in popular accounting software.
This can be beneficial for UK businesses when it comes to hiring talent who have experience in areas such as:
- Bookkeeping
- Accounts payable
- Accounts receivable
- Reconciliations
- Financial reporting
- Payroll administration
- VAT-related bookkeeping
- Cloud accounting software
Rather than recruit from within the local workforce, outsourcing opens the door to larger talent pool of individuals for businesses.
2. Potential Cost Savings
Another significant reason why bookkeeping outsourcing is becoming popular is cost efficiency.
With in-house employees comes a price tag and much more. Employers should also consider:
- Recruitment expenses
- Employee benefits
- Office space
- Equipment
- Training
- Software
- Pension contributions
- Holiday and sick leave
- Management time
Some of these fixed costs can be replaced with a service-based approach by outsourcing.
This can be more viable for smaller businesses in the UK who don’t need to have a large finance team in-house.
Important: The savings are dependent upon the provider, extent of work, volume of transactions, service model, technology, and complexity of the business.
3. Lower Administrative Burden
There are a lot of repetitive tasks in bookkeeping which can be time consuming.
Business owners and internal finance teams might spend hours:
- Entering transactions
- Matching payments
- Checking invoices
- Reconciling bank accounts
- Following up on outstanding invoices
- Organising financial records
These processes can be outsourced to save administration time.
This enables business owners to put more effort into other parts of their businesses, like:
- Sales
- Customer service
- Product development
- Business strategy
- Marketing
- Growth planning
In other words, by outsourcing the bookkeeping responsibilities, businesses can shift such tasks from the main duties of business administration.
4. Flexible and Scalable Bookkeeping Support
Business needs evolve with time.
Bookkeeping for a startup business can be a part-time job of just a few hours per week. When sales, employees, customers, and transactions rise, bookkeeping can become quite a burden.
An outsourcing provider may be able to scale services as per the business needs.
For example, a company may begin with:
Basic bookkeeping → Reconciliations → Accounts payable/receivable → Management reporting → Additional finance support
This may be especially beneficial for expanding companies that aren’t looking to recruit and train new staff members over and over again.
5. Access to Modern Accounting Technology
A lot of outsourced bookkeeping firms utilize cloud-based accounting systems and workflows.
These can be a range of platforms, including:
- Xero
- QuickBooks
- Sage
- Microsoft Excel
- Cloud document-management systems
- Expense-management platforms
- Payroll software
- Receipt and invoice automation tools
UK businesses can use technology to make transaction processing, reconciliation, reporting, document sharing and collaboration with such offshore teams easier.
It’s not just software; it’s the people who know how to use the technology effectively in a specific bookkeeping process.
6. Faster Turnaround for Routine Tasks
Delegation can be utilized to build certain procedures for regular accounting tasks.
An overloaded internal employee does not need to finish a backlog, an outsourced team works on schedules and service level as agreed.
A business can have processes for, for instance:
- Weekly bank reconciliation
- Daily invoice processing
- Weekly accounts receivable updates
- Monthly management accounts
- Month-end bookkeeping
The presence of set limits and defined duties will allow for better consistency.
7. Focus on Core Business Activities
Bookkeeping is essential, but it isn’t necessarily the core activity of every business.
A marketing firm should focus on serving clients.
An e-commerce company needs to focus on sales and customer experience.
A technology company has to be more product and innovation oriented.
By outsourcing routine bookkeeping, management can free up time to focus on the operations, while still having a clear view of the company’s financial standing.
This can be helpful in setting strategic financial management apart from regular bookkeeping operation management.
8. Time-Zone Advantages
Sometimes the time difference between the UK and India can help improve workflow.
An Indian bookkeeping team may be able to carry out some work outside of the UK working hours depending on the working arrangements.
This can enable businesses in the UK to start the following working day with reconciled records, processed paperwork or up to date bookkeeping records.
But, effective communication and agreed working hours are still relevant. Don’t take time-zone differences as an indicator of the need for better communication, it’s actually a workflow opportunity.
9. Support for UK Accounting Workflows
Not all offshore bookkeepers are familiar with the specific needs in the UK.
The right outsourcing partner will be able to show you how their processes fit into the UK’s accounting environment, and should make clear what work will be done by the UK business or the UK’s accountant.
Outsourced bookkeeping can assist with things like:
- VAT bookkeeping
- Transaction categorisation
- Bank reconciliation
- Supplier and customer ledgers
- Management accounts
- Year-end preparation support
But, businesses need to define who is responsible for tax advice, statutory submissions, financial sign-off and regulatory duties.
What Bookkeeping Services Can UK Businesses Outsource to India?
A variety of bookkeeping duties can be outsourced to UK companies, depending on the provider.
Accounts Payable
- Supplier invoice processing
- Invoice recording
- Payment tracking
- Supplier statement reconciliation
- Outstanding payable reports
Accounts Receivable
- Customer invoicing
- Payment allocation
- Receivables reconciliation
- Aged debtor reports
- Outstanding payment follow-ups
Bank Reconciliation
An outsourced bookkeeper will be able to reconcile accounting records with bank statements and spot discrepancies or missing transactions.
General Ledger Maintenance
The bookkeeping team can keep records of the transactions and ensure that all what is agreed on in accountants is followed consistently.
Expense Management
Businesses can outsource:
- Expense recording
- Receipt management
- Expense categorisation
- Employee expense processing
Payroll Support
An outsourced team can help with records and payroll administration based on the provider’s abilities and client’s UK accountant or payroll expert.
Management Accounts
Regularly outsourced bookkeeping teams can generate reports on management to help business owners keep track of:
- Revenue
- Expenses
- Profitability
- Cash position
- Debtors
- Creditors
How Much Does It Cost to Outsource Bookkeeping to India?
Outsourced bookkeeping doesn’t have a set cost.
Pricing can depend on:
- Number of transactions
- Number of bank accounts
- Number of employees
- Accounting software
- Complexity of bookkeeping
- VAT requirements
- Frequency of reporting
- Volume of invoices
- Level of financial reporting required
- Number of hours required
The most common pricing models are:
Hourly Pricing
Client is paid by the hour.
Monthly Fixed Fee
The service provider has a fixed fee for a defined range of services.
Dedicated Bookkeeper
The business is provided with separate bookkeeping personnel and hours.
Customized Outsourcing Model
Larger companies might employ both bookkeeping and accounting, reporting, and finance support.
UK businesses should not go for the cheapest provider but instead consider the price of the overall service and scope of services provided before they compare prices.
Is Outsourcing Bookkeeping to India Safe?
Security should be one of the most important considerations when outsourcing financial processes.
Bookkeeping deals with sensitive business information, so when it comes to hiring an outsourcing firm in the UK, businesses should take the time to investigate the company before they put financial information in their possession.
Businesses should consider:
- Data-security policies
- Access controls
- Confidentiality agreements
- User permissions
- Secure file transfer
- Backup procedures
- Employee access management
- Data-retention policies
- Incident-response procedures
It is also crucial to know the contractual and data privacy obligations of both the parties.
A good provider should be open with methods for accessing, processing, storing and safeguarding client information.
How to Choose the Right Indian Bookkeeping Partner
Not all outsourcing companies will work for all businesses based in the UK.
Here are a few factors to take into account before signing any deal.
1. UK Bookkeeping Experience
Inquire if the provider is familiar with the bookkeeping needs of the client and has experience to assist with UK businesses.
2. Accounting Software Expertise
Look for a team’s experience with the accounting software your business already uses.
3. Qualified and Trained Staff
Inquire regarding staff experience, training, supervision and quality control procedures.
4. Data Security
Check the security measures and guarantees that the provider offers before giving access to financial data.
5. Communication
Establish:
- Communication channels
- Response times
- Working hours
- Escalation procedures
- Reporting frequency
6. Clear Scope of Work
A written arrangement must be put in place that clarifies what is covered and what is not.
7. Quality-Control Process
Inquire about the review process of transactions and methods to identify and correct errors.
8. Business Continuity
Know what to do if the nominated book keeper is unavailable.
A provider that has established processes and backup resources can mitigate disruption of operations.
Outsourcing vs In-House Bookkeeping: What’s the Difference?
| Factor | In-House Bookkeeping | Outsourced Bookkeeping |
| Recruitment | Required | Usually handled by provider |
| Office costs | Potentially higher | Typically reduced |
| Staff availability | Depends on employees | Can potentially scale |
| Training | Employer responsibility | Often provider responsibility |
| Technology | Business may purchase/manage | May be included |
| Scalability | Requires additional hiring | Often more flexible |
| Management | Direct employee management | Vendor/service management |
| Expertise | Depends on recruitment | Access to provider talent pool |
Both models are not always applicable to any company.
This depends on transaction volume, complexity of transaction, internal resources, budget, security requirements, and degree of financial control that the business would like to have.
Common Concerns About Outsourcing Bookkeeping to India
Will Communication Be Difficult?
If expectations aren’t defined, it can be.
Communication, reporting, time to respond and escalation should be planned from the outset in the UK businesses.
Will I Lose Control of My Finances?
Outsourcing bookkeeping to an outsourcing company doesn’t necessarily mean that you are losing control of finances.
Businesses can keep their authority to approve, review reports, control system access and have a responsibility for important financial decisions.
Is Offshore Bookkeeping Only for Large Companies?
No.
Outsourced bookkeeping can be utilized by a number of companies, including small businesses, startups, agencies, professional organizations, ecommerce businesses, and growing businesses.
The suitable model is dependent on the company’s requirement.
Can an Indian Bookkeeping Team Work With My UK Accountant?
Yes, this is a possible part of the out-sourcing model!
For example, the outsourced team could keep the books, with the accountant in the UK preparing the tax, statutory, or compliance accounts or tax filings.
It is important that the tasks are agreed prior to division.
7 Signs Your UK Business Should Consider Outsourcing Bookkeeping
An outsourcing option can be advantageous for your company if:
- Too time consuming to maintain bookkeeping.
- You often find yourself a day or two behind with your finances.
- Your internal team is overloaded.
- You have a lot of expenses for regular bookkeeping management.
- Your volume of transactions is increasing.
- You need more regular financial reporting.
- You need extra bookkeeping support but do not want to add to your full-time staff.
If you recognize a few of these scenarios, you might want to take a look at the various outsourcing providers and compare them to your existing bookkeeping services.
How to Successfully Outsource Bookkeeping to India
Successful outsourcing depends on a variety of factors including the level of work, the type of service provider, the size of the business, as well as the cost model that is being used. It is best that organizations compare total costs and service scope and take into consideration other aspects like hourly rates of paying the provider.
Follow a structured process:
1: Define Your Requirements
Identify all bookkeeping tasks you currently do and which ones you wish to outsource.
2: Organise Your Records
Organize your accounting systems, bank feeds, invoices, receipts and financial documents.
3: Select the Right Provider
Compare experience, service size, technology, security, communication and pricing.
4: Establish Access Controls
Only provide the outsourcing team with the necessary access to perform their tasks.
5: Create Standard Operating Procedures
Record routine procedures, approval processes, time limits, and escalation procedures.
6: Start With a Controlled Transition
A gradual transition may help in identifying problems related to process before the whole of the bookkeeping work is outsourced.
7: Monitor Performance
Regularly review accuracy, turn round, communication, reporting and agreed service levels.
The Future of Bookkeeping Outsourcing for UK Businesses
Bookkeeping outsourcing is increasingly moving beyond simple data entry.
The way bookkeeping tasks are done is changing with the use of cloud accounting, automation, digital document management, artificial intelligence, and integrated financial systems.
Companies are now seeking out outsource partners that can offer more than just cheap work.
The focus is shifting toward:
- Process automation
- Real-time financial information
- Cloud collaboration
- Data accuracy
- Financial reporting
- Scalable finance operations
- Technology-enabled bookkeeping
It offers a chance for the UK businesses to improve their finance processes and tap external knowledge.
Conclusion
The question isn’t simply “Why do UK businesses outsource bookkeeping to India?”
The bigger question is if outsourcing can help build a more efficient, scalable and cost-effective bookkeeping business for your specific company.
For many businesses in the UK, outsourcing can enable them to hire professionals, have flexibility in their workforce, utilise up to date technology and for routine financial processes, it can provide support without the need to hire a larger workforce.
Factors like selecting the right provider, defining the processes, safeguarding financial data and appropriate monitoring are crucial to success, however.
The goal shouldn’t be outsourcing all things. The object should be to delegate the appropriate tasks to the appropriate partner.
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FAQs
1. Why do UK businesses outsource bookkeeping to India?
By outsourcing bookkeeping services to India, UK businesses can leverage the expertise of skilled professionals, cut down on some expenses, gain flexibility, manage larger transaction volumes, and avoid the mundane nature of financial administration.
2. Is bookkeeping outsourcing to India cheaper than hiring in the UK?
Depending on the scope of work, the provider, business size and pricing, it can be. When choosing an office cleaner, compare the over-all cost and the services provided instead of just the hourly rate.
3. Can small UK businesses outsource bookkeeping to India?
Yes. Depending upon their needs, small businesses can choose to outsource certain activities only or entire revenue operations.
4. Is outsourced bookkeeping secure?
This kind of implementation can be safe if the appropriate controls related to data protection and security are applied in practice.
5. What accounting software can Indian bookkeepers use?
While some software skills may differ between providers, many work with popular accounting software like Xero, QuickBooks, Sage and Excel.
6. Can outsourced bookkeepers work with my UK accountant?
Yes. An outsourcing bookkeeping team can keep accounting records and a UK accountant can manage agreed accounting, tax, compliance or statutory duties.
7. How do I choose a bookkeeping outsourcing company in India?
Review UK experience, staff competency, accounting software experience, security, communication, quality control, scalability, pricing and client references.