Showing posts with label accounting. Show all posts

Advantages of Using a Payroll System for your Business in the Philippines

advantages of payroll system

Before diving into buying yourself a payroll system for your business, it is righteous enough to know first why you are buying one? Will this be an asset that could help the company’s state? Will this help in a quicker production of payroll?

Here in the Philippines, wages are deducted from taxes and other government requirements as these are mandatory deductions and obligation of a working employee.

Another is to increase in salary due to holidays as the Philippines has quite the list of holidays in a year. Though these movements to your salaries are foreseen changes, having a payroll automatically computes it for you makes production of payroll a lot faster and accountable for little to no human error. But what really is a payroll system.

What is a Payroll System?


It is a software created and designed to not just compute an employee’s salary as well as the deductions such as taxes and government deductions. This also includes the filed leaves of absences whether it is a vacation, sick, or emergency type of leave, it will then be compiled alongside the computation of an employee’s wage.

On a more technical side, the system includes gathering of timekeeping information, computation of wages, disbursement of salaries and pay slips.

Advantages of Using a Payroll System


Accuracy is expected


Initially, a user will need to input a new employee’s information together with their salary without deductions. The system will then compute the wage in a recurring basis minus the deductions to output the deducted salary. The good thing about this system is due to the little interaction of manual actions, accurate outputs are expected.

If for some unknown reason, a system suffers from a glitch, the business could then ask for a refund from the provider as it is an anomaly in their created system and accounts for a money back unlike when it is a manual mistake wherein reimbursement could be done to subordinates.

Lesser cost


How it is less? Simple, compare hiring an accountant who will do the manual monthly computations and produce reports within a certain time though works for a small company but if the company is a bigger one then this could be time-consuming and be prone to human errors unlike having a system to do the job for you.

Operation of this system requires little human intervention as the system is already capable of the complex computations needed in producing an employee’s payroll. To make the investment worthy, be sure to have the produced system be created according to your needs to ensure effective and efficient computations.

Adaptable to change


Since every regime in the Philippines always wants change, it is not a shock that every government deductions will be changed as well. It is good to note that a payroll system provider has the capabilities to deliver a system able to cope with the changes thus making it adaptable to changes.

Promotes higher security


How a payroll system promotes security? A payroll system prevents payroll frauds in such are ghost employees (employees who are included in the payroll system but is no longer or is not working for the business), payment manipulation or data breach.

It is of good note that the system notifies users to update login credentials to avoid data breach. The update could be every month or quarterly or what fits best to the business.

Note: Before acquiring a payroll system, be sure to be knowledgeable of the processes of the payroll system in the Philippines as this is crucial to computing an employee’s salary.

Having a payroll system for your business in the Philippines would enable you to have accurate results in no time enabling the company to focus their time to other business activities.
CONTINUE READING

Accounting Due Process: FASAB’s Rules of Procedure

fasab-rules-of-procedure

The Federal Accounting Standards Advisory Board since its establishment in October 1990 has devoted itself to serve the public interest by improving federal financial reporting through issuing federal financial accounting standards and providing guidance after considering the needs of external and internal users of federal financial information. It has become a significant entity not just for the accounting industry but also for those other industries that involve auditing, payroll, and taxation in general. The accounting outsourcing industry is also put into a conversation as any movement to the standards of accounting set by FASAB should be reflected in their procedures regardless if they are offshore or within the boundaries of the federal state.

As complex at it may seem to decide on actions on how to keep the accounting standards in good shape, FASAB has been able to stay true to its mission thanks to its rules of procedure which has also been their guideline in adhering to the Federal Advisory Committee Act. Through this, FASAB can ensure that the common understanding of the information provided through financial reporting by participating in educational efforts and that its own accountability through governance practices that are transparent and consistent with the Memorandum of Understanding among its sponsors. This is all while considering the views of other accounting trend-setters (international trend, trends upheld by other industries like accounting outsourcing, the World Bank, and offshore markets) and the stakeholders.

In order for FASAB to conduct a timely, open, and thorough study of the accounting issues that might affect the accounting standards, FASAB acts on the following steps:

1. Identification of accounting issues and agenda decisions. FASAB consults and syncs with the Executive Director to first identity projects that need prioritization among its potential projects. When a new project is decided it is added to the list of active agendas and is weighed by the board on how to deliberate on them. A pre-agenda research should be conducted to ensure that the issue has supporting data before being presented in a meeting.

2. Preliminary deliberations. The FASAB deliberates on active agenda items at its meetings. Through this process, FASAB will able to ensure that all issues are identified and alternatives resolution to issues are developed, assessed, and ranked.

3. Preparation of initial documents. FASAB requires that documents that provide background information about the presented issue, summaries of the concepts being developed, and initial listing of options including the possible impact of the resolution are initially prepared before a meeting.

4. The release of documents for comment (e.g., exposure drafts) to the public, public hearings when necessary, and consideration of comments. 

5. Further deliberations and consideration of comments. As the situation demands, FASAB may go under series of deliberations that will require members of the board to further investigate and schedule a further meeting that requires further preparation of documents to support the proposed solution to the issue. 

6. Voting. When the Board has finally decided to proceed to a final pronouncement due to the lack of further substantive revisions to the proposal in the exposure draft then it will require the approval by at least a two-thirds majority affirmative vote of the board.

7. Submission of proposed Statement to the Principals for 90-day review (45 days for Interpretations). 

8. Publication of final Statement or Interpretation. The final statement is then released for public dissemination.

Accounting will remain as a pillar industry that holds other industries to stay intact. And with the help of the Rules of Procedure, we can make sure that we will be able to uphold a fair and safe system of accounting.

Sources: 
CONTINUE READING

6 Qualities of the Best Accounting Outsourcing Firms

qualities-of-best-accounting-outsourcing

Undoubtedly, partnering with accounting outsourcing firms has made finance-related tasks easier for a lot of businesses. In fact, 90% of finance and accounting business process outsourcing (F&A BPO) engagements are reported to meet their initial delivery performance and cost-reduction targets.

From the mundane jobs such as outsourced bookkeeping to the more complex ones like risk management service, BPOs have provided more time for businesses by taking these tedious tasks from them. This allows companies to focus on more important business matters.

Because of the clear benefits of outsourcing, it is only natural that companies seek its service. However, while BPO services are advantageous, it can also backfire if you don’t conduct research carefully about your prospective outsourcing partners. For instance, incompetent firms may cause trouble with miscalculated employee payrolls, or worse, have the Bureau of Internal Revenue haunting you for filing late tax reports.

Although these problems are really troubling, they can be completely avoided. Save yourself from future headaches by checking out the qualities to look for in the best accounting outsourcing firms.

Offers Reasonable Price


Competitive price is an important factor to consider when choosing an accounting outsourcing firm, but it should not be the sole basis in your decision-making. Cheaper price may sound good and enticing, but it does not necessarily translate to the best firm. Low-cost services shouldn’t stop at being inexpensive; it should also be able to provide quality and efficient processes at the same time.

Efficient Processes


According to a Forbes article, simplified and standardized F&A processes result to more information, more service, and more cash. When deciding which firm to choose, you should seek how their process works, and if they have the expertise in creating process that can provide you with more competitive advantages.

Impressive Track Record


Long and proven track record matters for businesses. When dealing with prospected firms, ask how long they have been operating, and the number of clients they have partnered with. Experienced BPOs have more likely dealt with issues concerning the tasks, and know how to avoid them in the future. The track record does not only ensure you are working with a seasoned service provider, but it also guarantees you are in safe hands.

Specialization in Complex Tasks


Different firms offer different services. As someone who lacks expertise in accounting, you are looking for a firm that is an expert not just in standard accounting, but also in the more complex branches of the job. It should be adept in outsourced bookkeeping, and at the same time be able to handle financial analysis, risk management service, and other complex tasks.

Aside from specializing in complex tasks, the best outsourcing firms should also be flexible. They should be able to catch on the latest trends in the industry, and meet their partners’ requirements and the changes in the state’s conditions.


Promotes Security


Dealing with financial information is a sensitive and crucial matter. Hence, your service provider should be able to secure their systems from external threats. They must be able to show how they are managing and securing information, in compliance with ISO 27001 standards. A certification to the said standard is also a good sign that you are working with a reliable accounting outsourcing firm.

In addition, since confidentiality issues may arise while doing business with BPOs, it is better to choose firms that are willing to sign a Non-Disclosure Agreement (NDA).

Values Transparency


Immediate access to your financial data is important, therefore, accounting outsourcing firms should be able to give that to their partners. Having knowledge on using cloud-based service software should help ensure that you are getting your data anytime and anywhere you need them.

While problems are part of every business, it does not mean that you should face those head on when you can totally avoid them. You wouldn’t have to suffer from failed outsourced bookkeeping tasks just because you’re not careful enough in choosing the best service provider. Taking note of the qualities above should let you screen prospective firms better and make more informed decision to help your business achieve success.
CONTINUE READING

Keeping Accounting on Top: Midyear Accounting Checks and Reviews on Accounting Stability

midyear-accounting-checks

The industry of accounting is one of the steadiest industries in the United States. The revenue it has accumulated in the past years is a reflection of its stability. The revenue of accounting, alongside tax preparation, bookkeeping, and payroll services in the United States reached approximately 137 billion U.S. dollars in 2013. In fact, accounting, tax preparation, bookkeeping, and payroll services lead the market with a net profit margin of 19.8% and remain the most profitable industries in 2015, behind legal services, and oil and gas extraction. A portion of accounting’s profit is thanks to the growing industry of outsourcing. The leading accounting and auditing firms worldwide (Deloitte, Pricewaterhouse Coopers, Ernst & Young and KPMG) alone made around 40 billion U.S. dollars between them in 2013, employing more than 717, 000 people. By 2018, this industry is projected to generate around 160 billion or more.

statistic-annual-revenue
Image Source: http://bit.ly/2a1KuiX

However, being a giant in the market did not excuse accounting from legal cases involving fraud and the like. In a research conducted by Cornerstone Research in 2014 regarding Accounting Class Action Filings and Settlements, the reviews and analyses show that allegations of accounting fraud increased by 47 percent in securities class-action lawsuits in 2014 compared from the data from 2013. This just shows the vulnerability of accounting in the legal aspects.

This is just one of the main reasons why accounting and tax expenditure are closely monitored by the US government in the past decades. In the midyear newsletter of The Federal Accounting Standards Advisory Board or FASAB, they released a follow up in the Risk Assumed—Insurance Programs. The Program Board has approved edits on the terms of Insurance Program, Exclusions, Incurred but Not Reported, Insurance Claim, Insurance Contract, Cash Surrender Value, and Recoveries. Risk Assumed—Insurance Programs objective is to determine the risks the federal government assumes when it implements policy initiatives to provide safety and stabilize financial markets and the economy. It also aims to update the current standards that are limited to insurance contracts and explicit guarantees.

FASAB is a US federal advisory committee which has been established through the Chief Financial Officers Act of 1990 to develop generally accepted accounting principles or GAAP. FASAB serves the public interest by improving federal financial reporting through issuing federal financial accounting standards and providing guidance after considering the needs of external and internal users of federal financial information. The American Institute of CPAs or AICPA Council designated FASAB as the only body that establishes accounting principles for federal entities. FASAB has scheduled meeting regarding Risk Assumed Insurance Programs on the 24th and 25th of August, 19th and 20th of October, and on the 19th and 20th of December.

Various data and research about accounting will prove that it will continue to be a dominating industry for decades to come. And with the FASAB flourishing it up to make it a stable industry with lesser risk, we can count on accounting to stay on top of the market for a very long time.
CONTINUE READING

Cash Management: The Heart of Risk Management Services

cash-mgmt-risk-mgmt-services

Risk management and like services would not become an industry nor a field if it were not for the unpredictable nature of financial investiture. Financial investiture is summarily closer to planting seeds than raising livestock—you can always get a healthier chicken to breed with your hens so you can yield more eggs but you can’t be sure how many and how sweet the apples will be until after a couple of years. That’s why risk management services are so important and that’s why cash management is your best weapon to reduce financial risk.

When talking about risk reduction, “financial” is almost always affixed. It is always in the context of money. In a constantly evolving industrial world, how do you get by managing financial risk for your company’s betterment?

Risk < Reward

There is such a thing as cost effective risk reduction (CERR) and its basic working principle is that no risk = no reward. Taken bluntly, it might look counterproductive to what we’re trying to do, i.e. reduce risk but investments and risks are the heart of innovation and discovery. Businesses continually have to invest in advertisement to be known, in technology to be enabled, and in manpower to stay in business and all these investments are risks. It’s only just a matter of reducing risk—never evading them—that makes the differentiating margin between reward and loss.

Cash Flow Prediction

You will know when a business is succeeding or at least has found stable footing when it has more incoming cash than it has expenses. That’s exactly what cash flow management is all about: balancing collections, income, and accounts receivable with disbursements & accounts payables. Cash flow prediction is more concerned about imbalance in that it needs to know how much you are going to need to pay so that you can predict how much more you’re going to need to make to be able to carry one with future plans. Also called financial forecasting, it might be one of the most important risk reduction mechanisms to make sure that you have the money you need as you go into risk. So what if you go into risk and it doesn’t go as well as you’d hope?

Contingency Fund

After you’ve accounted for how the best scenarios of your investment may play out, risk management services and cash flow prediction considered, you now have to prepare for the worst. After you’ve steered your company’s ship into stormy seas only to find nothing but high winds and no treasure, a contingency fund will paddle you back into calm and stable shores of liquidity. If investing is, in itself, investing in risks, a contingency fund is an investment in safety. A contingency fund does not only work when you need to make a risk so even without any immediate plans to make an investment, you can start on a contingency fund already.

Whether you are a small or medium business doesn’t matter—investiture is a risk you are going to have to take if you are going to make more money and do not want to stay in a limbo of stagnation. Risk management and cash flow management will be your left and right hands to help you break through a bigger market moving forward.
CONTINUE READING

Balancing Advantages and Disadvantages: Outsourcing Financial Management Service

outsourcing-financial-management-service

Funds are vital to a business as it serves as its fuel. With enough funds in hand, together with big ideas, business managers are prepared in making necessary improvements for their businesses. It allows business managers to buy materials and equipment needed for their business processes. However, to efficiently use every peso of your investment, you, as a business owner, equally need an effective financial management service provider.

Financial management refers to the effective manner of organizing a business’ funds including all the income and expenses made. It does help in making decisions that can subtly and greatly affect the whole business. It is the act of keeping an accurate set of books and balance sheets containing each and every financial function made within the business.

Although there are a lot of companies that offer financial management services, there are still important points you (business owners) should understand before you fully commit your businesses to outsourced financial management service.

Outsourcing financial management service allows managers to focus on the development of the business’ products and services. Since finance is a matter that greatly needs attention for studying, outsourcing the service from the right professionals will allow you to just focus on the things you can do for the development of your business instead of allotting so much time in self-studying financial statements. Having financial management outsourced from a pool of financial professionals, moreover, can help you understand what financial statements tell you about.

On the other hand, there are cases in which you spend a lot for financial professionals than for business processes. This is why you need to also emerge yourself on the process of financial management though you have outsourced it from the professionals. Understanding is a process, and if you spend enough time understanding how financial professionals do the process, you would be able to do financial management yourself or with a little help from the professionals. So in choosing the service provider, make sure that they are all willing to not just do the financial management process but to also impart knowledge to you as the business owner.

Moreover, your chosen financial management service provider helps you avoid possibly dangerous mistakes. Since funds are vital in making your business processes successful, knowledgeable professionals can help you not overlook simple yet important details about your finances. So it is equally important that you outsource the financial management service from established providers who have handled finances of different businesses. Although you are assured that your chosen provider can really help you according to their experience, it is not a reason for you to lose awareness of the key factors of your business.

Outsourcing financial management service, like other outsourced services, has its own set of advantages and disadvantages that affects how managers run businesses. Since finance is an important factor that you cannot lose in managing your business, you need to be careful enough in choosing your service provider. Generally, in outsourcing financial management service, you need to balance its advantages and disadvantages and learn from its process.
CONTINUE READING

A Bit of Fun and Scary Facts about Accounts Payable

facts-about-accounts-payable

Learning sure is quite a tedious tasks but could be turn into a fun lecture with this mix of fun and scary facts about accounts payable. Being able to know little information on things or engage you on such will help you see what’s in your future. Having to decide what to do is a much more tedious task than having a grasp of things to learn.

As defined, accounts payable is also known as payables or trade payables. It is the company’s balance sheet which has the information about the money owed by a business to its suppliers shown as a liability. Such payable is recorded in the accounts payable sub-ledger and would also create an invoice representing the vouched for the payment.

Fun Facts about Accounts Payable


Present and used by the Greeks

It dates back to ancient Greece that automated technology has been of use in this era. It was first used by Homer. The Latinization of the Greek, or “acting of one’s own will”. It was the Antikythera mechanism, the only surviving analog computer ever to exist in Hellenistic Greece.

A wide range of automated technologies to choose from

According to Chief Marketing Specialist, it was dated that on 2014, there were 211 different marketing automation solutions on the market with 947 different technologies available.


Accountants doing Police Work

It was that FBI employs 2,000 accounting special agents on handling white collar crimes. It was of also known fact that the famous Chicago crime boss Al Capone was taken down by accounting agents. He was arrested and convicted for income tax evasion rather than the many alleged crimes he’s accountable for.


Scary Facts about Accounts Payable


Invoice? Where art thou

Don’t stress your A/P clerk for unwanted expense. According to the 2012 AP benchmarks reports, it takes up to 5 or more days for the invoice to reach the A/P department upon delivery of the invoices from the vendors to the purchasers.


Patience is a virtue

Due to the fact that the invoices arrives jn a paper format, the accounts payable network let us know that inputting such information could be done for around 14% only upon its arrival date.

Needs more time

A minimal automation could process a single invoice up to 16.3 days, said the Aberdeen Group. Also, a huge difference between low level of automation from high level of automation was around 20 times higher of the average cost in processing an invoice according to the Institute of Finance & Management (IOMA).

Are you sure your money is safe?

It was stated by the Association of Certified Fraud Examiners that organizations lose an estimated 5% of their annual revenues o fraud.

Did you know, you could outsource your accounting services? There are companies that offers outsourced accounts payable that would surely come in handy for the benefit and shows progression in the business. Asking for an outside intervention would not be as much horror as anyone who has foresaw it could be. Ask them, know them, and see if they could make amends with your interests and needs.
CONTINUE READING

Identity Theft: A Threat To Business Innovation

identity-theft-threat-to-business

The integration of technology to almost every aspect of life has changed the expectations of the consumers to the quality of services that they deserve. Consumers now prefer convenient and hassle-free services that are readily available almost literally when and where they want. And many businesses recognize that adapting to this kind of market would make them sell more. Some would extend their business hours, even going as far as operating 24/7. Others would take advantage of the use of outsourcing and provide over-the-phone customer services. There are even those who have explored the use of mobile apps and online shops in bolstering their consumer reach. But sadly, these business innovations have also made proprietors vulnerable from threats concerning consumers’ safety—identity theft.

Identity theft is the fraudulent acquisition and use of a person's private identifying information, usually for financial gain. Identity thief often uses the information they have acquired such as social security number to open accounts, file taxes, or make purchases. In 2015, the U.S. Federal Trade Commission has reported 490,000 identity theft complaints. It has inflated by 47% since 2014. The sudden increase can be associated to the rise of consumers that are taking advantage of over-the-phone services and online services that require statement of personal information.

Identity thieves, once they get a hold of personal information, can find a way to drain an innocent user’s bank account, run up charges in credit cards, or get medical treatment using health insurance. There are many ways that identity thieves can get a hold of information: they can skim through trash and look for old bills or financial statement; they can also steal mail and take advantage of pre-approved credit card offers—some may even pose as a credible company and send you an email asking for your personal information.

Recognizing the threat that identity theft poses to the safety of the consumers and the stability of businesses, the House has finally passed the H.R. 3832, or the Stolen Identity Refund Fraud Prevention Act of 2016 this May 15, 2016 for the Senate’s review. The bill has been introduced by Rep. Jim Renacci (R-OH) and was co-sponsored by Rep. John Lewis (D-GA). It includes provisions to both establish a centralized point of contact at IRS for ID theft victims and improve taxpayer notification of suspected ID theft.

Identity theft is a serious issue that poses a threat to consumers and businesses and everyone should be aware of it. It puts businesses in a tight situation that consumers will make them question the safety of their information. If you think that someone has assumed your identity to file taxes, contact the Internal Revenue Services. Follow the instructions that they will provide to address fraudulent complaint. To report other identity theft cases, you may visit the Federal Trade Commission website that has been specified to help identity theft victims and spread awareness about it. The website comes up with questionnaires that will help you state the severity of the case. It also comes with a recovery plan and a walk though program in updating and tracking your progress.
CONTINUE READING
Subscribe to: Posts (Atom)