Outsourcing Accounting: Process, Costs and Handover

Outsourcing accounting changes an ongoing financial process. The transition therefore needs to start from a clearly defined status of the accounting records.

For a German GmbH, it needs to be clear through which period the financial accounting has been processed, which accounts have been reconciled, which transactions remain open and how invoices, bank data and queries will be handled going forward.

A structured handover creates a reliable starting point for ongoing accounting. It makes clear what has been completed, what still needs to be addressed and which financial information management can expect to receive each month.

The handover date follows the actual accounting status

A month-end provides a clear operational cut-off point. The relevant factor is the actual status of the books at the handover date.

If financial accounting is complete through September, October can become the first month handled by the new provider. This requires a clear understanding of which accounts have been reconciled and which matters from earlier periods remain open.

Unresolved bank transactions, missing invoices, outstanding receivables and payables and unusual clearing account balances belong in the handover documentation.

The new provider then has a clearly defined starting point.

Where the previous advisor has already made substantial progress on a period, a split by accounting period can make sense. The previous advisor completes the month already in progress. The new provider starts with the following period.

The quality of the handover depends on this allocation.

Account balances need an economic explanation

Accounting records can be transferred between systems. That does not, by itself, explain the balances they contain.

This is particularly relevant for shareholder accounts, loan accounts, payment providers, credit cards and outstanding receivables and payables.

An account balance is only reliable if its origin can be understood.

For an outstanding receivable, it needs to be clear whether the customer has actually not paid, whether a payment has been allocated incorrectly or whether a credit note is missing.

That distinction affects liquidity, reporting and the annual accounts.

A structured takeover therefore documents the status of material accounts and clearly identifies any remaining points that require clarification.

Bank data and documents determine the quality of the monthly process

Ongoing financial accounting depends on recurring and reliable data flows.

Bank transactions need to be processed completely. Supplier invoices need to be available in the system. Customer invoices need to be allocated to the correct receivables. Missing information needs to be identified.

The monthly process therefore needs defined channels for documents, bank data and queries.

The company needs to know how documents are provided. The external provider needs to be able to identify missing information. Queries need a clear contact person.

A stable process depends on repeatability.

If the same process works again the following month, individual accounting tasks become a reliable financial process.

DATEV supports the process technically

DATEV can organise the digital collaboration between a company and its advisor efficiently.

The quality of the accounting still depends on the professional work performed within that system.

A missing document remains missing. An unreconciled account still requires clarification. An unusual transaction still requires an economic explanation from the company.

When taking over existing DATEV accounting records, it therefore needs to be clear which datasets are available, which periods have been processed and which open matters remain within the records.

The new provider builds on that position.

The technical transfer of data and the professional handover therefore form part of the same transition process.

Good financial accounting follows a defined monthly rhythm

Management needs reliable financial information at a defined point in time.

That requires a recurring monthly accounting process.

Documents and changes are provided within the agreed period. Transactions are processed. Bank accounts, receivables, payables and other relevant accounts are reconciled. Open matters are resolved. The resulting data can then be used for reporting, tax filings and other financial processes.

The importance of this rhythm increases as the company grows.

Management, investors and financing partners work with monthly figures. The value of financial accounting therefore also depends on how quickly and reliably those figures become available.

Accounting that regularly falls several weeks behind the operating business loses significant value for management purposes.

Reporting starts with the quality of the accounting data

The quality of reporting depends materially on the quality of the ongoing accounting data.

A meaningful profit and loss statement requires transactions to be recorded completely and in the correct period. Missing expenses, incorrectly allocated revenue and unresolved accounts directly affect the reported result.

The same applies to working capital and liquidity.

Outstanding receivables affect expected cash inflows. Payables affect future liquidity requirements. Tax positions lead to payments or refunds.

Reliable financial accounting therefore provides the basis for the monthly close, reporting and liquidity planning.

The quality of this data directly influences how effectively management can steer the company financially.

The annual accounts start during the financial year

Many year-end issues arise months before the annual accounts are prepared.

Unreconciled accounts, missing documents, unresolved receivables and poorly documented transactions need to be addressed at the latest during the year-end process.

A strong ongoing accounting process reduces this workload.

The annual accounts then build on accounts whose balances have been maintained and kept understandable throughout the year.

This can improve both the efficiency of the year-end process and the quality of the financial information available during the year.

The effort required for the annual accounts can therefore also provide an indication of the quality of the ongoing financial accounting.

Corporate groups need a consistent accounting approach

Every additional entity increases the need for reconciliation.

Holding companies, operating companies and other investment vehicles maintain separate accounting records. At the same time, intercompany loans, cost recharges, management services and other relationships arise between those entities.

These transactions need to be reflected consistently on both sides.

An intercompany receivable should be reconcilable with the corresponding payable at the other entity. Differences between the accounting records need a clear explanation.

Timing differences, VAT effects, foreign currencies or other valuation issues can create discrepancies.

As the group grows, a consistent accounting approach becomes increasingly important.

Account structures, documentation and monthly reconciliations need common rules. Otherwise, additional reconciliation work arises during each monthly close and when preparing the annual accounts.

Group reporting starts with consistent accounting at entity level.

Requirements often change after an acquisition

Following an acquisition, reporting, financing and internal responsibilities often change.

The new ownership structure may require monthly reporting, additional cost centres, new financing arrangements or new intercompany relationships.

Timing expectations can also change. New owners may require reliable monthly figures earlier and in a more consistent format.

Financial accounting needs to support these requirements.

When accounting is taken over following an acquisition, the existing chart of accounts, reporting structure and monthly process should therefore be assessed against the requirements of the new ownership structure.

The existing data remains the starting point.

The new financial organisation needs to build on that data in a traceable way.

The existing accounting records determine the handover

The scope of the handover depends on the existing process.

For ongoing financial accounting, relevant information generally includes accounting data, accounts and balances, outstanding receivables and payables, bank information, fixed asset accounting and the underlying documents.

For unusual or unresolved positions, the new provider also needs information on the economic background.

A data export may not include all of that information.

The professional handover therefore complements the technical dataset with an overview of the matters that remain open.

Operationally, the takeover is complete when the next accounting period can be processed under the new process and the outstanding matters transferred from the previous setup have been clearly allocated.

Costs follow the actual accounting workload

Transaction volume is an important cost driver. A reliable fee calculation also requires an understanding of the underlying processes.

Bank accounts, payment providers, open items, foreign currencies, fixed asset accounting, multiple entities and specific reconciliation requirements all affect the monthly workload.

Reporting and the monthly close can also increase the scope of services.

A well-organised GmbH with clear data flows can be handled efficiently. Persistent clarification requirements create additional work every month.

For a monthly fixed fee, the recurring services and the way in which data is provided by the company therefore need to be clearly defined.

The fee follows the actual scope of services and the complexity of the ongoing process.

Internal responsibility remains part of the accounting process

The external provider processes transactions and applies the relevant accounting rules.

The economic background to those transactions arises within the company.

Unusual payments, new contracts, loans and other specific transactions therefore require information from the company.

A clearly designated contact person makes this coordination significantly more efficient.

This creates a defined allocation of responsibilities between the company and the external accounting provider.

The provider manages the agreed accounting process. The company provides the information required to understand and classify its transactions correctly.

This division of responsibilities keeps the monthly process manageable as transaction volume grows.

Good outsourced accounting delivers reliable figures every month

The quality of outsourced accounting becomes evident in day-to-day operations.

Bank accounts are reconciled. Receivables and payables are understandable. Material account balances can be explained. Tax positions are reconciled with ongoing filings and payments. Any remaining differences are traceable. Management receives figures it can use for decision-making.

The annual accounts then build on a well-maintained accounting dataset.

Financial accounting becomes an integral part of the company’s financial organisation.

CLIQ provides ongoing financial accounting for German GmbHs and corporate groups. Depending on the scope of services, we combine financial accounting with payroll, reporting, annual accounts and tax advisory. The handover date, status of the accounting records and monthly process are defined at the start of the engagement.

Learn more about our services:

Accounting Outsourcing

Financial Accounting for GmbHs

Accounting & Reporting