When letting go is the best way to take control – The Benefits Of Outsourcing
When starting up and growing a small business, the temptation is to keep everything in-house, rather than spending precious capital on out-sourcing. Yet the growing role of technology in business has forced reconsideration and acceptance of this new paradigm.
Technology is helping SMEs to drive costs down, increase productivity and profitability and improve customer satisfaction. The punitive cost of setting up in-house departments for functions such as cash management solutions and accounting has already prompted the majority of SMEs to take a fresh look at best practices.
This new opportunity was confirmed by the findings of the recent SME Digital Transformation Study, which showed SMEs in Singapore are optimistic about out-sourcing to increase profits.
As Kurt Wee, President of the Association of Small & Medium Enterprises (ASME), puts it: “The findings from the survey are consistent with the common view that local SMEs tend to be cost-sensitive, valuing day-to-day efficiency and garnering more customers to grow the business.”
This digital transformation process raises certain questions, however, such as which areas should be kept in-house and which out-sourced. As a rule of thumb, experts tend to advise that the core competencies in which an SME excels should never – or very rarely – be outsourced.
One area actively considered for outsourcing is cash management and accounting, for which it tends to be more cost-effective to rely on out-sourcing partners. This allows SMEs to take advantage of the partners’ evolving expertise as well as the technology they employ to make processes more reliable and cost-effective. But identifying right partner is key.
How, then, can SME owners identify the right partner? One of the key areas for out-sourcing in cash management solutions is payroll – a role too important and sensitive to be entrusted to an unknown entity.
Further, with regulations and taxes constantly evolving, payroll is a huge challenge for employers. Meanwhile the consequences of getting it wrong can be severe. Incorrectly calculating and paying tax is not only unlawful but could lead to a large and expensive bill.
More than half of all SMEs still conduct their own payroll functions, partly because of doubts over how well third parties will understand their business.
One way around this is to use a trusted banking partner for payroll solutions, as well as working capital requirements, as this enables a broader business relationship. Managing both elements affords the bank greater visibility over the SME’s outgoings and allows them to suggest specifically tailored solutions according to need.
As a leading financial institution and partner to many successful SMEs, Maybank works closely with the SME Start Digital Program supported by Enterprise Singapore (ESG) and Infocomm Media Development Authority (IMDA).
Maybank offers relevant and scalable digital solutions in five categories: Accounting, HRMS & Payroll, Digital Marketing, Digital Transactions and Cybersecurity solutions. As part of its humanizing approach, Maybank promotes digital solutions that help fuel efficient processes and cost-effectiveness, while widening audience reach for SME businesses. This helps SMEs focus on growing business, leaving the rest to the experts.
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