How Much Should I Spend On Accounting and Financial Services?

If you have a business, you need accounting and finance.

But do you know how much you should spend on these functions?

The answer is quite standard: not too much, not too little - just enough.

As technology evolved, outsourcing accounting and financial services became widely available, and many individual accountants and firms entered the market.

The service became cheaper,  but what about quality?

Let’s just say… not always great.

Accounting isn’t just about submitting tax declarations, uploading and downloading invoices, or preparing bank transfers.

It’s about accuracy, timeliness, reliability, and efficiency.

A failure in even one of these areas can put your business’s very existence at risk.

Outsourcers often tell you:

• “Risk management is simple,” or

  
  

•  “Let’s tax every operation where a risk may occur.”

  
  

And that’s how you end up paying taxes on everything, which basically means you’re paying your outsourcer to work for the tax authority rather than for you.

Want examples?

There are plenty.

Should you pay VAT on your operations if you’re already a VAT payer?

Do you know that before a transaction even qualifies for VAT, it must go through several strict conditions?

First, there must be a supply, import, or export;

Then it must be carried out within Georgia (for instance, if you provide consulting services from your Tbilisi office to a foreign client, that service is likely not considered to be rendered in Georgia);

It must not be exempt, or, conversely, you may think it’s exempt when it’s not (for example, you sell land and assume the operation is VAT-free, but if a building is registered on that land, your multimillion GEL transaction becomes subject to 18% VAT).

Or imagine this: you contribute a building as capital to a company, then sell the company’s shares thinking you’ve avoided VAT.

Yet your outsourcer fails to tell you about the concept of a “real estate–rich company,” where the substance-over-form principle applies.

Years later, the tax authority conducts a desk audit, applies VAT to your transaction, and adds an equal amount in fines and penalties.

To keep it short — before you focus on the price, ask your outsourcer:

• Who will actually do your accounting?

  
  

• Who checks their work?

  
  

• How is knowledge shared and managed within the company?

  
  

• How is quality control ensured?

  
  

As for the pricing, here’s how we, as a financial service provider, view it:

🎯 If your company’s annual turnover is between ₾100,000 and ₾300,000, you should spend at least 3% of your revenue on financial services.

You’ll need accounting, tax declarations, reporting, and light consulting.

📈 For turnovers between ₾300,000 and ₾1,000,000, the cost ratio drops to around 1.5%.

At this level, besides the basics, you’ll need flexible internal reporting, analytics, planning, budget performance analysis, and full (IFRS) reporting.

🏢 If your turnover exceeds ₾1 million, you should first assess whether outsourcing is still the optimal model for you.

Either way, you should allocate about 1% of revenue to your financial function.

Here, the focus shifts to financial management  liquidity, inventory, working capital, capital and operating expenses, investor relations, process design, and control.

P.S.

If you don’t know how much your financial function currently costs - calculate it:

• The cost of internal resources

• Lost time

• Fines you could have avoided

• Overpaid taxes

• Decisions you failed to make on time

  
  

Often, a “low-cost service” turns out to be the most expensive one.

📌 If you want to assess and optimize your company’s financial structure, contact us.

We’ll help make your financial management efficient, flexible, and risk-free.