The effects of outsourcing accounting strategy on the performance of small, medium and micro retail and service enterprises in Cape Town

Abstract

SMMEs play a critical role in the economy, specifically those in developing countries such as South Africa. However, the sustainability of SMMEs is constantly under threat. Factors hindering the survival of SMMEs include inter alia the lack of funding and sufficient in-house financial management skills. To overcome these challenges, SMMEs outsource some of their activities by transferring what they traditionally handled in-house to external agents, particularly the accounting function. Thus, the aim of this thesis was to explore the effects of outsourcing accounting strategy on selected SMMEs in the Cape Metropole. A mixed methods approach was used for data collection and analysis which entailed consideration of both quantitative and qualitative data. Data were collected by means of an online survey questionnaire due to the Covid-19 pandemic. Data were analysed to compile demographic profiles of respondents, along with their individual responses to the questionnaire. The results reveal that most SMMEs outsource their accounting function because of lack of time and in-house skills. Furthermore, outsourcing was reportedly more efficient and cost-effective in that it provided accurate financial reporting. In addition, it afforded SMMEs owners more time to focus on other critical areas of their respective businesses, particularly during the Covid-19 pandemic.