Abstract
In the country's economic development, small and medium-sized enterprises (SMEs) play an important role, adding to the country's gross domestic product, lowering unemployment and poverty levels, and encouraging entrepreneurialism and innovation. SMEs, however, encounter many financial challenges and consequentially have a higher rate of collapse than large corporations. In order to survive in todays' hyper-competitive environment, several SMEs have used outsourcing activities such as accounting functions every year to meet their objectives. Based on the Resource-Based View (RBV) theory, SMEs outsource tasks that are not the organisation's core expertise, including finance and accounting, computer management, human resources, and all other back-office operations. These are tasks that SME's managers have fewer capabilities and competencies. In addition, Transaction Cost Economics (TCE) theory indicates that outsourcing activities related to accounting functions would lower financial costs in comparison to those performed by SMEs. Previous scholars employed these two theories in addressing the importance of accounting outsourcing for SMEs to sufficiently and efficiently manage its financial resources (Everaert, Sarens, & Rommel, 2006). However, there is still a lack of knowledge on how accounting outsourcing can improve the financial performance of SMEs in Greater Sydney, Australia. Moreover, it is unclear which accounting activity functions are more important to be outsourced to lower the financial cost of SMEs according to the RBV and TCE theories. Hence, this research study aimed to examine the relationship between accounting outsourcing and financial performance in terms of cost efficiency and profitability in SMEs operating in Greater Sydney, Australia. The study's main goal was to assess the link between accounting outsourcing and SMEs' financial performance. To assess the link between accounting outsourcing and financial performance, the model look into the influence of three independent variables (Generalxi accounting services, Management accounting services, and Taxation services) on two dependent variables (Cost efficiency and Profitability). This study adopted a quantitative research design, which allowed for a more in-depth investigation of the issue. Due to the COVID-19 global pandemic, this research was undertaken in line with the New South Wales' health restrictions thus necessitating an online survey. To get the needed sample, the researcher utilised the Snowball sampling approach. In order to collect data for analysis, the study employed primary data sources. The major data source was a questionnaire that included both open-ended and closed-ended questions. Descriptive statistics were computed using the quantitative information from the questionnaire, which was coded and entered into a computer system. A total of 130 respondents from SMEs were surveyed. Only 80 people have attempted to respond to the survey questions. For descriptive statistics (frequency, percentages, mean and standard deviation), the researcher utilised the Statistical Package for Social Science (SPSS) Version 27. Data was examined using descriptive statistics and inferential analyses and the results of this study were coupled using correlation and regression analysis in order to identify the relationship between independent and dependent variables. Based on the study research objectives, the quantitative data was displayed in tables and figures. The results of the study on the impact of taxation services outsourcing on SMEs' financial performance in terms of cost efficiency and profitability indicated that cost efficiency and profitability had a significant connection. This research identified a positive link between taxation services outsourcing and SMEs' financial performance. As a result, managers in small and medium businesses should ensure that taxation services outsourcing is done in a way that gives them a strategic benefit. As a result of the findings, external accountants or accounting companies may find this study helpful in exploring opportunities to enhance service performance. The result of this research will assist SMEs in identifying resource gaps and whenxii and why they turn to an external accountant for outsourcing to close the gap and improve efficiency and performance. This research recommends SMEs to outsource taxation services to improve their cost efficiency and profitability, improving their financial performance. In terms of the impact of management accounting services on SMEs financial performance, the study revealed no significant relationship between management accounting services with cost efficiency but found a positive significant relationship with profitability. The findings on the impact of general accounting services outsourcing on SMEs' financial performance in terms of cost efficiency and profitability indicated that neither cost efficiency nor profitability had a significant relationship. The findings of this research will offer information on accounting outsourcing that has a favourable relationship with company performance, which may be used to suggest and assist unsuccessful SMEs. According to the research, SMEs should evaluate their requirements for outsourcing general accounting and management accounting operations. This requirements analysis would allow the company to determine the cost-benefit analysis of implementing this kind of outsourcing approach. Firms would be able to improve their productivity as a result of this research