Outsource AccountingAccurate and timely accounting is critical for any business’ survival. At the same time, it’s important for entrepreneurs to pour their energy into core business activities and not waste time on day-to-day bookkeeping. Unfortunately, the cost of setting up a full-time accounting department is prohibitive for small and mid-sized businesses. Thankfully, there is an option to outsource functions such as bookkeeping, payroll, tax services, financing, budgeting, chief finance officer services, and more to a third party.

In this article, we discuss how to know if you are ready to outsource, the benefits, and how to choose the right professional.

How to Know if You Should Outsource

Here is how to know when you need to outsource.

  • Business growth – when you start adding more employees and your business is expanding, you might be more likely to commit financial errors. You may also realize you are experiencing difficulties in handling payroll and invoicing and need more than basic bookkeeping.
  • When your business accounts start to take too much of your time – you barely have time for your other responsibilities and you spend more time checking your business accounts.  
  • Multitasking – if you find yourself multitasking or having employees spend extra hours on roles they were not initially employed to do.
  • Need an expert’s opinion – you do not feel confident in your ability to handle bookkeeping, or you need another person to check the accuracy of your accounts.
  • Need to reduce costs – running a profitable business requires a check on operation costs. An in-house team comes with extra costs, including recruiting, training, managing more employees, updated software, etc.
  • You suspect fraud – when you suspect abnormal transactions or want to prevent possible fraud in your business. Unfortunately, as a small business, you can’t afford to hire a chief finance officer and have no one to implement fraud protection controls.
  • Investors – when you have investors, you may be required to involve a third party for an unbiased financial assessment.
  • Latest accounting software – if your business needs the latest accounting software to stay up to date with technology, but the cost is too high for your business.

Benefits of Outsourcing Accounting

Choosing to outsource your accounting can be uncomfortable as it means you are allowing a third party to have control over a very important part of your business. But your business could miss out on the following benefits:

  • Access to a professional dedicated team. It is the role of the accounting firm to keep up with tools, regulatory requirements, and systems that meet accounting standards. This guarantees your business is compliant and avoids taxation issues.
  • A trained professional will take a proactive approach, as they check for any red flags in your finances, expenditures, or cash flow.
  • Save on cost. It costs less to outsource than build an in-house accounting department. You avoid overhead costs such as employee salaries, insurance, and benefits, among others. You only pay for the accounting service you use.
  • Increased operational efficiency – an outsourced team will advise on the right accounting system for your business. They take care of automation, which will speed up processes and thus enhance operational efficiency.
  • Better decision making – you have access to industry insights and financial and management reports that will help make better decisions.
  • Access to the newest technology – it’s the business of the accounting firm to ensure they provide their clients with the latest accounting technology.

How to Choose the Right Firm

Having seen why you need to outsource and the benefits that come with it, the next step is to choose the right firm to outsource your accounting and bookkeeping needs.  

First, you need to be clear about the actual services you need. This will help you choose a firm that aligns with your business values.

Where possible, look for recommendations from existing clients on the expertise, experience, and reputation of the firm. Be sure to check the payment schedule that will work best for you, whether they charge an hourly fee or monthly. Don’t ignore what is included on the packages offered. Other things to check for is their package flexibility, the onboarding process (should allow to define roles, expectations, communication policies, and procedures).

Most importantly, ensure that you understand the terms and conditions before signing a contract in case you need to terminate the agreement.

Conclusion

Whether you are a small business, medium sized, or a non-profit, with time your accounting functions will go beyond what your bookkeeper can handle. The best option is to outsource a dedicated team that acts as your accounting department or complements your existing accounting staff. 


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