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When we need to outsource accounting & bookkeeping?

Topic: Financial LiteracyPublished July 2, 2020

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Business needs both financial and management reports for the growth ofrnits company. Your business needs basic financial reporting for compliance andrnmaking sure your books are accurate. As the business grows, you find itrndifficult to tackle every aspect of your business. Most bookkeepers only knowrnhow to handle billing, collections, deposits, payroll etc. When you reach arnpoint where a bookkeeper is not sufficient this is when outsourcing comes intornthe picture. Accurate and timely accounting is vital to keep your businessrnafloat.

What is outsourced accounting and bookkeeping?

Outsourcing accounting and bookkeeping is a service which provides fullrnaccounting experience for small businesses. An outsourced accounting departmentrnhandles day to day transactions of the business, accounts payable, accountsrnreceivables, payroll, management financial reporting and many other services.rnOutsourcing offers a team of professionals at a lower cost as compared tornhiring in-house.
The following reasons will compel you to outsource your accounting andrnbookkeeping services:
  • Acceptingrn outside investor capital
  • Employingrn more than ten people to carry out your accounting activities
  • Reachingrn $1 million in revenues.
  • Thern business owner cannot be involved in every aspect of the business
  • Requiringrn more sophisticated financial reports for decision making
  • Yourn see outsourcing as a competitive advantage without any upfront investmentrn of time and money
Benefits of outsourcing Accounting Bookkeeping services to a thirdrnparty:

  • Focus on core business:

Core competencies are the USP of the business, senior management skillsrnand competitive advantage that are responsible for business growth. Outsourcingrnaccounting activities frees up management’s time and focus on core activitiesrnof the business to grow and sustain the business and increasernprofitability.

  • Removal of In-house burden:

By outsourcing to a third party, a business eliminates time and moneyrnon training, staffing and recruiting their accounting staff. As a manager, yournalready have human resources issues and a CEO will not want to increase thatrnburden by appointing an accountant department. The outsourcing company has arndedicated accounting team. This team has greater productivity at a fraction ofrnthe cost for a full time accounting department.
Outsourcing is beneficial for startup companies as well. These startupsrnneed a scalable accounting platform right from the beginning and are oftenrnrequired to submit business operations plans to their stakeholders inrnadvance.

  • Access to experts:

One of the biggest advantages of outsourcing accounting and bookkeepingrnactivities is to get access to accounting and business technology experts.rnThese experts devote their time and energy to keep up to date with technologyrnkeeping your business in mind. These experts are well equipped with advancedrntechnologies that can benefit your business.

  • Peace of mind:

Outsourcing accounting services offers complete peace of mind andrnoffers scalable service. This peace of mind keeps management focused on sales,rncustomer relationships and building value in the business. It also ensuresrnconfidence in the accuracy and a quality of the business financial information.rnOutsourcing accounting offers scalable service options that provide efficiencyrnand complete peace of mind.

  • Security of data:

Your accounting data is stored on a secured server in the cloudrnprotecting against any physical loss of data and to enhance business continuityrnand disaster recovery.

  • Compliance Vs. Reliance:

The difference between an inhouse CPA and outsourcing firm is that thernCPA typically focuses on tax and audit compliance whereas an outsourcing form enablesrnreliance such as providing financial intelligence which can help you in makingrnreliable financial decisions.
Compliance ensures things to get done while reliance providesrnactionable financial intelligence at your fingertips to make data-drivenrndecisions.

  • Increased operational efficiencies:

Outsourced accounting firms can increase efficiency for your businessrnby designing and optimizing financial systems with a combination ofrnautomation and integration to deliver greater financial reporting capabilities.

  • Decision-Ready Financial Intelligence:

Better insight allows for better financial decisions. A traditional CPArnwould not be able to derive in-depth knowledge. Hence, a business owner needsrnstrategic decisions that impact profitability of your business.

Conclusion:

Outsourcing business accounting and bookkeepingrnto third parties saves at least 30 percent of your cost which is less thanrnbuilding and maintaining an in-house accounting department. However, the truernvalue of outsourcing bookkeeping and accounting service is not just restrictedrnto cost saving. Businesses choose to outsource to improve their core businessrnactivities, to avoid the risk of hiring more employees and also to gain accessrnto expertise that small businesses could not afford otherwise.

Further reading

Further Reading

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