For any business to have a successful run, it must have long-term financial planning and impeccable accounting practices. Business accounting involves identifying, recording, and reporting all transactions and investments of a company. The insights that the process generates are crucial for a business owner to make informed decisions and ensure growth for the company.
Nowadays, more and more businesses are looking to outsource their business accounting, as it is not directly involved in income generation.
What is Outsourced Accounting?
Outsourced accounting is when a company awards long-term contracts for its accounting services to an outside service provider. In the last decade, many companies have looked to outsource their accounting functions to agencies and professionals, as it can have a substantial positive impact on their daily processes.
It has become quite common for companies to outsource accounting to agencies worldwide. An advantage that resource-rich large enterprises previously enjoyed, outsourced accounting is also a growing trend among small businesses today. Outsourced accounting allows your company to invest more time in growing the business and exploring different opportunities.
Saving resources and cost-cutting is critical for a company’s success. In today’s world, where the cost of good outsourced accounting is far less than a full-fledged accounting department, many companies are looking to outsource accounting operations.
Why do companies Outsource Accounting?
Many companies, especially small businesses and startups, find it expensive to hire a team of professional accountants. It is even more challenging to find the right person or group to manage accounting operations, financial statements, analysing data, preparing invoices, and much more.
Although small companies tend to believe that bookkeeping and accounting should be kept inside the business, it is necessary to assess whether you have the experience and skills to complete the job. Outsourcing accounting is not a new concept. For decades, companies of all kinds have been outsourcing printing, computer, advertising, and legal processes to leverage the professional expertise of agencies without having to build an internal department. Saving costs, focusing on core processes, and optimising capacity are a few of the many reasons companies are looking to outsource accounting.
Benefits of Outsourcing Accounting and Bookkeeping
Outsourced accounting processes can prove to be an effective tool for your business to boost its growth. There are several significant benefits that an organisation can enjoy by outsourcing accounting. Here are some of them:
Outsourcing offers your business the flexibility of hiring a professional with higher expertise at affordable prices. By outsourcing, you gain access to a team of expert accountants and not just one person to handle all accounting tasks.
Modern automation technologies
Your staff members may find it difficult to operate on modern accounting software. However, an accounting service provider gives you access to automation tool experts. These tools help you ensure that there are no errors and risks involved.
Saves your time
As your business grows, you will have to spend more time managing your money and not growing the business. Outsourcing an administrative task like accounting gives you room for crafting future strategies and dedicating resources to revenue generation.
No lengthy hiring processes
The recruitment process is a lengthy one, as you want to find the perfect fit for the job. By outsourcing your accounting services, you eliminate the need to create a recruitment strategy, select prospective accountants, and interview them.
Having outsourced your accounting practices makes it extremely easy to scale processes at any time. If your accounting tasks require more than one employee, you can easily have an expert added to the workforce without hiring a full-time employee.
Access to a global talent pool
Outsourcing accounting means you are not bound to hire experts from your vicinity only. It gives you the luxury of choosing from a vast pool of experts from across the globe. With abundant experience of working remotely, these teams provide you with the same value, if not more, compared to an in-house accounts department.
Reduce your expenditure
By outsourcing accounting, your company saves on paying taxes, providing office supplies, and offering benefits that you provide to full-time or even part-time employees. As a business, you only pay for what you need and can ensure no loss in productivity, which is the case with office employees.
How to choose your outsourcing partner?
Once you decide that outsourcing is the way to go, the next step is to select an outsourcing partner that meets all your accounting and financing needs.
Here are a few essential steps that you must follow while choosing the right outsourcing partner for your accounting needs:
- Identify your accounting needs
The first step is to determine whether your business requires comprehensive financial and accounting services outsourcing or you need help with a few specific tasks. It would also help determine what kind of security measures are required for your business.
- Fix a budget
It would be best for your business to make a rough estimate of your outsourcing costs. Doing so can help you avoid overspending. Outsource accounting companies have different payment terms. Some of them charge by the hour, and some on a monthly basis. Choose the terms of payment that suit your business requirements.
- Look for experts
Make sure that you hire an outsource accounting provider that offers high-quality expertise. You can try looking at testimonials or asking for recommendations from their existing clients. A practical approach would be to look at other players in your industry and their accounting services providers.
- Ensure data security
Data security is the biggest concern for a business in outsourcing crucial tasks such as accounting and bookkeeping. Your company will share confidential information, including cash flow, statements, etc., with the accounting partners. Hence, it would help ensure that the accounting firm handles client data with utmost privacy.
- Look for flexibility
As your business grows, your accounting needs may increase or change. Look for an accounting partner that puts your needs first and is willing to match your accounting requirements as they scale or change. It would help to include the terms of change in the agreement.
Bookkeeping, financial planning, and accounting are vital components of a business. However, these are time-consuming processes that require rigorous training. An inexperienced staff might expose your business to human errors that can be financially disastrous. Outsourcing your accounting processes brings several benefits like cost-efficiency, flexibility, and optimised managerial responsibilities. As the outsourced accounting industry continues to build trust with companies, outsourcing accounting and other complex functions seem to be a popular choice for businesses.