If you wish to succeed in today’s fast-paced world of business, you not only need innovative ideas, but the ability to manage cash flow and financial operations is also essential.
However, for a lot of entrepreneurs and business owners, handling accounting tasks can be pretty challenging, which can also hinder growth and steal valuable time.
As a business owner, you must already be familiar with the complexities of handling accounting responsibilities. From complex financial reports to tiring record-keeping, it can get pretty overwhelming to keep up with all the numbers and regulations, along with trying to focus on growth and sales.
Fortunately, there are quite a few solutions available in today’s market, among which outsourcing can be extremely beneficial for a lot of businesses.
So, if you wish to know how outsourced accounting can be helpful for your business, keep on reading.
Outsourced Accounting- What Is It?
Outsourced accounting is when a business or a company hires a third party to complete the finance function and accounting functions of the organisation.
In accounting outsourcing, the outsourced accountants take care of all the finance functions of the organisation, including payroll, financial reports, bookkeeping, tax, accounts payable, accounts receivable, following up debtors, management accounting, and other accounts-related services.
Benefits Of Outsourcing Accounting Services
Outsourcing accounting or bookkeeping services can be an excellent decision that can improve performance in multiple ways.
So here are some of the benefits you can enjoy with outsourcing accounting:
One of the major benefits of outsourcing accounting services is cost-effectiveness. Outsourcing accounting services or bookkeeping services can considerably reduce costs compared to hiring and paying employees for managing tasks like payroll, accounts and general bookkeeping.
Outsourcing accounting services can help you in avoiding expenses like salaries, training, benefits and office space.
If you wish to save money and improve results simultaneously, outsourcing accounting services will be the right decision for you.
For those business owners who do not run an accounting firm, they would require some accounting professional who has a wide range of experience. Such a professional ensures that books are accurate, payroll is compliant and completed on time. They help you ensure that you are not at risk of penalties or regulation mistakes.
With outsourced accounting services, you will not have to spend much time overseeing the financial functions of the organisation and preparing financial statements. As a result, you will have more to focus on your vision.
With a reliable finance team, you will not have to worry about taking care of your accounting responsibilities. Along with this, getting financial reporting insights that show the business performance, budget, cash flow, and other important factors can help you improve productivity as well.
Scale Up Easily
For businesses that are still in the growing stage, having an outsourced accounting firm can make a lot of things easier.
There’s absolutely no doubt that accounting operations are complex, and you need to be extremely attentive. Along with this, in the initial stage of growth, it can get overwhelming.
Outsourcing services let you scale up or down your accounting services as per the needs of your business. An outsourced accounting provider can quickly adapt to accommodate changes, which provides more flexibility than an in-house team.
Automate & Go Digital
Another advantage of an outsourced accounting team is that you can access all their accounting software and systems. As a result, you can streamline processes and automate tasks.
By going digital, you can reduce the impact on the environment and your carbon footprint. Along with this, you can save money on inventory and time by reducing storage and filing.
Who Is Outsourced Accounting For?
Previously, outsourced accounting services were only used by large corporate companies. However, nowadays, these are available to small businesses and organisations, thanks to the world being more familiar with remote workers.
Outsourced accounting services are best suited for:
The first category that may need outsourced accounting services is small businesses. A small business owner doesn’t require a full-time accountant or CFO (chief financial officer). However, the need for someone with more skills than the current bookkeeper, administrative worker and office manager is still there.
Thus, for such small business owners, outsourced accounting services may be the best solution.
Growing companies can benefit a lot by outsourcing accounting services. Through this, they can easily address all of their growing business needs when it comes to accounting or other related tasks.
A Company Struggling To Hire
If a company is struggling to hire full-time employees, then outsourcing services may be helpful. Rather than looking for full-time employees, the company can hire professionals at affordable prices.
Also, it reduces the worry of having to recruit and train new employees when your accountant leaves. Hence, outsourcing to a team of professional accountants can be the perfect solution for companies that are having difficulties when it comes to hiring.
In Need Of Temporary Help
There might be a situation when the company is in need of some temporary help. For instance, when you need a part-time replacement for a staff member, rather than hiring a new full-time employee, outsourcing will be more suitable and affordable.
Not-For-Profits and Charities
For not-for-profit organisations, accessing experienced finance professionals is not easy at all. However, with outsourcing services, you can look for professionals who are experienced in not-for-profit accounting.
Such experts can help you with managing donations and tax-deductible receipts, managing grant funding, recording and acquiring programs, and annual reporting obligations with multiple regulatory bodies.
Overall, outsourcing is an excellent option for basically everyone. It does not matter if a company has 5 employees or 500; every organisation has payroll, compliance and reporting requirements. If outsourcing accounting services seems beneficial to you, you should give it a try.
Common Mistakes You Need To Avoid While Outsourcing
Let us pay attention to some of the common mistakes made by people when it comes to accounting and bookkeeping outsourcing.
Choosing Someone Who Does Not Understand Your Business
In accounting outsourcing, oftentimes, people end up choosing somebody who is unable to understand their business. Although this may not seem like a huge problem in the beginning, it may hinder the growth of your business.
The accountant you hire must understand what accounting functions are required by your business. Otherwise, the outsourced services will not be able to bring the results you desire.
Along with this, it is essential that you partner up with a firm that aligns with your values. In this way, you will not only be able to get the best services and results, but you will also be working with a like-minded organisation.
Not Making A List Of The Services You Need
Not having a list of support or services you need (for instance, bookkeeping services, payroll taxes, reporting, monitoring transaction fees and so on) may cause some miscommunication with the outsourced team.
Thus, you must list all the services you are looking for. Along with this, you should also list your goals, such as increased cash flow and better visibility into the financiers and balance sheet.
Accounting Tasks That Can Be Outsourced
There are multiple accounting tasks that you can outsource. These may include:
- Budget forecasting
- BAS (Business Activity Statement) preparation
- Compliance reporting
- Checking invoice accuracy
- Expenditure allocation
- Maintaining the billing system
- Payroll collecting, calculating and inputting data, updating records
- Matching invoices and purchase orders
- and so on.
Tasks like HR administration, including issuing contracts and letters, MYOB updates, reconciliations, and weekly reporting in Xero, may also be outsourced.
Outsourcing Companies – Choose The Right Provider
Now that you know what the benefits of outsourcing accounting services are, let us move on to how you can choose the right provider.
Your ultimate goal when selecting a provider should be choosing the one that aligns with the values of your business. This will ensure that your outsourcing journey is on the way to success.
So here are some of the questions that can help you figure out if the outsourcing company is right for you or not.
Data, Security, and Privacy Management: How does your organisation handle data security and privacy, including your standard security policies and infrastructure?
Ensuring Staff Productivity: What tools and measures are in place to guarantee that your staff members can work online and remain productive without interruptions?
Productivity Reporting: What kind of productivity reporting can clients typically expect as a standard part of your service?
Termination and Notice Periods: In the event that a client decides to terminate their engagement, what are the notice periods and any associated termination fees?
Recruitment or Hiring Process: Could you explain your recruitment process and how it ensures finding the best candidate for a specific role or project?
You should pay attention to the specific conditions or requirements you have.
Always remember not all outsourcing providers are the same. Ensure to compare and choose the provider that suits your firm and its requirements the most.
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