You've made an effort to expand your business, and it's thriving, but at this moment, the tax deadlines, payroll, receipts, invoices, and spreadsheets are baffling you.
Accounting functions at many firms are outsourced to specialized professionals to optimize cash flow, reduce total processing time, and determine the most and least profitable product lines for future growth. So why don't you go for it?
It makes complete sense to outsource your accounting and bookkeeping work to work in the other core business functions, which are product/service development and marketing.
But is it worth the effort to employ outsourced accounting services for your company?
Here is everything you need to know about outsourced accounting and how it can benefit your firm. Let’s get started with what accounting outsourcing is.
What is Accounting and Bookkeeping Outsourcing?
Accounting outsourcing is a business management strategy where an outsourced accounting firm takes care of all the accounting and financing functions of a company. These accountants handle all the accounting duties, including accounting, financial statements & reporting, payroll, management accounting, tax, accounts payable & receivable, and other accounting-related services.
To be kept in mind that an outsourced accounting service isn't always associated with contracting a foreign firm; it simply means that you pay an independent contractor or firm of accountants to manage your compliance and accounts rather than managing yourself.
However, the reason why most small businesses don’t outsource their accounting operations is that they don’t understand how this works. So, let us help you understand that.
How Does Outsourcing Work in Accounting?
One of the advantages of outsourcing is having the services you need without paying for those you don't.
An outsourced services provider will begin by assessing your needs and how to help you reach your objectives. After determining what you need, they will submit a proposal that lists the services they can provide and their associated costs.
There will be times when new systems or business applications will be implemented to improve your operations and provide better data. Other times, accounting procedures will be adjusted to improve internal controls or enhance efficiency.
However, working with the right company is crucial for your expanding company, no matter what.
So why you should outsource accounting and what are the benefits of outsourcing your accounting work to the right service provider?
6 Benefits of Accounting Outsourcing to an Agency
The following are the most significant advantages of outsourcing accounting services for your small business, regardless of size or industry:
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Cost-Effectiveness
Outsourcing, at its core, is famous because the specialized firms (the ones you outsource to) know the best practices and work on a large scale. This allows them to do the job with fewer resources than you'd allocate otherwise.
An in-house accounting team can quickly drive up operating costs as you'd have to spend on recruiting, onboarding, employee benefits, and insurance.
Instead of dealing with all of these issues yourself, you can outsource your accounting team and focus on growing your business. Trained professionals can be assigned the necessary work, allowing you to focus on growing your business sustainably.
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Scalability
When you're scaling up, accounting operations can be difficult to manage, which is why hiring an outsourced accounting firm is a smart choice. By working with bookkeeping service providers like IBNTech, you'll be working with a company that has a team of dozens of expert accountants always ready to help you with your finances and reports.
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Financial Expertise
It's a common error to try and fill as many jobs as possible with one person. Even small businesses have a wide range of accounting needs, ranging from simple bookkeeping to financial forecasting. Therefore, it's important to have the right qualifications and experience for certain jobs.
For example, a bookkeeper is not the best person to prepare a cash flow forecast or a detailed financial projection. Similarly, there are better people than a controller or CFO to process your day-to-day transactions. Outsourced accounting firms can provide cost-effective part-time personnel for these positions.
Think of a couple of dozen bookkeeping and finance experts working in the same workplace, they will be able to learn about new accounting trends, solutions, and technologies quickly. Furthermore, top accounting firms have greater access to training and courses, and they attend them regularly.
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Access to Latest Tech
Working with an outsourced accounting team gives you access to all their accounting software (Xero, etc.) and systems, allowing you to automate processes and save time. Going digital and using less paper saves on carbon emissions and environmental impact and saves money on inventory and filing. Additionally, using less paper saves time by reducing filing and storage.
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Data Protection
In this digital-savvy world, most firms (despite their size) have made the switch to digital finance and accounting processes, resulting in large amounts of sensitive information. While it is important to safeguard this data, which may be either internal or customer-related, small businesses and startups frequently rely on preliminary security measures, leaving them vulnerable to cyberattacks and data theft.
The primary cause of these data security breaches is the lack of security features in accounting systems and employee knowledge. Such security mistakes may harm your brand's reputation and may even lead to a lawsuit.
Online accounting and bookkeeping service providers can safeguard your financial data by:
Handling data on premium cloud servers
Using data encryption
Limiting client data access
Using a password management tool
Not saving your data on local storage
Shredding data on a regular basis
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Reduced Accounting and Bookkeeping Errors
It is true that you'll find yourself overwhelmed as a small business owner if you choose to manage your own accounting. Even if you hire an in-house accountant, things go wrong.
The first line of the challenge is - how you can assess candidates' credentials and filter them. What are some ways to integrate thorough accounting procedures into your infrastructure? Can you afford a couple of full-time accounting and bookkeeping experts?
Since most small businesses cannot afford to hire unqualified applicants, they can get access to these experts via outsourced services. The most qualified accounting professionals are employed to perform your accounting services when you use outsourced accounting services.
Moreover, you reduce the chance of error by employing a team of expert accountants who work exclusively on your financial procedures. These experts also know how to integrate digital accounting software into your infrastructure to eliminate human error.
How to Pick the Right Accounting and Bookkeeping Firm?
If you want to have someone you can rely on every day and are willing to spend a bit more, a bookkeeping firm is a great option. But how do you pick the right firm?
Here are some recommendations:
Step 1: Industry Expertise
It is crucial to determine what sort of accounting expertise and knowledge you need your accounting service provider to possess, as not all firms have the same industry expertise. For example, a company that has worked with manufacturers will possess different expertise than one that works in construction or with small businesses like non-profits or retail shops.
Therefore, asking the right industry-specific questions during the interview process is critical when selecting the right accounting service provider for your company.
Step 2: Trustworthiness
In order to avoid accountant fraud, you should find a trustworthy partner. Accounting and bookkeeping service providers are given access to confidential financial information about your business, so you should seek out a reliable company.
Hence, verifying their qualifications and certifications is an excellent way to sift through the companies you're considering.
Step 3: Price
An accounting firm may either charge an hourly or monthly rate. The money you pay will depend on how much time it takes for someone to do your books, as well as whether you have bookkeeping to catch up. Make sure that the price is competitive.
Know What You Need Before Hiring an Outsourced Accounting Firm
Before you outsource your operations, create a record of the assistance and services you require (for example, accounting services, payroll tax payments, tax returns, reporting, monitoring transaction fees, etc.) as well as your objectives (for example, improve financial visibility, increase cash flow, etc.). At IBN Tech, we combine our understanding of your needs with your objectives to produce a customized package.
