Why Outsourced Accounting Deserves a Place on Your Roster
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How agile is your business? Unfortunately, many businesses — smaller companies and startups, in particular — remain stuck in traditional management models that limit their ability to thrive when facing new challenges. By understanding your team’s limitations in terms of time and skill sets, you can discover which challenges you’ll be able to tackle internally, and the perfect opportunities to refer to third-party providers.
Businesses outsource work for a number of reasons. For example, as a business grows, most owners find that their time becomes limited and more valuable. Hours in the day are better served by focusing on building the core business, not overseeing day-to-day bookkeeping. If your small business is looking to save on the cost of head count, or seeking stability and consistency in your accounting team, consider outsourcing. But, don’t wait for the ball to drop: Start thinking about this shift today.
Look at Your Current Roster
When determining whether outsourcing your accounting function is the right decision for your small business, you must compare the cost of outsourcing with the cost of having an internal accounting team. Start by evaluating your current needs and available talent pool. While you can always refer to an independent contract worker or a temp, it’s important to remember that these types of employees require a certain degree of oversight and management on your end.
When you work with a provider that specializes in outsourced accounting, the individual employees with whom you work will be managed by their own team. As this arrangement requires less time and involvement on your end, it presents a variety of cost-saving opportunities. Further, as the third-party will be skilled in their area, you can expect consistent, accurate results.
Scout the Right Solution
When it comes time to hunt for the best outsourcing solution for your team, fulfill your immediate needs first. Keep in mind, however, that it’s also important to consider future endeavors and potential challenges. After all, if you later find that your company’s work volume is fluctuating, outsourcing your accounting services will allow you to focus on the core of your business, rather than on recruiting, hiring and monitoring accounting staff members.
When reviewing your outsourced accounting provider options, you need to also think about the type of accounting work you would like this vendor to handle: Would you like the firm to manage the accounting functions of your entire company, or would you like these professionals to only be in charge of managing specific types of tasks? Overall, outsourced accounting teams are able to handle day-to-day transactional management, including bill pay, cash reconciliations, AR reconciliations and month-end close.
You should also think about where you are in your company’s life cycle. Startups, established businesses and companies that are expanding into international operations all require different types of accounting skill sets. Finally, as a best practice, you should do some research involving a firm’s previous work with other businesses in your industry. Talk to each company’s clients and read their case studies to better understand how their work can impact your business.
Step Up to the Plate
Once you find the right outsourced accounting partner, you can rely on this provider to manage your transaction processing, month-end journal entries, account and general ledger reconciliations, and financial statements.
As you’re developing this partnership, be clear about your communication and information needs. Doing so ensures your financial projects and client data are handled to your specifications. In addition, only allow firms access to your payroll information and personal customer data once you’ve determined they’re operating to your ethical standards.
Overall, outsourced accounting tends to work best for medical and dental practices, tech startups, family offices and small professional services firms. Unfortunately, some business owners wait to investigate outsourced accounting until they experience unexpected turnover or work overload for the existing team. Don’t let yourself fall into this category: Be proactive so that you can take advantage of the benefits an optimal partnership can bring to the table.