Better Accounting Through Outsourcing

For a small business owner, it is often a difficult task to choose outsourcing for accounting functions of the firm. But outsourcing accounting can prove to be immensely beneficial for a small or mid-size business.

Accounting is dependent on how diligent your bookkeeping has been; outsourcing is one way to ensure that all your bookkeeping records are made on time. However, bookkeeping can include significant amounts of data-entry and numeric records. Accuracy is of high significance for each of these elements, and can prove to be time-consuming. Further, bookkeeping functions are also very labor-intensive, thus adding to the time taken. For the owner of a small or mid-size business, this can mean taking time out of core business functions to take care of basic accounting. Outsourcing all accounting functions can help the small business owner spend more time on building the business, instead of getting busy with accounting and bookkeeping basics.

What are the areas accounting outsourcing can help you with?

Accounts payable and receivable: Know your cash reserves immediately, at a single glance. Outsourcing can help you streamline key accounting elements like accounts payable and receivable, and help you figure out a glance how much money is owed to you, or by you. Accounts receivable is a snapshot of customer invoices, or money owed to you, while accounts payables is about payments that you need to make out to your vendors, etc.

Bank reconciliations: Reconciling your bank and credit card statements is very important. Most outsourcing agencies ensure timely reconciliations, which translates in updated books and more reliable accounting reports.

Inventory management: Taking stock is very important and unless done on time, could reflect in accounting inaccuracies.  Accounting outsourcing takes care of your inventory management, right from taking stock to managing orders and deliveries.

Electronic document management: Accounting outsourcing is one of the ways to ensure sound document management. Ensure your reports are accurate and created on time. Further, electronic documents can keep data safe through the use of passwords and limited or authorized access.

What are the benefits of outsourced accounting?

Outsourcing your entire accounting function can help the owner to focus on business basics, such as boosting core competencies, taking better care of client deliverables, and attending to essentials such as planning and researching for better deliverables, working towards business expansion, etc.

Outsourcing accounting has become a popular choice for businesses of all sizes, from small startups to large corporations. It involves hiring a third-party company or individual to handle accounting tasks and processes that are typically performed in-house by the business itself. While some may be hesitant to outsource such an important aspect of their operations, there are many benefits that come with outsourcing accounting.

One of the main advantages of outsourced accounting is cost savings. By outsourcing, businesses can save money on salaries, benefits, and overhead costs associated with having an in-house accountant or accounting team. This is especially beneficial for small businesses or startups that may not have the financial resources to hire a full-time accountant. Outsourcing also allows for more flexibility as you only pay for the services you need and can adjust accordingly as your business grows.

Another benefit is access to specialized expertise and technology. Outsourced accounting firms often have a team of skilled professionals who specialize in different areas of accounting such as tax preparation, bookkeeping, or financial analysis. This means that your business will have access to a wider range of knowledge and experience than if you were relying on just one in-house accountant. Additionally, these firms invest in the latest technology and software to ensure accurate and efficient handling of your finances.

Outsourcing also frees up time and resources for businesses to focus on their core competencies. Without having to worry about managing day-to-day accounting tasks, business owners can dedicate more time towards growing their business and improving overall operations. This can lead to increased productivity and profitability in the long run.

Moreover, outsourcing provides scalability for businesses during times of growth or change. As your business expands, so do its financial needs which may require additional support from an experienced team. By outsourcing your accounting needs, you have access to a larger pool of resources without having to hire additional staff internally.

Outsourcing also offers improved accuracy and compliance with regulations. Accounting firms are well-versed in the latest tax laws and regulations, ensuring that your business stays compliant and avoids any penalties or fines. They also have proven systems in place to maintain accurate records and reduce errors.

Outsourcing can provide a level of objectivity and transparency to your financial reporting. By having an external party handle your finances, there is less potential for bias or conflicts of interest. This can lead to more reliable financial statements and help build trust with stakeholders.

Outsourcing accounting offers numerous benefits for businesses looking to streamline their operations and improve their bottom line. From cost savings to specialized expertise, scalability, accuracy, and transparency – outsourced accounting can be a valuable solution for businesses of all sizes.

Possible Challenges in Accounting When Carrying Out the Work Yourself

1. Time-consuming: Bookkeeping and other accounting functions can take up a significant amount of time, especially for small business owners who already have multiple responsibilities.

2. Lack of Expertise: Accounting requires specialized knowledge and skills which may not be possessed by the business owner, resulting in inaccuracies and potential financial errors.

3. Labor-intensive: Performing all accounting tasks can be physically and mentally draining, taking away valuable time and energy from core business functions.

4. Inconsistent Reporting: Without proper training or experience, it can be challenging to generate accurate and timely reports, making it difficult to make important business decisions.

Expected Challenges When Outsourcing Accounting

1. Cost considerations: Outsourcing may come at an additional cost for the business, but this is often offset by increased efficiency and improved operations.

2. Communication barriers: With outsourcing comes the challenge of communicating effectively with the vendor to ensure that goals and expectations are aligned.

3. Security concerns: Sharing sensitive financial information with an external party may raise concerns about data security, so choosing a reputable vendor is essential.

If you choose your vendor with care, and focus on communication such that your business goals are aligned, accounting outsourcing can actually help increase your bottom line measurably. To ensure efficacy, you do not need to move out only difficult functions to the outsourcing vendor; instead, focus and communicate on the general goal of improving your operations, ensuring better and improved accounting, and optimizing on your existing resources.

• Outline or identify the challenges you face in accounting, when carrying out the work yourself; compare this with the challenges you expect to face when outsourcing.
• Define the attributes you want in your outsourcing vendor. This exercise will help you narrow down your search. Include features like professional expertise, customized reporting, etc. to help you find the right match.
• Communicate with the accounting outsourcing vendor to ensure your goals and ideas are aligned. Discuss and analyze expectations, quality of services, and requirements before rushing into an agreement.