The general conception in the business world is that each business should be responsible for handling its own financial records and taxes. After all, having an inside team member with the expertise to handle the job seems ideal, as this worker is embroiled within the business infrastructure, living in the trenches with the rest of the team.
Yet, nearly a third of small businesses outsource their accounting and bookkeeping, meaning that they hire somebody outside of the company to perform these duties.
Believe it or not, there are quite a few benefits to having an independent entity step in to handle this particular aspect of business. The following five points demonstrate just how effective outsourced accounting can be.
The realization that outsourcing accounting can benefit the company’s bottom line is a major motivator for making use of outside help. Acquiring the services of highly skilled professionals and saving money? Where do we sign, right?
The truth is that many specialized companies, such as accounting firms, spend their days handling a variety of different types of accounting and tax work. More than likely, they’ve seen it all and they have perfected these processes to an art.
Because their resources are dedicated to these particular services and can perform them so efficiently, they can offer lower rates.
On the other hand, having a professional team at your beck and call as needed comes with its own advantages.
For one, since you only need their services on specific occasions, you save money by eliminating the need to keep an accountant team of your own, which means that your business will not be responsible for the hiring process, onboarding, salaries, benefits, and all the other bells and whistles that come along with that.
Second, since you are only engaging these professional services at select times, you only pay for them when you use them. You are saving money and limiting expenses at the same time.
Sounds like a win/win, right?
With no need to keep a significant accounting team, you no longer have to expend time on all of those elements from above that would generally cost you money – the hiring process, training, onboarding, etc.
That means that you can focus on the other aspects of running your business, which will allow you to increase productivity.
An additional caveat – sometimes it’s very difficult to find trained professionals that can handle the job appropriately in the first place. Having a highly respected third party on call means that you generally do not have to worry about mistakes.
Access to Experts and Professional Technology
Outsourced accountants have another major benefit. They are available if you need advice.
Immersed in the world of crunching numbers, preparing documents, and making evaluations, a professional team of accountants can help you look at your business from the outside, helping find new ways to increase productivity and find better ways to perform to increase profits and reduce expenditures.
Sometimes it’s hard to see the flaws in a system when you live in it day in and out, so an objective expert will be able to provide valuable analysis of key aspects with a fresh set of eyes. They can monitor your business strategy and provide skilled analysis and suggestions.
Furthermore, as these teams are specialized, they will generally possess the highest quality, state-of-the-art technology that most businesses will not be willing to acquire due to the expense.
Essentially, when you contract a professional third party, you are also acquiring access to some of the best programs available to help you with whatever problems you face while ensuring minimal risk.
If the outsourced accounting service has a lot of automation capability, this will not only streamline a lot of the processes and provide fast and efficient results, but it can also provide a smooth transition as your business grows.
They should also offer a lot of packages that are useful from the ground up, so that when you are ready for more features, you can take the plunge, at your own pace. With scalability features, there’s a peace-of-mind element since you know that when you reach a certain level, your accounting is going to be able to advance along with you.
A lot of the above benefits have a secondary result as well – accuracy. Due to the experience level of the outsourced firm, the high-end technology, and the expert knowledge they possess, you can trust that the numbers you see are the result of a careful and meticulous performance.
With your own accounting and bookkeeping team, there’s a greater risk of costly mistakes and misinformation that can result during the computation process. This is not to say that will always be the case, but these employees likely have other responsibilities and perform their accounting roles within the single paradigm of your own business.
That means they are less likely to understand how to deal with discrepancies, unusual errors, or other factors that can lead to further complications down the line.
The truth is that any individual who focuses on a single task or aspect of business is likely to become better in that role than someone who is spread thin or only engaged in an activity occasionally.
Fewer mistakes also tie in with the first two benefits – saving time and money.
The Bottom Line
There is nothing wrong with having a trained team of bookkeepers and accountants. Plenty of businesses do, and they perform admirably in that regard.
However, when your business is growing or you wish to save time and money, finance and accounting outsourcing is a viable option. There are many benefits, one of which is clearing extra time so that you can continue to grow your business.
Since outsourcing relies on contracted work, you can swap your business model to develop a team whenever you want, if you decide that is the way to go. If you need any help or anything goes wrong, the outsourced company will still be there as needed to assist along the way until your team is skilled enough to stand on their own merit.