If you are struggling to manage your accounting in-house, you are far from alone. Arguably one of the most challenging tasks that businesses need to carry out, especially for those with limited experience, good accounting takes patience, knowledge, and, above all else, time. Fortunately, there is a simple solution to all your accounting problems – outsourcing.
As a business practice, outsourcing is the process of hiring a party outside of your organization to perform specific services or to create goods.
So, how does outsourced accounting work, and why should you use it?
In the following guide, you will find out:
- What is outsourced accounting?
- What are the benefits of outsourced accounting?
- Who should outsource their accounting processes?
- Common mistakes that people make when outsourcing accounting
- How much do outsourced accounting services cost?
- How to choose outsourced accounting services
What is outsourced accounting?
Outsourced accounting is when a business enlists the services of a third party to undertake both the accounting and finance functions of its organization. Some of the most common accounting tasks that you can outsource include bookkeeping, payroll, financial reports, taxes, accounts payable, and following up debtors.
What are the benefits of outsourced accounting?
Whether you are a relatively small business, a global enterprise, or somewhere in between, all businesses can benefit from outsourcing their accounting processes. Some of the most notable benefits of doing so are as follows:
To save money
Although you may think that the opposite would be true, it is actually more cost-effective for most businesses to outsource their accounting rather than hire a new employee. Hiring an in-house accountant can be incredibly expensive, especially when you factor in costs such as sick pay, holiday pay, training, and insurance.
To save time
It can take a lot of time to carry out, manage, and oversee all the aspects of accounting in-house. However, when you choose to outsource, you free up time and resources that can be directed toward other aspects of your business, such as growth and product development.
To scale with ease
If you would like to grow your business in the future, you need to ensure that your accounting processes will help rather than hinder this. By hiring a third party to handle your accounts for you, you can enjoy peace of mind that they have the skills and technology needed to scale your business with ease.
To access automation
There are so many automation tools and software programs that you can utilize to streamline your accounting processes, all of which you will have at your disposal when you choose to work with an experienced firm. For example, outsourced netsuite accounting has become increasingly popular with businesses across all industries.
To improve productivity
When you have a reliable and knowledgeable accounting team behind you, your business can function at its best, and you can expect to see a significant improvement in your productivity levels.
Who should outsource their accounting processes?
It used to be just larger corporations that could benefit from outsourcing their accounting processes, but now, pretty much any business can take advantage of these services due to advancements in technology.
In particular, the following businesses can benefit from outsourcing:
- Small businesses that do not need or cannot afford a full-time accountant.
- Companies that are struggling to find a quality full-time accountant.
- Growing companies that need help scaling their business.
- Not-for-profits and charities that need specialized advice.
- Companies that need temporary help with accounting.
Common mistakes that people make when outsourcing accounting
There are several mistakes that business owners tend to make when outsourcing their accounting processes, and these can prove to be very costly. These are:
- Choosing a firm that doesn’t align with their values
If a company does not share the same values as you and your business, you are not going to be able to have a good working relationship. For example, if you want to make a real difference in the world, you need an accounting firm that can support you to achieve this.
- Choosing a firm that doesn’t understand their business
If a company does not understand the nature of your business or what you are trying to achieve, it may struggle to effectively manage your accounts and also to work alongside other members of your team.
- Choosing a firm that doesn’t have a good reputation
It goes without saying that you should choose a firm that has a good reputation as it will be responsible for looking after and managing your business’s most important data and information.
How much does it cost to outsource accounting?
Outsourcing rates can vary greatly from one company to another, but there are specific factors that influence them, including:
- The size of your business
- The nature of your business
- Your annual turnover
- Your accounting needs
- Your business’s stage of development
- The location of your business
As you might expect, the larger your business and the more specialist accounting services you need, the more you will pay.
Some companies charge by the hour, whereas others charge a flat monthly fee. As a general rule, you can expect to pay anywhere between $500 to $5,000+ per month.
How to choose outsourced accounting services
When choosing outsourced accounting services, there are several factors that you need to consider, including:
How much of your accounting processes do you want to outsource?
How much do you have in your budget for accounting services?
How do you want to be able to communicate with your chosen supplier?
Once you have determined all of the above, the next step is to research different companies to see what they have to offer. Make sure you look for firms that are suited to your company type, size, and needs.
Next, gather quotes from your preferred firms to see which ones fit into your allocated budget, and read customer reviews and testimonials.
The final step is to meet with your preferred firm in person so that you can get a better feel of whether or not they are suitable for your business.
