Should I Outsource My Accounting: 5 Signs You’re Ready

Date Published: 01/18/2023
Published By: Centri Consulting
Topic: Insights

“Why is accounting so hard?” “My business is growing too fast for me to keep up with accounting.”

Sound familiar? When you start your business, you don’t plan for it to be a failure—you want it to be a success. However, what happens when success builds and you just can’t keep up with the accounting demands?

If you’re asking yourself, “Should I outsource my accounting?”, don’t worry. We’ve created this guide to show what outsourcing your accounting entails and how it can benefit your business. We’ll also explore the top 5 signs that can indicate outsourcing may be a better and more effective option for your business than handling it in-house like you are now.

A stressed out man holding his head while looking down at a table with financial documents and a laptop open.

Benefits of Outsourcing Your Accounting

For many people, accounting isn’t the most exciting part of the job but it is necessary. However, there are some benefits to outsourcing it that people might not realize.

First, it can save money because you won’t need to go through the hiring process. You won’t need to take the time to place the job ad, conduct rounds of interviews, or find a recruiter to handle the process. Plus in slower seasons, you won’t have to pay for a full-time staff member carrying a lighter workload. You can also use those hours normally spent on accounting for different projects to help grow your business.

With outsourcing, you simply work with professionals and figure out the best accounting solutions to make it all run seamlessly for your business and then you implement them. This eliminates the hours of research on your end trying to fix problems or find better solutions, especially if accounting isn’t your primary expertise.

Another perk of having an outsider look at your finances is that they can give you a fresh perspective on them and make sure you’re tracking everything that matters.

Having a well-run accounting system gives you full visibility of the core metrics that matter most, so you can make important business decisions quickly and efficiently. Instead of reactively looking back into your financials and wondering why there wasn’t profit during a specific timeframe, you’ll have a clear understanding of the financial implications of your business decisions. You can be proactive and create a well-formed plan to help grow your business.

And finally, one of the most important benefits of outsourcing is that you are getting support from a knowledgeable and credible source. Accounting firms keep up with the latest regulations and laws, which in turn can help you stay compliant with the fast pace of changing regulations. That way you can proactively avoid the consequences of not staying compliant, whether that’s fines, your business being shut down, or a combination of the two.

What Can You Outsource?

Accounting is a necessary but complicated part of your business. Unless you’re an accountant or very good with numbers, it can easily become overwhelming. Thankfully, there are several parts of it you can outsource to a professional:

  • Back office support
  • Customer billing and invoicing
  • Running financial reports
  • Paying your bills
  • Payroll processing
  • Bookkeeping and reconciliation
  • Financial planning
  • Industry-specific accounting tasks

5 Signs You’re Ready

Now that you know what accounting pieces you can outsource and the benefits of it, here are 5 signs that you’re ready to make the change.

1. You Have Too Much Work for One Person

In most small businesses, the CEO or business owner handles all the financials at first until there is enough profit to hire someone or find a different solution, like a cloud-based accounting system.

However, if you aren’t familiar with accounting, it can cause issues trying to get the books organized. Even if you don’t mean to, details can get missed and could result in unpaid invoices, or even fines.

It’s also a possible conflict of interest to have you as a business owner or a CEO handle the accounting management. Generally, it’s not considered the best idea to have only one person be responsible for company finances.

A cautionary tale of CEOs mismanaging funds to keep in mind is the Enron scandal. Enron’s leadership fooled regulators with off-the-books accounting practices. They tried to hide debts to show larger profits; however, the whole scheme eventually unraveled and ultimately ended with bankruptcy, fines, and jail time for most of the company’s leadership.

Even if you don’t mean to do anything nefarious, you’re still held responsible at the end of the day for your business’s accounting. And if you don’t have the bandwidth to do it properly, it’s important to seek support.

2. You’re Accelerating Stages Of Business Growth

While you want to accelerate your business growth, sometimes your business accelerates too quickly to handle all the details. There are too many logistics to think about and too many decisions that need to be made.

While you want your business to be successful, growing too fast with the right support can be detrimental, like in the case of Wise Acre Frozen foods.

In the span of two years, it went from a one-person operation to having 15 employees and a large warehouse, to declaring bankruptcy. Part of the company’s downfall was it started buying equipment and hiring employees before there was the capital to do so.

Some of these problems might have been avoided if they had an outside partner handling their accounting. A dedicated point person could have created a business growth strategy and helped the owner stick to it. Then the business could’ve grown in a controlled and successful manner.

3. You’re Having Staffing Trouble

If your business has a high staff turnover, then it is possible that any institutional knowledge and/or processes can get lost. It takes time to go through the job search to find a replacement staff member and get them trained and comfortable with the job.

Also, something that you need to keep in mind, even though you hope it doesn’t happen, is it also takes even more time if new employees leave before their first 90 days and you have to start the whole hiring process over again.

4. You’re Needing More Sophisticated Reporting

Investors like to ask questions, usually a lot of technical financial ones, because they don’t want to lose any money on an investment. The same can be said of any stakeholders. And with an outsourced accounting expert’s help, you can easily create the reports that matter most to all parties involved.

Plus, your accounting provider can help you find better software solutions that fit your needs and offer robust, real-time reporting. That way, crucial data can be shared at any time and is more visible to all stakeholders.

5. You’re Trying to Avoid Operating in Silos

When people communicate with each other, there’s less of a chance that mistakes will occur. When they don’t, details can fall through the cracks that shouldn’t. For example, invoices could go unpaid or unsent if your technology and team don’t communicate.

This can happen when a purchasing department doesn’t let the accounting department know that an order was placed. If accounting doesn’t know about an order, it could allocate those funds elsewhere.

Having better communication in your financial reporting process is essential to your business and having one entity handle your accounting can prevent these issues from occurring.

Two people sitting at a table with clipboards, charts, a laptop, and a calculator while they discus reports.

Taking the Next Step

There is no easy answer to “Should I outsource my accounting?” Leaving your financials in someone else’s hands can be scary. It takes significant trust to find the right team and let them handle everything.

At Powered by Centri, we are up for the challenge and want to help power your business into its next stage of growth. We have a dedicated staff who are here to help in any way we can.

If you’re ready to take the next step, contact us today and let Powered by Centri help ease your stress.