Why Outsource Accounting? 5 Reasons To Consider Outsourcing For Your Business
Outsourcing any part of your business is a complex decision. While a change in process can be daunting, especially if you’ve done your accounting in-house since day one of your business, outsourcing can open new doors and provide a flexible, affordable solution.
Check out the benefits of outsourcing bookkeeping and accounting, as well as answers to some of our most frequently asked questions, starting with “why outsource accounting?”
5 Reasons To Outsource Your Accounting
While the benefits of outsourcing accounting are unique to each business, here are some of the most common reasons business owners choose to take the leap.
1. Outsourcing Frees Up Your Internal Resources
If your team is overburdened with managing your accounting or if you’re being pulled away from your own work to assist with financial matters, it may be time to consider outsourcing your accounting. Outsourcing can free up time, money, and human resources, so you can make growth and other new initiatives your primary focus as a business owner or manager.
While it may seem like a minor inconvenience, a missed payment here and a late invoice there can add up and significantly impact your company’s reputation. Outsourcing accounting and bookkeeping can strengthen your relationships with partners, vendors, and customers by providing accurate accounts payable in a timely manner.
You may not even realize the ways that managing your finances internally is holding your business back from its full potential until you take the leap.
2. Outsourcing Is Cost-Effective
Why outsource accounting when your internal solution seems to be working? We get this question a lot, and the truth is, if you’re currently staffing an in-house team, you’re likely paying for hours that aren’t going toward billable work. One of the greatest benefits of outsourcing bookkeeping and accounting is that it will typically save you money in the long run, since you’ll only pay for the hours your external team uses.
Outsourcing can also save you money through the innovations and automations that your external team can provide. A manual task that takes your in-house team days may be able to be completed in mere minutes by an experienced team with intelligent software solutions.
3. Outsourcing Gives You Access To Accounting Experts
Working with an outsourced accounting team means working with only the best. Unusual financial situations that may come up once in a business’ lifetime are a regular occurrence for our experts, making them better able to handle and address them.
Your accounting team will also provide you access to new technologies and softwares that can help you manage your accounting needs more effectively. While your team may not have time to test and trial different accounting solutions, dedicated accounting firms have to stay on top of the latest technology to provide you with the best solutions for your needs.
4. Outsourcing Is Flexible And Scalable
Why outsource accounting for your day-to-day financial needs? Because business growth is notoriously unpredictable. The greatest opportunities often don’t come with advance notice. And you never want your internal capabilities to hold you back from a game-changing opportunity for your business.
Outsourcing accounting and bookkeeping to a team of experts means that nothing is out of reach. From opening a new location to the possibility of acquiring another company, you’ll have experts at your fingertips to help in times of need. And, your outsourced team can grow and evolve as needed depending on your financial workload.
Utilizing an in-house accounting team means constantly dealing with growing pains and an ever-changing list of softwares and processes to adjust to. But outsourced accounting is fully scalable, meaning you can use the same processes no matter how your business grows or evolves.
5. Outsourcing Can Reduce Fraud
One of the downsides of keeping your accounting in-house is that the numbers may all be in the hands of one person. The unfortunate reality is that having a single person or a very small team in charge of your company’s finances opens the door for fraud.
Why outsource accounting and bookkeeping for your business? Because without checks and balances, fraud can go unnoticed for months or even years. And while there’s no way to eliminate the possibility of fraud completely, an outsourced team of experts is more likely to notice anomalies and unusual patterns in your accounting than someone internal.
You’ll also likely have several individuals working on your account, so for smaller companies, outsourcing can provide extra sets of eyes on the financial inner workings of your business.
Frequently Asked Questions about Outsourced Accounting
Outsourcing your business’ accounting functions isn’t always a clear-cut decision. Here are the answers to some of the most commonly asked questions we receive about taking the leap.
How Do I Know When To Outsource Accounting?
Outsourcing is not always a simple decision, and there is no “perfect” time to outsource for all businesses. However, there are a few signs and symptoms that it’s time to outsource.
Rapid Growth Or Downsizing
If your team is growing (or shrinking) rapidly, it can be difficult to keep up financially. Changes in payroll, expenses, and travel, and new business ventures can overwhelm your internal team. When your accounting team starts holding you back from growth (or staying afloat in tough times), you may want to consider outsourcing as a more flexible, affordable option.
The Need For Innovation
Why outsource accounting when your business is running smoothly? Over time, many teams will revert to maintaining the status quo, because it’s how things have always been done. This stagnation might mean it’s time to look into outsourcing accounting and bookkeeping.
Oftentimes, having a new team looking at your numbers can help find new opportunities for saving and investing. This craving for innovation is what drives many companies to partner with an outsourced accounting firm like Powered by Centri.
Entering A New Business Lifecycle Phase
Another sign that it’s time to outsource your company’s accounting is if you’re going through a major change or entering a new phase in the business lifecycle. This could mean anything from hitting a significant new revenue goal to acquiring another company to creating a national expansion plan.
Whatever new milestone or initiative you’re experiencing, it’s sure to complicate your accounting needs, making it the perfect time to outsource. Outsourcing at the onset of a big change can also help ensure that your books are set up correctly for the next phase of your company’s life and that you won’t run into issues further down the road.
How Much Will It Cost To Outsource Accounting?
Why outsource accounting when you can afford an in-house team? Because you can likely save your business time and money with an outsourced accounting solution.
The cost of your accounting will depend on a few factors, including the number of transactions your business completes each month and the complexity of your business’ financials.
The good news is that you’ll only pay for the work that your outsourced accounting experts complete, rather than for a full-time salaried, in-house employee. This typically results in significant savings for you and your business.
Which Accounting Functions Can Be Outsourced?
Nearly all accounting functions can be outsourced, but some are a bit more complex than others. Many companies begin by outsourcing their accounts payable and/or accounts receivable as a trial for outsourcing their accounting in full.
What Happens To My Internal Accounting Team When I Outsource?
One of the most common questions we get is “why outsource accounting when we love our internal team?” But the truth is that you don’t have to choose between your employees and your company’s success.
What happens to your internal team is up to you – and if you start researching outsourcing accounting and bookkeeping before it’s a true necessity, you’ll have the time to explore your options and find a solution that benefits your company and your current employees.
These options may include:
- Finding or adapting new roles for your employees
- Retraining your employees to work in completely new roles
- Relocating your employees to another location of your business
- Allowing your employees ample notice to find a role at another company
- Laying off employees who can’t be adapted to the new circumstances
Having to lay off employees is a big reason many companies resist outsourcing their accounting well past the point where it would benefit them. There is no one-size-fits-all solution for handling a sensitive matter such as employment, but we encourage companies going through this transition to seek advice from a business advisor as needed to help them make the right decisions.
Should I Outsource My Accounting?
Ultimately, the decision to outsource accounting is up to you and what you feel is best for your business. However, our team has worked with hundreds of companies to simplify and manage their accounting and bookkeeping over the years, and would be happy to speak with you further about the specifics of your business and how Powered by Centri may be able to help.