Outsourced bookkeeping and accounting services are becoming more popular with small businesses. This is a recognition of the many benefits that were once only available to large and mid-market businesses. Business owners and CEOs have access to qualified, educated employees who can help them run their business better, grow faster, and increase revenue through a remote, U.S.-based team of accountants.
There are often significant savings when compared to setting up an internal accounting department. This is just the beginning of the discussion about the benefits and drawbacks of outsourcing bookkeeping and accounting services. Continue reading to find out why companies outsource their accounting services, and whether it is a good option for your company.
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Why companies outsource
Remote work with an outsourced accounting service is motivated primarily by cost reductions, the desire to concentrate on core business tasks and the need for capacity constraints to be addressed. These are the four main outsourcing trends:
- Cost-cutting This is a top priority for most businesses. Many leaders in the industry agree that cost reduction can be an added benefit to goals like improving agility and quality.
- Cloud, robotic process automation (RPA), and Cloud: Cloud technology and RPA are becoming an important part of new outsourcing plans and transactions that businesses of all sizes.
- Ineffective supplier management: To get the best out of their service provider network, businesses should invest more in outsourcing to improve their supplier management abilities.
- Flexibility: Businesses must be more flexible due to changing business conditions, visa restrictions, and increased client demands. Outsourcing will increase as companies become more adept at working in a global environment where speed, quality, and flexibility are more important than geography.
Bottom line: Outsourcing can bring about a revolution in business performance and create new opportunities for growth. Is it right for you? It all begins with an analysis of the benefits and drawbacks, so you can decide if outsourcing accounting is right for your company.
What is Virtual Bookkeeping?
This term (admittedly awkward) refers to a method of managing your books without using paper. Bookkeeping by virtual means having someone else handle your books online. Online bookkeeping connects you to real bookkeepers.
In virtual bookkeeping, bookkeeping software and traditional bookkeepers combine to provide the best of both worlds. The virtual bookkeeping service manages your books and helps you monitor your finances with software.
Bookkeeping and Accounting Services Outsourced: The Pros
These are the top 3 benefits of outsourcing accounting services.
1. Higher cost-effectiveness
Outsourcing an accounting service can be cheaper and more cost effective than hiring financial professionals in-house. Employers can save on overhead costs such as PTO and health insurance, retirement, sick days, vacation, workers’ comp, and PTO.
It’s clear that virtual bookkeeping is here to stay, and it’s got plenty to offer. In comparison to hiring an employee to do the work in-house, outsourcing could save you up to 83%.
It is also possible to hire colleagues who require specific equipment. Any accountant needs accounting tools to do their job. They can be costly. These tools are usually included in the operating expenses for outsourced accountants. It can, however, be avoided by outsourcing.
2. A proactive approach
Outsourced accounting teams can spot red flags and notify business owners. It can be helpful to understand potential cash flow and expenditure problems so that you can make informed business decisions. A set of eyes on finances can give you peace of mind and the confidence to make sound financial choices.
A full team is better than one or more internal employees. This reduces the risk of financial errors and non-compliance. This is especially important for startups and small businesses.
3. Reduced Fraud & Errors
Small to medium-sized businesses with one accountant may experience fraud and errors. It’s easy to forget about errors or tampering with books. Fictitious expenses may go unnoticed for many months, if ever.
Outsourced accounting services allow you to have multiple eyes looking at your transactions and reports. This increases internal control. An engaged team with accounting expertise and best practices is more likely than one person or a small group to spot an anomaly.
Potential downsides to outsourced accounting and bookkeeping services
These are the potential drawbacks of outsourcing bookkeeping services.
1. Hidden Costs
Paid services can cause scope creep. A single job could end up becoming several jobs, which can lead to additional costs that business owners didn’t know about (or forgot) at the beginning.
It is important to establish clear expectations and set the right expectations at the beginning of your month-to-month relationship. This will reduce the chance of it happening. To avoid hidden fees, it is important to only work with reliable service providers.
2. We have less control
Business owners may find it difficult to give up control of their financial records. They can contact their account manager for updates and monthly reports. However, it is important to trust the connection made by the outsourcing company.
A thorough onboarding process is recommended. It outlines the responsibilities, policies, and procedures, sets expectations, and ensures timely communication. This will allow business owners to have greater control over the engagement.
3. Accessibility issues
It is a good idea to have someone on staff who can quickly respond to your inquiries. Although an outsourced workforce can be reached quickly, they may not always respond immediately. It is possible that distances may limit your ability to respond.
A good outsourced accounting firm will have strong communication protocols in place to ensure that your team is always available. It can be helpful to establish a communication plan and divide the responsibilities with your outsourced provider.
Windes: An Dedicated Remote Team For All Accounting & Bookkeeping Services
Outsourced accounting services can be used to complement your team and transform your financial operation. Windes offers a range of services including advanced bookkeeping, accounting, customized management reporting, and controller services. Windes is more than just keeping your books in order. It also provides a platform for increasing profitability, cash flow, and expanding your business.