“And just remember, every dollar we spend on outsourcing is spent on U.S. goods or invested back in the U.S. market. That’s accounting.” Arthur Laffer – American economist
It doesn’t matter if you’re an SMB or a larger enterprise, managing business finances can be a bind. But, you can hand the time-consuming responsibility to a professional accounting firm.
Businesses have been trusting accounting firms with their finances for ages. The difference is the flexibility and scalability of modern, cloud-based accounting services.
What Are Outsourced Accounting Services?
Outsourcing accounting services entails hiring another company to manage your financial needs. Services can be as simple as payroll management or as complicated as portfolio investment management.
This is fantastic because there’s no need to hire a full-time employee, which saves a ton of money. The one expense is the cost of your chosen software package, which varies according to the services required, from payroll and bookkeeping to financial reporting and tax management. Additionally, there will be charges for optional services like high-level CFO services or a bookkeeper, depending on your preferences.
What Accounting Services Are Provided By An Outsourcing Provider?
The first step to outsourcing is determining your needs. If all you need is bookkeeping, it doesn’t make sense to pay for financial management and reporting. Consider the traditional financial roles and services below.
Accountant
Accountants use extensive financial data to contribute to critical financial decisions. Some of their responsibilities include financial auditing and maintaining accurate financial records.
Bookkeeper
Bookkeepers record daily transactions, including purchases, sales, and invoices in general ledgers for more advanced accounting services, like income statements.
Controller
Controllers oversee all the accounting processes, from accounts receivable and payable to high-level accounting and industry compliance.
Chief Financial Officer (CFO)
CFOs are responsible for a business’s overall financial health. They analyze data collected and processed to provide advice regarding everything from mergers and acquisitions to tracking cash flow and supply chain financial management
Accounting Software Specialist
Advancements in cloud-based technology have changed the accountant’s role. They must adapt to industry changes and become experts in accounting software packages, including software selection for clients, integrating accounting software into company systems, and providing clients with technical support.
To learn more about Lescault and Walderman’s Sage accounting software services, click here.
What are the Advantages of Outsourcing Accounting Services?
Outsourcing accounting services provides many benefits for companies looking for more freedom to concentrate on their primary objectives and goals.
Outsourced accounting services offer immediate access to expertise
Hiring staff is lengthy and expensive, there are recruitment costs, the cost of time lost during recruitment, training time, salaries, etc. Outsourcing is immediate and more cost-effective.
All you have to do is purchase a package and you’ll have access to skilled professionals who would ordinarily be out of your budget.
Outsourced accounting services are cost-effective and save time
We’ve said outsourcing accounting is a cost-effective solution to access highly skilled professionals, but what about the other benefit: Time saved?
With some planning, the “new” time can be used efficiently to focus on sales, product development, marketing, etc.
Did you know: Our analysis of compensation studies indicates an average saving of at least 20% through outsourcing.
Outsourced accounting services are scalable
One of the best things about cloud-based accounting software is its scalability. Services mirror your business’s needs.
When your business grows, you can increase the range of services or the capacity of existing services.
When your business is in a downturn or you’re winding down, you can remove functions without sacrificing the quality of the services that remain.
Outsourced accounting services offer Risk mitigation/ transference
If you don’t store your financial data on your premises, no one can steal it. Instead, your outsourcing company is responsible for data security. They need data protection systems in place to prevent data breaches, leaks, and viruses.
You can be sure that the company meets industry best practices and is always compliant with national and industry regulations.
What are the Disadvantages of Outsourcing Accounting Services
No solution is perfect, including outsourcing accounting services. We’re going to look at seven disadvantages you need to consider before purchasing software.
The Problem: Undisclosed Costs
Costs aren’t necessarily undisclosed on purpose. For example, your business grows faster than expected and now you must add more features to your software package – and that costs money.
Some costs are undisclosed by omission, for example, it’s unclear if technical support is included in the cost of the software package. Unless you ask specifically, you might get a surprise the first time you call the line.
The Solution
If you have any questions about the contract or agreement – ask! You want an agreement that is crystal clear with no ambiguity regarding the breakdown of costs. Ensure that the agreement is comprehensive and that the terms include all costs, including incidental costs.
The Problem: Lack Of Skills
Some cloud-based accounting service providers offer a general range of services. But, if you have a niche business, you want an accounting firm that understands your specialization and has features to match.
Finding such a firm might not be easy, but it’s worth the time so you avoid misunderstandings in critical matters, like tax.
The Solution
It’s a bind, but you must vet cloud-based accounting software providers before you commit to an agreement. It’s still possible that you might get a bad apple, but that’s why it’s a good idea to keep an eye on service providers. You can catch poor performance early and start looking again.
The Problem: Communication Issues
Every time a service leaves your immediate control, you risk miscommunication. The risk is greater when you outsource to a company that isn’t in your country. The risk increases exponentially if the company is in another time zone.
Solution
Establish clear communication protocols, like a schedule for weekly, fortnightly, or monthly calls to ensure everyone, regardless of time zone is on the same page. Establish the channel, for example, Zoom or Google Chat.
The Problem: Lack Of Management Oversight
Out of sight but definitely not out of mind. It’s unnerving to hand over such an important function to an anonymous third party.
The Solution
It helps to assign one person to maintain open lines of communication. There should also be one point of contact on the outsourcing side to ensure continuity and avoid conflicting information.
How To Choose An Outsourcing Accounting Provider
Below, we will discuss the key factors to consider while selecting an outsourced accounting firm.
Reputation
If you want to maintain your good reputation then you must engage an accounting company with a good reputation, as well (they could mess up your tax, but you’re the one who’ll be penalized).
Scour their website for client testimonials and maybe case studies to see if they’ve worked with anyone who has similar needs or is a similar size.
Check sites like TrustPilot and Capterra for reviews.
What Are Their Teams’ Accounting Qualifications?
To meet regulatory compliance criteria, accountants must have a specific set of qualifications. A bunch of letters behind their names (CPA or ACCA) indicate qualifications obtained or membership to industry associations.
They don’t guarantee high-quality service, but at least you know that they’ve met strict education requirements.
Accounting Services And Fees
Services and fees depend on the size and specialization of your business. You must make doubly sure that the firm can provide exactly what you need, even if they’re optional add-ons.
Make doubly sure they have worked with other businesses in your industry, so they understand the rules governing things like tax and payroll management.
Finally, make doubly sure that you know exactly what the cost of the agreement contains. For example, is there an hourly rate or a flat fee, are you bound to an inviolable contract or is there flexibility to reassess terms, what support is available and what does it cost?
How Much Do Outsourced Accounting Services Cost?
Due to the many accounting services available, it is best to speak to one of our accounting specialists for a tailored quote to meet your company’s accounting needs and budget requirements.
Click here to contact Lescault and Walderman.
To read about the Lescault and Walderman accounting team, click here.
