7 Benefits of Outsourcing Accounting and Bookkeeping Work
Introduction to Outsourcing Accounting
Many small businesses, start-ups, and entrepreneurs find it challenging to hire an accountant. Especially with the right skills to prepare their company’s financial statements, manage bank account operations, analyze financial data, and prepare the outgoing invoices.
Nowadays, it is even more challenging to find a qualified and eligible person at an affordable rate.
More than 1/3 of small businesses are outsourcing their accounting. Interestingly, most small companies who outsource are not feeling comfortable doing accounting on their own.
Even though it is commonly believed that accounting and bookkeeping must be done inside of the business. But it is essential to ask yourself whether you have the necessary skills and experience to do this job. Also, do your staff has enough experience to coup with increasing accounting tasks. More than 1/3 of small businesses are outsourcing their accounting. Interestingly, most small companies who outsource are not feeling comfortable doing accounting on their own. To add it up, 62% of all small businesses they think that they overpay their taxes.
Due to this fact, you might consider outsourcing accounting services to the company that is with the right knowledge and qualifications. Also, which company can do the same job more qualitatively and cost-effectively.
For the same reason, many executive directors have noticed various positive aspects of outsourcing bookkeeping and accounting services. Importantly, outsourcing such services should be without any adverse effects on their business, employees, and customers.
Therefore, we want to share the top 7 benefits, which our clients in Denmark, Norway, Sweden, and Switzerland, have already experienced after they decided to outsource bookkeeping and accounting.
7 Benefits to Outsource Accounting and Bookkeeping Services (It is not only about cost-savings)
1. Cost-Saving Accounting Services
In general, most businesses consider outsourcing to be additional, and therefore the unnecessary cost for their business. It is not the right perception at all. In fact, it is opposite.
Our clients who are outsourcing accounting is willing to reduce their expenses but most importantly, without reducing the quality.
The savings that outsourcing usually provides can be quite considerable as most companies can offer their services at the lower cost rates (typically due to lower labour costs at their location).
Besides, by outsourcing, you save money on paying the salaries, taxes, office supplies and benefits for the full-time or part-time employee. You only pay for what you need. There is no loss in productivity costs that come along with hiring full-time employees.
2. Eliminate Time and Costs of Hiring Processes
If you will look at the picture, the recruitment process is a rigorous job. It takes resources to manage it, from creating a recruitment strategy, selecting applicants to interview them. The recruitment process takes your business time, it costs, and you will need to dedicate the time either for yourself or employee.
Many companies do not consider the time they spend looking for a professional Accountant. And time is equally correlating with costs. It must be accounted to savings of outsourcing business processes.
3. Saving your Time
As your business grows, you will find yourself spending more time managing your money and less time scaling the business. Therefore, the outsourcing administrative tasks like bookkeeping and accounting help you to focus your time, energy and resources on creating the business strategies. It will be bringing more revenue, as well as networking and building relationships with your customers.
4. Expert Accountants and Bookkeepers
Outsourcing may offer you the possibility to hire a professional with a higher level of expertise at an affordable price.
Outsourced bookkeeping and accounting service firms continuously have to improve their skills and qualifications to stay competitive in the market. Imagine, 50 people working in the same office. They can easily share the new accounting trends, solutions and tools. To add more, great accounting companies have more extensive access to training, courses, and they are participating continually.
Moreover, outsourcing to an accounting firm is giving you access to the team of Accountants. For example, at Baltic Assist, for the fixed price company gets a team of accountants. Not merely one person to deal with different kind of tasks.
Choosing the outsourcing company wisely, you can be sure that your accounting is in the reliable and knowledgeable company’s hands.
5. Scaling Accounting Easily
The accounting service providers has the amount of availability to scale your services significantly without any lag. For example, if your bookkeeping and accounting tasks exceed the number of functions for 1 employee, you can easily be enforced with the extra workforce. Without the need to go through a rigorous recruitment process.
Moreover, accounting and bookkeeping service providers are charging on an hourly basis. It means you can scale-up or scale-down the hours without any interruption.
6. Automation technologies
Most businesses use accounting automation software to save time. It will save time, but importantly, it reduces risks. Automating accounting is minimizing human errors. Secondly, in automation software, accountants get real-time reports. They assist in catching potential problems and resolving them in an early stage. Thirdly, it will reduce the probability of internal fraud.
Most of the accounting service providers are highly qualified in the automation tools such as Quickbooks, Sage, Visma, Xero, Microsoft Dynamics, SAP and more.
If your accountants are still using only Excel sheets – you are wasting your time and money.
7. An accountant is your advisor
A good accountant will always provide advice on how to make accounting more efficient. Sometimes he might work with a couple of companies and propose an excellent experience from another client. Whether it is about taxation, accounting software or even provide financial advice.
When You Should Consider Outsourcing Your Accounting And Bookkeeping
From our experience working with different Scandinavian and Western companies, outsourcing bookkeeping and accounting tend to work the best when:
- A small business does not require a full-time bookkeeper but needs a person with more skills than the office manager, or receptionist can provide.
- A company of any size cannot find a full-time employee with suitable abilities at the affordable costs.
- A growing company is looking for opportunities to scale their accounting and bookkeeping services anytime.
- The temporary services are needed, e.g., extra help with end of the year reports or if a full-time employee is going on holidays, maternity leave, etc.
However, even you will hire a skilled and qualified person, someone (usually the executive director) will still need to be involved in the process while approving invoices, making deposits, reviewing timesheets, etc.
5 Things to Look for Before Outsourcing
Once you decided to outsource, the next step should be to choose an outsourcing company that will be a great fit with your goals and objectives, but most importantly, would be able to match your needs and requirements. We believe, when outsourcing bookkeeping and accounting services, the quality of performance and efficiency must be the top priority. However, a few more essential factors must be considered, as well.
1. What accounting and bookkeeping services you are in need
Is to prepare the end of the month reports, balance sheets, payroll services, reporting to authorities or taking care of your account payables and receivables? You maybe need someone to prepare your bank reconciliations and analysis or just enter the data into the accounting software? Whatever it would be, you need to be clear on what you do personally, what you’re in-house staff is responsible for and what you want someone else to do.
2. Competitive cost range.
Every accounting and bookkeeping company have their payment schemes – some of them charge by the hour, others every month. Therefore, you can choose the payment term that suits your needs and budget the most, but do not make your decision only based on the cost-effectiveness.
Make sure that the company you want to hire is experienced, professional and has the right qualifications. Remember you can always ask for some recommendations from their previous or existing clients, look at their reputation in the market, financial stability, but most importantly, their ability to deliver high quality and consistent results.
4. Data security.
In our opinion, data security plays an important part when outsourcing accounting services online. The highly respectable firm handles its clients’ data with most required privacy and ensures that each transaction is secure. It is essential because you will be not only communicating cash flow information to them but also confidential data.
5. Flexible service level agreement.
Accounting and bookkeeping service provider must show their flexibility and desire to match your future needs and requirements. We strongly suggest to check the term and conditions before you sign the contract, so you will be aware of how to terminate the agreement if you are not satisfied with their work.
6 Accounting Tasks Your Business Can Outsource Tomorrow
- Reporting to authorities and Management.
- Payroll processing services.
- Account payables (payments creation).
- Account receivables (debtors follow up).
Bonus advice: If you hire a big-five accounting firm to perform an audit, you should continue to use the other company for your accounting and bookkeeping functions. Due to independence regulations and standards within the accounting profession, a CPA firm performing an audit cannot also perform the accounting and bookkeeping for the same company.
There are significant advantages for clients who decide to outsource their accounting tasks. To begin with, cost-efficiency, and ending with flexibility in terms of contracts or scaling the number of functions. Accounting and bookkeeping are a vital part of business, but also complex. It requires time and specific knowledge. Without accounting experience, there might occur many errors which can lead to a decrease in your business or even go bankrupt.
Baltic Assist is a reliable accounting service provider to small and medium-sized businesses with over 500 clients from Scandinavia and Western Europe. You can check our accounting and bookkeeping services or leave us a quote.