How outsourcing of bookkeeping and accounting service works
Many small businesses, start-ups, and entrepreneurs find it difficult to hire someone 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.
Even though it is commonly believed that accounting and bookkeeping must be done inside of the business, it is essential to ask yourself, whether you have the necessary skills and experience to do this job. Due to this fact, it might be worth considering to outsource someone with the right knowledge and qualifications, who can do the same job more cost-effectively.
For the same reason, many executive directors have noticed various positive aspects of outsourcing bookkeeping and accounting services without causing any adverse effects on their business, employees, and, most importantly, their customers.
However, we believe that the advantages of outsourcing should be weighted against many positives and not purely against the savings of the company. Therefore, we want to share the top 5 benefits, which our clients in Denmark, Norway, Sweden, and Switzerland, have already experienced after their decision to outsource bookkeeping and accounting.
5 BENEFITS TO OUTSOURCE BOOKKEEPING & ACCOUNTING
1. Cost saving.
Most businesses consider outsourcing to be additional, and therefore the unnecessary cost for their business. However, when it comes in reality, 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 labor costs at their location). Besides, by outsourcing, you save money on paying the salaries and benefits for the full-time or part-time employee, as you only pay for what you need. So there is no loss in productivity costs that come along with hiring full-time employees.
2. Extra time.
As your business grows, you will find yourself spending more time managing your money and less time expanding 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, bringing more revenue, as well as, networking and building the relationships with your customers. However, if you have spare funds to afford the in-house accountant, use its knowledge and skills to generate sales and optimize your business expenses.
3. Expert service.
Outsourced bookkeeping and accounting service providers continuously have to improve their skills and qualifications to stay competitive in the market, so you can be sure that you are handing over your accounting to a reliable and knowledgeable person. It means outsourcing may offer you the possibility to hire a professional with a higher level of expertise at the affordable price.
4. Flexible employment benefits.
When you outsource your bookkeeper or accountant, you have the advantage of using his/her services only as you need them. This factor can be particularly valuable for small businesses, start-ups, and entrepreneurs as they may not have enough bookkeeping work to take care of daily. Besides, if outsourced bookkeeper or accountant does not perform to your expectations and requirements, you can easily terminate the contract with no further difficulties.
Whether you are looking to expand your business or just cut down the spending, it is useful to have a reliable and experienced expert alongside, who can provide you with various financial plans and options to reach your goals. Besides, the outsourcing offers you a great way to have full-time professional aside your team and use the service on Pay As You Go basis.
WHAT IS OUTSOURCING?
Outsourcing, also known as Business Process Outsourcing (BPO), is the process of hiring another individual or company, either internationally or domestically, to manage various business activities for you. For some time now, it has become a standard business practice that enables small business, start-ups, and entrepreneurs to receive services and required skills, that can help them to grow their businesses, without any significant investments and further self-development.
Therefore, as your business grows to the point where you need to have a bookkeeper, who can manage different tasks for your business, but you do not have resources to hire an additional full-time employee or extra equipment and space in the office, outsourcing could be the right choice for you.
What is more, you can do so by advertising your employment needs or outsourcing qualified bookkeeping and accounting companies online, while virtually communicating your personal needs and requirements.
WHEN YOU CAN CONSIDER OUTSOURCING
From our experience working with different Scandinavian 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 can not find a full-time employee with the suitable skills at the affordable costs;
- 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 time sheets, etc.
5 THINGS TO LOOK FOR WHEN 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 service 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 important because you will be not only communicating cash flow information to them but also confidential data.
5. Flexible service level agreement.
The company you want to work with must be flexible enough to use the latest accounting software, such as the advanced spreadsheets, e-conomic, Dinero, Billy’s Billing, SAP, Navision, QuickBooks, and Xero, that will be compatible with your type of work. Also, it must show their flexibility and desire to match your future needs and requirements. Besides, we 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.
5 TASKS YOU CAN DELEGATE TO VIRTUAL ASSISTANT
2. Reporting to authorities (SKAT, Danish Business Authority) and Management;
3. Payroll processing;
4. Account payables (payments creation);
5. Account receivables (debtors follow up)
NOTE. If you hire a big-five accounting firm to perform an audit, you should continue to use the small firm 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 starting with cost efficiency. According to a survey conducted by Northwest Staffing Resources, an employee can cost approximately 57 percent more than the stated wage due to the cost of benefits and the amount of time they are focused and on task. For example, a 50,000 € employee could actually cost the company almost 78,500 € a year. An outsourced firm, however, can provide complete accounting services for roughly 2,000 € per month or $24,000 € per year.
Baltic Assist is a reliable accounting service provider to small and medium-sized businesses. If you are interested in outsourcing opportunities for your business, contact us to have a free consultation.