All businesses need to invest a certain amount of resources into their accounting department and financial processes. However, when it comes to deciding how they want to manage their bookkeeping procedures, organizations have the choice of hiring in-house or outsourcing their staffing needs through a recruitment agency or firm.
Outsourced bookkeeping has become a much more common practice for modern organizations due to its ability to help streamline a business’s financial management while helping to reduce costs.
However, there are a number of other great benefits associated with outsourcing to explore, so long as you’re partnering with the right staffing services.
What is Outsourced Bookkeeping?
Outsourced bookkeeping is a common business strategy used today that involves moving all the business’s accounting-related tasks to an external service provider or an outsourced accounting team. By choosing to outsource this responsibility, businesses can often access more affordable and scalable financial services than if they were to hire their own in-house accounting professionals.
The great thing about outsourced bookkeeping is that it gives organizations more flexibility when deciding on the level of expertise they need for their business. Many outsourcing partners have relationships with pre-vetted accounting professionals who specialize in areas like payroll processing, tax filing, or financial analysis.
The Benefits of Outsourced Bookkeeping for Your Business
Making the decision to outsource your business’s bookkeeping needs can bring a number of benefits to the organization. Some of these include:
Cost Reduction
One of the primary reasons why organizations start looking at outsourcing their bookkeeping efforts is the significant cost savings it can bring. By removing the need to hire and manage a team of in-house accounting staff, businesses can have a much more affordable solution for managing their finances.
Expertise and Specialization
The great thing about choosing to partner with an outsourced bookkeeping provider is that they often have a much wider talent pool where they can source staff members.
This gives organizations access to more industry specialists who are highly trained in navigating complicated tax regulations or financial hurdles, which can be an invaluable asset for businesses.
Improved Focus on Core Business Functions
Bookkeeping processes are critical components of running a business and can take up a lot of an organization’s time and resources. However, outsourcing these tasks to outside professionals can free up valuable internal resources that could be better spent on other areas of the business, like sales, marketing, or customer service.
Better Flexibility
The more an organization scales, the more demanding accounting processes become. However, outsourcing provides a much more adaptable solution rather than needing to make long-term commitments upfront when hiring accounting professionals in-house.
Whether experiencing rapid growth or slower seasonality dips, outsourced bookkeeping allows businesses to adapt their accounting resources seamlessly, ensuring they’re only paying for the services they need at any given time.
The Process of Outsourcing Your Bookkeeping
To start transitioning your in-house bookkeeping processes over to an outsourced partner or accounting team, there will be a systematic process you’ll need to follow to ensure all your internal processes are managed the way they should be outside of your organization. This will include:
- Initial Assessment and Consultation – The first step when deciding to outsource is to research potential outsourcing partners and schedule a consultation. This will help you outline your organization’s specific needs while getting a better understanding of how the provider can find you the expertise and specialized accounting services necessary for your business.
- Data Transfer and Setup – After you’ve decided on the partner you’ll be working with, the next step will be to securely transfer the relevant information needed to manage all bookkeeping processes on your behalf. The amount of data shared will likely need to be fairly comprehensive, including bank statements and other financial records. In most cases, investing in reliable accounting software to facilitate this interchange will be necessary.
- Ongoing Collaboration – Regular communication is an important part of creating a successful outsourcing partnership. It’s important to work with a partner who can provide weekly or monthly check-ins and updates to ensure you can ask relevant questions or address concerns related to your business’s accounting procedures.
- Performance Review – Over time, it’s important to ensure you’re still getting the value you need from your outsourced bookkeeping initiatives. Take the time to periodically review the accuracy and timeliness of all accounting tasks and the quality of the reports you receive. This will help you ensure your provider delivers on the expectations set at the beginning of the relationship.
Overcoming Common Concerns About Outsourced Bookkeeping
Although relying on outsourced bookkeeping can be a great way to help reduce spending and improve an organization’s scalability, some common concerns can come up during the process. Below are some of these common challenges and how they can be addressed:
Loss of Total Control
Some organizations find it difficult to feel comfortable having remote employees that they’re unable to physically oversee, especially when it comes to bookkeeping processes. However, these feelings can subside when you take the time to research and work with reputable outsourced bookkeeping providers.
The regular reporting and communication they provide will give you the important level of visibility you need to feel confident about how your accounting processes are being handled day-to-day.
Data Security Issues
Another common concern when moving accounting processes outside of the organization has to do with security. However, when you work with a qualified outsourcing agency, they use strict security policies when sourcing professionals with impeccable references and put into place various access controls to safeguard the business against data theft.
Costs vs. Value
Although outsourcing can have significant benefits, some organizations may wonder if the value they’re receiving outweighs the benefit of having in-house accounting teams. In this situation, it’s important to quantify the dollar value being saved when gaining immediate access to industry expertise and larger talent pools with varying levels of experience.
It’s also important to calculate the “total” costs associated with in-house recruitment, which can be a significant drain on resources. When outsourcing your accounting needs, recruitment responsibilities and costs will be passed on to the provider, which could bring significant savings.
Manage Your Bookkeeping Processes More Easily
Outsourcing your bookkeeping processes can be a great way to reduce your operating costs while gaining access to a wider range of talent and expertise. By considering the factors mentioned and taking the time to partner with the right outsourcing partner, you can free up valuable resources for your business and continue to drive long-term success.
Author: Jaiwen Parker
Jiawen Parker is a licensed CPA in California and CFO of Sound Decisions. Jiawen comes from a technical accounting and audit background of 15 years. Jiawen acts as the SME for all accounting positions and consults with the team on testing and examination of different area candidate skills.
