Accounting is a specialized domain in the corporate world and has some kind of presence in almost every business. From small businesses to blue-chip companies like Apple and Microsoft, companies rely on their accounts department to better manage their financial affairs.
However, in today’s fast-paced world, businesses would prefer to focus on boosting their returns on investments (ROIs) instead of worrying about debits and credits all the time. This is where outsourcing your accounting can be a substantial resource to hire.
So let us have a closer look at how outsourcing accounting can benefit your company.
8 Reasons Why You Must Outsource Your Accounting
Here are eight of the most essential aspects that make outsourcing your accounting a viable business strategy.
1. Cost-Effectiveness
Traditional bookkeeping methods are becoming obsolete, and bookkeepers are moving to smarter solutions such as software and tools.
If you want to stay relevant, competitive, and efficient, you will have to go through the following process:
- Implement expensive software
- Hire highly paid accounting individuals to use these software solutions
- Pay for training your existing staff.
All of these costs will add up to a hefty sum of money. Therefore, you can get rid of all that hassle by outsourcing your accounting. The third-party accounting service will already have the latest accounting solutions with highly trained staff in all account domains.
These include payroll, employees’ compensations and benefits, audits, Accounts Payable, Accounts Receivables, etc. The best part is that you will gain access to all their resources for a small monthly or yearly fee. This is a more innovative, more efficient way than restructuring your entire accounting infrastructure.
2. Focusing on Core Business Operations
Whether you are a business or a non-profit organization, accounting does not fall under your core competency. Therefore, you must focus on other domains such as sales and marketing to bring in more money and gain a competitive edge in the market.
This way, you can also reduce your operational costs and use your employees and other resources in other business-critical functions.
3. Increasing Your Accounting Efficiencies
There are multiple ways how outsourcing accounting can increase your business’s overall operational efficiencies.
First, the team of outsourced accounting experts will design an optimized solution befitting your need. This automation of the accounting system and integration into your business operations will enable the delivery of impeccable financial reporting capabilities.
Second, outsourcing your accounting will speed up the processes and less working hours for your employees. The billing and collection process will no longer be a hustle as experts working at outsourced accounting service providers will stay on top of expense invoicing.
This will ensure faster collections and improve your company’s cash flow.
4. Financial Intelligence for Decision Making
The experts working at the outsourced accounting service provider will produce reports to offer you better insight for well-informed financial decisions. If you are a director or CEO who likes to keep your finger on the company’s financial pulse, then outsourcing accounting can also help you in many ways, such as:
- Who is your most profitable product?
- Which season is the most profitable during the year?
- Who are your most profitable clients?
- Are you pricing your job positions right?
- Should you hire more employees?
- Do you have enough cash flow to ensure monthly payroll?
- Where to invest your marketing dollars?
5. Rectifying Fraud
According to Business Fraud Prevention, 32 percent of small businesses with less than 100 employees suffer internal frauds. On the other hand, this percentage spikes up to 43 percent in companies with more than 100 employees.
This means the bigger your company is, the more prone you are to internal financial frauds. Therefore, outsourcing your accounts and financial matters to subject matter experts can help you establish enhanced safety metrics and parameters.
These outsourced experts will implement stringent KPIs to identify any abnormal financial activity in your billing and transactional data.
6. Staying Compliant
The compliance laws pertaining to labor, taxation, compensation, and payroll are constantly evolving. Adding to the complication, each state has its own additional laws that local businesses must comply with. If you are a busy company, chances are you may miss out on the implementation of some new regulation or update.
This can cause a great deal of predicament, leaving you with a hefty fine or litigation process. But, remember, it is the job of professional accountants working at the outsourced accounting service provider to know the latest tax information.
Therefore, outsourcing your accounting will ensure that your company stays compliant with every tax code, employment, and financial law in the past, present, and future.
In addition, the third party executes the required number of staff as per your needs. This way, you will have instant, consistent access to the most qualified and experienced accounting individuals working for you.
7. Collaboration Prevents Errors
While you may have an accountant or two at your company, having a team of expert accountants working for you is far more efficient. There is a wide range of exemptions and loopholes in the accounting system, and one individual is not sufficient to identify them.
Collaborative accounting due to outsourcing can help you double-check each piece of data and information before making any final decisions. Another in-house perspective of outsourcing is that you will be able to assign an accounting expert for each business department.
You will be able to put every department under the microscope for better monitoring and audits. This would not be possible using an in-house accounting department with a limited number of employees.
8. Scalability
Last but not least, you will have scalable options. Outsourcing your accounting department will enable you to expand or grow your business as much as you want. The accounting service providers will offer you a list of options and valuable feedback and strategies to boost your profits, which is what matters at the end of the day.
Conclusion
Whatever your long-term goals are or whichever industry you belong to, outsourcing your accounting is the way forward if you wish to make money and retain most of it. Use this flexible option and allow yourself to use your time and money on other more productive operations of your business.
