2 weeks Ago
Companies are always looking for ways to improve their business, and one effective and important way to do that is outsourcing accounting services. Outsourcing is cost-effective for all businesses. Still, many are wondering if it’s the right move and if they should start outsourcing.
In this blog, we’re giving you the answers to all the questions you might have to help guide you through the process! When companies decide to outsource, they usually determine their needs, understand the operational pressure they’re under, and have specific financial goals. Some of the most common reasons why they outsource include the following: This is the main and most obvious reason why many companies choose to outsource various services. If you hire and maintain an in-house team, you’ll realize that you’re spending money on salaries, benefits, training, setting software up, renting office space, and buying equipment.
After you outsource your accounting services , all of these factors disappear, as you pay fixed costs every month according to the contract you have with your service provider. This, in turn, saves money that could be spent on more useful things. In fact, according to Deloitte’s Global Outsourcing Survey, companies that outsource finance functions can reduce operational costs by 30% to 40%, depending on the scope of services.
Searching for and hiring people can be a tiring process, especially when you’re looking for specific qualifications. Outsourcing has solved that for you; providers go through this process on their own, making sure they hire the best professionals out there. Also, accounting services outsourcing companies already know how and what to look for while hiring, including the latest tax laws, reporting standards (such as GAAP or IFRS), and compliance requirements.
Any business has its ups and downs, and it’s important to prepare for both. If you’re working on your own, you might have to let employees go or even hire more employees according to the season you’re in. Outsourcing allows you to scale up or down as needed without doing anything different.
In any business, mistakes can happen. Still, manual errors, missed deadlines, or non-compliance with tax regulations can cost you a lot of money. Working with professionals who have standardized procedures and quality control can help reduce the possibility of errors.
In addition, it can ensure that you have timely and accurate data. What to Expect When You Outsource Accounting While outsourcing can bring clarity and control to your financial processes, you have to understand that there are certain things to expect when you first start outsourcing your accounting services, including the following: Outsourcing includes bookkeeping, payroll processing, tax preparation and filing, financial reporting, accounts receivable, accounts payable, and advisory services. It’s important to understand your company’s needs and communicate with your service provider beforehand to get the services you want.
Also, your accounting services provider must offer a package based on your business size and the industry you’re in. When you decide to outsource, you have to understand that the process will take time. This transition period can either make or break your relationship with your provider.
You aren’t flipping a switch, you’ll be transferring and integrating internal records, processes, and systems. As a business, you’ll have to share access to past financial statements, clarify roles and responsibilities, and set expectations for deadlines. As a service provider, you’ll have to guide the company through this onboarding process to ensure a smooth transition and to build trust.
Take FlairsTech as an example: while offering accounting services, they make sure that they give a timeline to the process and when to expect specific tasks, building trust with their customers. Many businesses don’t like outsourcing because of the common misconception of losing control. Outsourcing doesn’t mean that companies don’t know anything that’s happening; they should expect regular updates, financial reports, and open communication if something is wrong.
In fact, many outsourcing providers offer their clients portals where they can have easy access to financial data, review documents, and ask questions. As a business, it’s important to ask your accounting services provider about their reporting schedules, communication channels, and how they handle problems or issues. Because of outsourcing, you’ll gain access to better financial visibility.
Your provider will be giving you real-time data and expert reporting, offering insights into several cash flow trends, profitability, budgeting and forecasting, and many tax optimization strategies. Now that you have more free time, you’ll have a better understanding of this information, resulting in better decisions, especially when you’re looking for growth opportunities. Since you’ll be outsourcing accounting services, which include sensitive financial data, it’s important that your provider offers a high standard of data protection.
Before committing to a certain provider, ask about their cybersecurity practices and compliance credentials. Your provider must have encrypted data transmission, secure cloud-based platforms, regulatory compliance, and confidentiality agreements. These will help protect your business and ensure a secure and safe relationship with your service provider.
If you’re a business, you must look at outsourcing accounting services as a strategic decision that requires planning and thinking. Yes, you’ll be saving money, but you’ll also be saving time and effort. By recognizing that and understanding why businesses usually outsource and what to expect from it, you’ll be able to make an informed decision.
Research carefully, understand your company’s goals, set clear expectations, and make sure that you partner with a provider who aligns with your business goals..
