The accounting process can be very complex, and mistakes can result in a cascading set of problems that result in costly consequences. Over half of all bookkeeping errors are the result of human error, from incorrect data entry and transposing numbers to inaccurate labeling of revenue and expenses. As the company’s finances are essential for budgeting and determining profitability, clerical mistakes can lead to over reporting, affect cash-on-hand for bills, and cause tax problems.
As a result, over a third of small businesses engage the services of a third-party account agency to ensure that their accounting is in expert hands. An outsourced accountant has the most sophisticated bookkeeping technology and wealth of knowledge that comes with specializing in a specific role. Those are just a few benefits for businesses that outsource their accounting.
However, is engaging the services of a professional service right for you?
Consider your human resources
First, many startups or small businesses need more resources to staff an entire accounting team, and if you have too few members or the staff is inexperienced, there is a greater chance that they will make costly errors that can come back to haunt you. Also, there is the issue of legal compliance; mistakes in this sector could lead to expensive fines, additional interest, and financial penalties.
If these are complications you face, you may wish to engage the services of a professional agency. With their certified credentials, they can offer you the peace of mind of knowing that your finances are correct and compliant. In addition, outsourced accounting is often less expensive than carrying an entire accounting team.
Another benefit is the malleable structure of the business relationship. As contracted agents, you can use them as little or as often as you like (or can afford). At certain times of the year, you may not need an active accounting staff on hand, and having the ability to pause or cancel outsourced services can save you a lot of money.
Inefficient procedures
Accounting can be time-consuming for staff members with so many numbers to crunch and different reports to keep. The problem may be that the procedures in place for these functions could be more efficient, taking additional time and effort to complete each process.
Even if you intend to use something other than an outsourced agency in the long run, it may prove beneficial to consult with their experts to evaluate how your team handles the books. As professionals who live and breathe accounting, they can analyze your methods to find ways to expedite the process and reduce the opportunity for human error.
With their expertise, you can transition to a smoother bookkeeping operation and save valuable time and effort to make life easier for your staff. Afterward, you can end the contract and retake ownership of your books, with the option to seek out your outsourced agency if you need additional advice or guidance.
Access to Expertise
Outsourcing accounting services provides businesses access to experienced professionals with specialized knowledge in areas like tax, audit, and financial reporting. This can help small businesses tap into this expertise without the added costs of hiring new staff. Outsourcing firms also have experience working with different clients and industries, providing insights into best practices and identifying areas for improvement or cost savings. This process can free up a business’s internal staff to focus on core functions and growth initiatives, while improving compliance and decision-making. Learn more about outsourcing your accounting services on https://accountingprose.
Evaluate your technology
Third-party accounting services generally employ the most sophisticated and effective software to ensure maximum results. This advantage is one reason they are often less expensive than hosting your accounting team – it takes less time and effort to complete the job, and they have a lot of fail-safes to ensure compliance and accuracy.
On the other hand, many businesses have their finances tied up in the tools of their trade or the people necessary to ensure they remain profitable. In many cases, top-of-the-line accounting software is an expense that they need help to afford. If your company fits that description, then this may be another reason why you might wish to use outsourcing.
You may have excellent accountants, but often they wear multiple hats, which means that they cannot devote their full attention to keeping the books, especially when whatever software you have does little to expedite the process. We already discussed how costly errors could be, so to save time and money and keep your staff dedicated to roles more conducive to earning profits, you may need a little outside help.
Analyze your security
Having an in-house accounting team often results in a higher risk of fraudulent practices than if outside professionals are performing the job. Sometimes even ethical people face temptation when presented with an opportunity, which can lead to unpleasant situations, significant losses, and confidentiality threats regarding private client information.
You can mitigate this risk by using an outsourced agency that employs advanced security software to reduce the risk of privacy, security, or confidentiality breaches. Many accounting services will also upload your data to cloud-based servers as protection, keeping a backup for you in an emergency.
Credible outsourcing agencies will be happy to assuage your security concerns. They will let you know the procedures and technology available to ensure your information is safe. Little research will likely reveal if the company has suffered a security breach. It never hurts to be careful and investigate a company’s background before engaging its services.
The bottom line
Many companies manage their finances just fine with an in-house team, especially if the business is small and does not perform an unmanageable number of transactions. However, in many cases, a company needs to sustain a suitable team, or staff inexperience leads to human error and time-consuming processes that hemorrhage money.
If you wish for peace of mind, added security, expert advice, and a team of professionals on call to use their high-powered technology and skill to ensure that your books are perfectly balanced in the least amount of time possible, you may wish to engage the services of outsourced accounting. Even if you do not want to use them full-time, they can offer invaluable guidance to tweak your procedures to ensure the best results.
Remember to take into account your potential for business growth. Outsourced accounting agencies are perfect as a scalability option, able to take on more (or less) work as needed with a flexible contract. Hence, you only pay for services when you need them.
