If you have struggled with the idea of outsourcing your business’s accounting function, you are in good company.
Many small- and medium-sized business owners (SMEs) have grown weary of maintaining internal finance and accounting staff due to frustrations with employee turnover and the high cost of hiring and training people. Some business owners have turned to outsourcing their accounting function to CA / CPA firms. If you are thinking, whether you can afford - might be worthwhile to reconsider.
The Benefits
Let us explore nine benefits of outsourcing your business accounting function and whether it is most likely a cost-effective alternative to maintaining internal accounting personnel.
You will have more time to concentrate on running and growing your business knowing that you have experienced professionals taking care of your business’s accounting function.
When you have any questions about your organization’s financial data, you will have easy access to experienced accounting professionals who are intimately familiar with your situation and can answer your questions quicker.
You will save money. In-house accounting is expensive. When you outsource, you will not incur the cost of salaries, payroll taxes and benefits associated with those employees.
Outsourced accounting services are scalable. If you have a seasonal business, for example, you will be able to adjust the level of service that you receive from month to month. Accounting fees can be cut back during the slow season. With a full-time bookkeeper on your payroll, you lose that flexibility because you are committed to paying that person’s salary even during downtimes.
With ongoing outsourced accounting services, you can rest easy knowing that their general ledger and subsidiary schedules are being kept current. This means year-end reporting and tax returns will be easier and cleaner, saving you money in accounting fees.
Accounting is an investment for your business. Bringing in a professional or accountant to provide (and analyse) accurate accounting reports and records for your business will save money in the long run. When your organization’s accounting is kept current throughout the year – and regularly reviewed – you will see when sales are up and down, and why. This will help you determine when to adjust expenses. It will also tells you when you need to work on boosting sales. Having a good handle of your accounting will also help you better manage your inventory.
When you outsource your accounting function, your outside CA / CPA firm essentially becomes part of your staff. A good accountant will notice changes and discrepancies as they review your organization’s monthly and quarterly statements. This allows you to address issues before they become out-of-control problems. Our experience is that while most bookkeepers are good at the daily record keeping, many are not always thinking outside the box. With an outside accountant keeping an eye on your business, you will boost the chances of getting fresh ideas to improve your finances.
With stealing and misappropriation of funds in the daily news, it is wise to have someone looking out for your business. Professional accountants are trained to make sure money is not walking out the back door. The practice of reconciling cash, accounts receivable and accounts payable helps ensure that the organization’s financial coffers are in good shape.
Even if the organisation has already have a small accounting department, an outside accountant can act as the CFO. Your “outsourced CFO” will manage and coach the bookkeeping staff on how to produce accurate reporting.
The outsourced CFO approach works extremely well for some of our clients. Their internal bookkeeping staff takes care of the daily deposits, posting sales activity, payroll, etc. We have one client among others that we visit their office quarterly to review the general ledger and make corrections as needed. Normally, they compile a list of questions and abnormalities for us before we arrive, and we review the list together. This helps keep everything current and accurate while training the internal bookkeeping staff along the way, which works out to be savings for them.
As the outsourced CFO we also meet with owners and department managers to review increases and decreases in revenue and provide recommendations for dealing with business challenges.
For more information on outsourcing, talk to our Morshona Advisory team
