Accounting is an integral part of every business. Whether big or small, it helps track economic transactions and ensure that your business moves in the desired direction. Unfortunately, most firms place a higher value on in-house employees to carry out corporate activities. But they forget the benefits of outsourcing accounting services.
Companies generally hire skilled people for each department. But when it comes to finances, the responsibilities of a business increase manifolds as a tiny human error can be disastrous. And many times, a business lacks hiring the top talent for their accounts department mainly due to budget constraints. Additionally, managing and training the accounting team can lead to unnecessary overhead costs that most small business owners prefer to avoid.
To avoid this, outsourcing financial operations to a third-party firm becomes useful. This blog will discuss the benefits of outsourcing accounting services and how it impacts your business growth.
what does outsourcing the accounting & bookkeeping services mean?
As we said earlier, accounting & bookkeeping jobs are extremely pressurizing and prone to errors. And so, hiring an experienced and skilled team is critical for any business. But at the same time, it may not be cost-effective, especially for small or medium-sized companies, as accommodation of a dedicated department and their payroll can be out of budget for such businesses. Besides, it’s no piece of the pie to find the right skills and loyal employees.
So, what is the solution? Well, it’s an outsourced CFO. There are ample reasons justifying why you should outsource your accounting services. And when we look at the bigger picture, around one-third of small businesses in the country use outsourced services for their accounting and financial activities. And most of them do not want to hire an in-house team in the first place. So, let’s see the different benefits of hiring accounting services:
top benefits of outsourcing accounting services to small businesses
There was a time when outsourcing the accounting services of a business, or for that matter, outsourcing any service, used to be a privilege only large corporations could afford. However, this approach is far more frequent in today’s commercial world. Especially after the Covid crisis, there was a massive shift towards virtual operations, building confidence in outsourcing mechanisms.
Most firms outsource accounting and bookkeeping activities to a third party. Let’s look at why so many businesses choose outsourced CFO firms and how doing so can help your organization flourish.
Acquiring up-to-date technology for accounting and bookkeeping activities may not be feasible for every organization. But on the other hand, lacking such technologies may also cause inefficiency in the system.
However, a dedicated accounting firm generally equips itself with the latest software systems, efficient hardware, skilled & qualified staff, and more streamlined processes that may not be feasible for any other product manufacturer or service provider organization. In fact, a financial service provider has no reason to bypass the highest equipment and technology standards.
So, hiring an outside accounting company gives you access to the most powerful software systems on the market. Besides, their staff is a pivotal factor that directly impacts your business.
a stronger claim for control
You take a more proactive approach to accounts & other financial tasks by outsourcing them to a professional team. An accounting firm has the flexibility with a diverse workforce available to help your business and formulate the reports exactly how you want them. In addition, hiring proficient third-party financial advisors ensures better control of the services to your exact specifications.
make life easier
At the end of the day, the primary reason for outsourcing financial activities is to make things easier for yourself. Of course, running a business is not easy. And so is accounting! However, the stress of one of your firm’s most critical functions goes away by outsourcing accounting and bookkeeping.
In addition to general activities, you may receive expert guidance by hiring a professional accounting team. They have experience in multiple industries and clients that benefits you in making accounting more efficient. He can also help you save taxes and decrease losses with his subject awareness.
Saving money is one of the main benefits of outsourcing accounting services rather than maintaining it in the house. The cost of outsourced accounting services is insignificant compared to the cost of maintaining a full-time in-house accounting staff. It is a common misbelief that outsourcing costs are higher than owning an in-house team. However, it proves to be completely wrong.
It is pretty easy to find a skilled accounting team at competitive prices. However, you need to invest in floor space, wages, employee benefits, and various equipment & systems that are necessary for full-time accountants. All these additional costs may not be essential for the pricing of an outsourced accountant, and you only pay for them until you require them.
automation & scaling
Accounting automation has become a necessary practice for large enterprises. In addition to saving time and resources, accounting automation also reduces the risks involved. Besides, it provides real-time reports that can be crucial in catching errors and potential problems at the early stages, diminishing the fraud risks. Today, automation tools such as Quickbooks, Sage, Visma, Xero, Microsoft Dynamics, SAP, etc., are widely popular amongst accounting firms.
In addition to automation, an outsourced CFO can scale your services significantly without any lag. For example, if your current bookkeeping and accounting tasks need more employees, you can quickly get the extra workforce without going through a rigorous recruitment process. Moreover, the service provides work on an hourly basis, giving you the flexibility to scale up or down the hours at any moment.
You gain access to a group of experts whose primary goal is to save you cash and keep your financial documents organized when you outsource bookkeeping. Your instinct as a business owner may be to keep the accounting in-house, but the benefits of hiring accounting services to an in-house team are beyond comparison.
An accounting firm has an in-depth understanding of the taxation system for different businesses. Outsourced CFO providers regularly upgrade their abilities and certifications to be competitive in the market, which helps to provide financial guidance that you otherwise wouldn’t have access to so quickly. In addition, it will allow you to make strategic business decisions that benefit overall growth.
cash flow management
Cash flow is cash coming in and going out of a business in a given time. Therefore, maintaining the cash flow of a startup is paramount to sustain. Unfortunately, around four out of every five small businesses in America suffer cash flow issues. Outsourcing your financial activities to a suitable CFO can help you optimize cash flow. They can take care of your bookkeeping tasks, analyze cash flow statements, help cut down expenses wherever possible, forecast cash flow, and formulate growth-oriented strategies.
After a period of continuous expansion, many organizations prefer to outsource accounting. After a company’s income exceeds a million dollars, handling bookkeeping in-house could become unimaginable. As a business grows, it becomes increasingly vulnerable to financial mistakes and, in the worst-case scenario, fraud.
You can easily avoid these dangers by using outside accountants. Professional accounting services make their living by removing these issues from businesses, so you can relax knowing that your money is in safe hands. Once you know that the financial management of your firm is happening smoothly, you can focus on your core operations and expand your market reach.
The whole idea behind outsourcing financial activities is to save time and cost. But, if you see, developing a recruitment policy, interviewing several candidates, and recruiting a suitable employee is not as easy as it seems and needs a lot of resources to manage all these operations. And when it comes to an accounting team, the hiring process becomes hectic. From creating a recruitment strategy to hiring the final applicants, a business spends significant resources and human resources.
Time, for any business, is one of the most valuable assets. And saving time is one of the reasons why you should outsource your accounting services to a more experienced and qualified team. You can imply the saved time and resources to the core business operations generating more output and profit.
attaining capital from the outside
Every Investor ensures that his money does not go to waste. To see if a company is worth investing in, prominent investors have various requirements. And one of these primary requirements is the streamlined handling of accounts or finances. Most of the time, they ask for the presence of a third-party independent financial assessment.
If you want to use outside investment cash to help your business develop, you can get ahead of the game by outsourcing your accountancy to a company you and your creditors can believe. If you have a trustworthy accounting team, a massive investment is not so far from you!
summing it up
As you know of the benefits of outsourcing accounting services, there are still some basic rules to follow before hiring any firm. First, as a business owner, you must evaluate the professional image, track record, and expertise of the firm you wish to hire.
Now that you know why you should outsource your accounting, it’s time to find the right accounting firm. To solve all your worries about hiring a suitable outsourced CFO firm, contact Stamos & Stamos CPA. We are a committed organization offering you top accounting services and tax and financial advice utilizing our sound experience of 25 years of financial guidance to local businesses and individuals.