Accounting and bookkeeping are considered an organization’s lifeblood. Well-maintained books give the assurance of financial stability, help reach business goals, and ensure taxes are paid on time.
It is equally true that accounting tasks are highly complex in nature. The complexity will depend on a business’s size and transactions made on a daily, weekly, monthly, or annual basis.
Moreover, the changing accounting trends mean that automation will play a major role in this field from 2023 onwards. GlobeNewswire reports that the worldwide accounting software market grew from $15.73 billion (2022) to $17.71 billion (2023). That is an impressive CAGR of 12.5% already.
One common issue, primarily among small businesses, is that their in-house teams may not be well-adjusted for rapid digital changes. That’s at least one reason why many are opting for outsourced accounting and bookkeeping services.
In this article, we will discuss four solid reasons why outsourcing bookkeeping would be a good idea.
Cost and Time Savings
Every business owner is aware of the tremendous costs attached to hiring and maintaining an in-house team. This is most true in cases where you need to train new members per the latest industry trends.
Small businesses with limited resources often take a hard hit from the recruitment process. When you outsource bookkeeping, your costs only extend to the services you use. CFOshare states that it’s important to choose a company that offers holistic solutions after carefully studying your firm’s accounting processes.
This way, you can have bookkeeping needs met in a tailored manner. Some of the common areas an outsourced bookkeeper can handle include –
- Data entry
- Recording financial transactions
- Preparing business receipts and invoices
- Processing payroll
- Reconciling bank accounts
- Analyzing the cost of operations
- Tax planning and filing returns
- Offering financial advice based on real-time insights
Moreover, your in-house team gets a kickstart to focus on core business operations. Juggling those with accounting tasks can impact their productivity and also increase the risk of accounting errors. Whether minor or substantial, such errors can cost your company market credibility, hamper decision-making, and waste resources.
As you outsource bookkeeping and accounting from the experts, your internal team has plenty of time to focus on core business efficiency.
Ease of Scalability
Another major benefit of outsourced bookkeeping is that you can use these services as per your current business needs. For instance – expanding the in-house team suddenly as demand rises can be a challenging task. Similarly, it’s a tough choice to reduce staff during periods of low demand.
Such staffing constraints are no longer a problem when your team is outsourced as per your needs. Also, this spares you the hassle of recruiting from square one. Besides time, effort, and the worry about the new hire’s competence, there’s the cost factor.
Did you know that some companies pay two to three times the position’s salary to hire an employee? These numbers are alarming given the fact that the average cost-to-hire is already around $4700.
When you outsource bookkeeping services, it’s easier to keep abreast with changing business needs without facing the rough side of such adjustments.
Improved Financial Reporting
This benefit is the most useful for small companies with accounting staff that are fairly new to the game. They may lack the latest industry expertise or struggle to keep the books as the business expands.
Outsourced teams (through renowned bookkeeping services) bring the promise of improved financial reporting through advanced automation software and analysis tools. This means your company gets the benefit of real-time insights necessary for effective business management.
As of 2023, the accounting scenario is vastly different from what it was even a few years back. One need not look further than the gold-standard examination – Certified Public Accountant (CPA) examination. Since 2021, greater emphasis has been given to data analytics, automation, and a digital mindset.
Plus, there have been major changes in tax policy, statutory compliance, and Environmental, Social, and Corporate Governance (ESG) rules. Your outsourced team will not only be familiar with but also specialize in bookkeeping according to the evolving accounting landscape.
This will minimize the chances of fraud or errors. Bookkeeping experts follow rigid procedures and accounting controls to ensure books are maintained as per the latest Federal requirements. As a result, your team can optimize debt management, forecast trends, monitor assets, and make informed financial decisions.
The Bottom Line
Perhaps you’re wondering if it’s the right time to opt for outsourced accounting and bookkeeping services. These services work best for companies that are unable to find a full-time bookkeeper at reasonable costs.
Furthermore, if you need immediate scaling opportunities, it’s best to outsource accounting to reduce the risk of financial fraud. Outsourcing bookkeeping or accounting is also the ideal option for small businesses that do not currently require (or cannot afford) a full-time bookkeeper.
Finally, such services come in handy during the extra-busy time of the year (end-of-the-year reporting) or when the in-house accountant is on a long leave (like maternity leave).
Before you outsource a reliable bookkeeper, have a clear idea of the services you might need. Choose only among reputed firms as this will ensure expertise, experience, and data security. You can choose a competitive cost range (on an hourly or monthly basis) depending on your budget and bookkeeping requirements.