The evolution of the digital world continues to give a spike in the emergence of startup businesses across the world. Entrepreneurs dreaming of becoming businessmen are diving into ventures aligned with their limited skills, resources and little experience too. However, not everyone is well-prepared or has the potential of managing the responsibilities that come with running a startup. In addition to this, it's quite significant for startups to manage finance effectively because they already are short on financial resources. According to studies, almost 90% of startups fail across the globe, out of which 16% of them fail due to poor management of funds and weak bookkeeping management.
This means that a startup needs affordable, reliable, highest quality and flexible accounting and bookkeeping services. In short, outsourcing services come up that can give competitive advantages along with offering opportunities to scale business operations.
Reasons to Outsources
As a startup owner, it often makes sense to limit expenditures by directly handling business bookkeeping and accounting operations on their own. But as time passes, and the startup starts to grow, the time and expertise required to properly manage business finance each month, there comes a requirement of hiring a professional bookkeeper that can engage and manage operations. However, at this stage, startup owners are likely to wonder, which type of bookkeeping solutions will work best to meet their requirements.
However, at the initial stage startups and small businesses have fewer administrative tasks and financial transactions that may require a full-time bookkeeper, but it's not suggested to have it with limited resources.
Hiring a part-time bookkeeper is one of the other options that might work effectively. In this the individual works for pre-described hours for each month. The resource may be hired as a freelancer or a permanent employee.
Outsource financial management services. These bookkeeping services come with an external team of professionals who manage daily finance remotely, after being hired.
However, both of these possible solutions cover startups’ bookkeeping requirements including managing cash flow, maintaining records of transactions, business account opening or closing, and forecasting future financial outcomes. The key difference between both services is that in an outsourced solution, instead of a single resource businesses get a whole team of bookkeepers. By opting for this option, businesses can get a competitive advantage as the individual bookkeeper can give limited support according to their skills and knowledge. However, in case they are not familiar with specific tools or transaction types that a business requires, they will end up with problems or inaccurate outcomes.
As outsourced bookkeeping services have multiple accountants, bookkeepers and financial analysts in a team, they hold extensive knowledge, and broad experience and are familiar with every type of business transaction or tool, as a result, they are better suited to be positioned as a bookkeeper for a startup.
Following are the top 5 reasons why startups must go for outsourced bookkeeping solutions.
1 Prompt Business Scaling
As a startup evolves and grows, bookkeeping and accounting operations will need to scale along with it. Therefore, as outsourced bookkeeping service providers offer access to a team of professionals, they can fulfil changing bookkeeping requirements. First, businesses require a resource that can manage bookkeeping software and can effectively carry out daily financial operations. As finances become complex, there comes the need to have professionals offering accounting services. This is the point where outsourcing takes the lead and helps businesses to stay put with limited funds. Choosing a team of outsourced bookkeepers and accountants with diverse industrial experience can help in a variety of ways. They are fully equipped to manage, handle, maintain and update business bookkeeping operations to make them well suited to new business ventures. For example, if a startup owner is working on a B2C product and is planning to scale the business by offering B2B services, it will be quite hard for the in-house team to manage and execute plans. But an outsourced team can easily help businesses in scaling operations.
2 More Expertise in Less Money
It's challenging for startups to find high-quality bookkeeping professionals within the business or hire a part-time individual, especially in the early stage of development. Startups make mistakes by onboarding an unprofessional resource that suits their budget. However, many businesses switch to outsourcing services in order to avail of options that were missing out or opportunities that part-time bookkeeper was providing was not worth helping the company grow. Whereas, if working with the outsourced bookkeeping service provider, startups can get professional advice, detailed insights into finance and everything startup owners can think of, without requiring the extra cost of hiring an individual.
3 Full-Time Access
The part-time bookkeeper would be hired on a contract basis with pre-set hours. However, in case businesses get into a situation of instant response, the hired professional will not be available. This may expose firms to significant threats. To overcome the risk and handle tasks properly within time brackets, outsourced bookkeeping services come into action. When businesses work with outsourcing service providers, firms can contact the team anytime and get someone on the call to deal with requests during or even after business hours. In addition to having the flexibility of contacting them anytime, outsourced bookkeeping solutions can also be tailored to meet business requirements. As transaction volume increases or becomes more complex, still outsourcing services can give all-in-all the best solutions.
4 Increased Productivity
Mostly emerging startups and small-medium-sized businesses consist of a versatile team that performs a variety of roles. It's very common practice for the employees in this kind of setup to take designations for what they are not capable of, yet working to help the business stand firm in the development stage. In addition to this, for business owners and managers, it's a critical task to balance the responsibilities and assign authority to well-deserved employees. However, adding more tasks results in increasing the workload which can lead to distraction from the core work that they were particularly hired for. Therefore, startups need to think out of the box and stop wasting talents in making them do what they are not trained for. Allow automated outsourced financial management services to handle business finance in a most appropriate manner that can also lift the workload, making employees stress free which can directly increase their productivity.
5 Highest Level of Flexibility
When a startup outsources business bookkeeping, employees will be able to spend more time and may pay more attention to other core operations. Outsourcing services offer the highest level of versatility and flexibility. Additionally, startups can also utilize the time to do research to come up with new strategies that will help their businesses to grow. Furthermore, outsourced bookkeeping services with personalized plans also allow taking input from the employees regarding critical tasks, aiming to reach and fulfill business goals