Start-ups, entrepreneurs and many small-scale businesses find it hard to onboard an accountant or bookkeeper. Especially with the desired skill set to manage company finance, prepare financial statements, handle account operations, analyze data, and create invoices. However, nowadays, it's getting even more difficult to find a qualified and eligible service provider at an affordable rate. Thus, around one-third of small businesses tend to outsource bookkeeping and accounting services as they are not satisfied with doing it on their own. Even though it's the norm that business finance must be done inside of the company. But it's important for companies to make a critical analysis of whether they have the professionals that have the essential skills or experience to handle this job.
Due to this reason, businesses might consider outsourcing bookkeeping services from a company that has the right qualifications and professionals who can do the same job at a low cost with maximum quality.
Outsourcing Bookkeeping Services - A Detailed Overview
Outsourcing is when businesses onboard a third party, an individual or another company to handle and perform operations that are managed by employees. This innovative strategy first emerged in the 1990s right after globalization. Countries like South America, the Philippines, China and the Far East are among the leading and most prominent markets for outsourcing services. Like any other company functions, outsourced bookkeeping services come with various sophistications but if implemented properly can give businesses seamless experience in managing books and taxes.
However, if the in-house bookkeeping team isn't capable enough of handling financial matters, this is the point where outsourcing comes in. Therefore, the contracted company takes over the operations with full responsibility for the agreed-upon period. In this contracting tenure, companies will get full-fledged bookkeeping services, without having to onboard them directly into the firm. This means businesses can cut the cost of recruitment and tenure, including health insurance, benefits, working equipment and training. Thus, companies can focus on the priority task and can grow to a large extent.
When do Businesses Need to Outsource Services?
When businesses or startups come into being, they don't want to handle their bookkeeping on their own. Outsourced services assist them and allow them to utilize valuable time on running business core operations, determining new business opportunities for growth, or simply getting some rest from the hectic routine and stresses of running a business.
With outsourced bookkeeping, businesses can get hands on the critical financial reports and statements that every company owner must need to know about, e.g, account reports, cash in or outflow statements and balance sheets.
Following are the four situations when businesses need to outsource bookkeeping ;
- Startups or small businesses looking for skills rather than an ordinary bookkeeper
- Inability to find an appropriate employee that can manage finance at an affordable cost
- In case businesses require temporary services
- Startup turning into established business looking to scale operations
However, there are various types of businesses where the financial functions of bookkeeping don't make it to the core operations. Core competency is an essential component that helps companies to flourish.
Things Businesses Need to Look for Before Outsourcing
The next step after deciding to outsource is to pick an outsourcing firm that best fits with business aims and objectives. But more significantly, one that can meet the firm’s demands and requirements. When hiring bookkeepers to handle business books and accounts, efficiency and performance quality should be prioritised. But there are still a few other crucial elements that must be taken into account.
Outsourcing Requirements
To run a business successfully, companies need to handle their finances including accounts receivables/payables, compile monthly or annual reports and report to government authorities within time. Perhaps businesses need service providers to create bank reconciliations and analyses, or might just use accounting software to enter the data.
Competitive Plans
Outsourced bookkeeping services come up with different pricing plans, including fully customizable plans tailored to business requirements. Therefore, companies can select the pricing plans that meet business requirements and finance at the best; nevertheless, firms do not need to base their choice solely on cost-effectiveness.
Expertise
Make sure that the outsourcing bookkeeping service providers businesses intend to hire are qualified, knowledgeable, and competent. Remember that companies can always ask for referrals from their previous or current clients while considering their standing in the industry, financial stability, and capacity to provide reliable results.
Data Security
Emerging businesses that strive for success, need to understand the significance of data security while outsourcing bookkeeping services. A highly reputable company should handle the data of its clients with the utmost discretion and make sure that every transaction is safe. It is crucial because companies will be giving them confidential information in addition to cash flow statistics.
Top 5 Reasons to Use an Outsourced Bookkeeping Service
It does take much time for entrepreneurs to realize the significance of up-to-date business financial records and understand the potential of outsourcing bookkeeping services that can help them to witness success. However, at the same time, the business routine operation also requires maintenance, that ultimately becomes the owner’s priority. After all, entrepreneurs didn’t establish businesses to become accountants or bookkeepers, while the value of time consumed in managing the financial records results in increasing the business expanse.
Here are five good reasons to outsource bookkeeping services:
Privacy: Business financial matters need extra security and need to be kept secure at all costs. Hiring trustworthy and reliable bookkeepers to manage business confidential financial records that can stay loyal to the goals for a long period and ensure confidentiality is quite a challenging task, especially in today's fast-moving economy where data breaches are on rise. Outsourcing virtual business bookkeeping services with strong customer references can give company owners peace of mind by mitigating the opportunity of having an employee in contact with a firm's financial records.
Scalability: Establishing companies may start with minimal financial management requirements but quickly need a full range of bookkeeping services to expand business operations. However, by utilizing the option of outsourcing bookkeeping services, firms can scale their operation without hiring new staff or spending loads of money on arranging training sessions. Outsourcing companies will manage financial operations, while closely monitoring the in and outflow of cash, allowing companies to stay focused on core operations.
Training and Management: The majority of business owners are not in a position to supervise or teach their bookkeeping personnel, mainly because their bookkeeper probably has more knowledge of the subject than they do. However, the advantages of having a bookkeeper who is knowledgeable about online bookkeeping solutions or who has a thorough understanding of state tax laws or reporting procedures make a significant difference in the quality of bookkeeping.
Preserve Business Resources: Startups and small businesses spend significant time and money in order to manage as well as streamline their financial operations. To do so, they hire more employees or assign to existing one that badly impacts the budget as well as productivity. However, they need to focus on more important tasks when outsourcing opportunities are readily available in the market. Simply said, businesses must not waste resources in managing books on their own.
Tax and Audit-Ready Financials: Accounting firms and financial institutions are pleased when business taxes and audit reports are managed through highly professional bookkeepers. Undoubtedly, financial records represent the businesses, therefore, outsourced financial management services can help companies ensure that their reports, audits and account invoices are accurate and up-to-date.
Keeping up with accounting responsibilities is crucial, whether a firm requires recent financial numbers to present to a lender or it merely wants to monitor cash flow. An easy approach is to outsource bookkeeping to a professional agency.