As a small business owner, you might have considered outsourced accounting services.
You’ve kept a close eye on expenses, and the other eye is looking toward future growth opportunities. You have done them yourself because it’s in your best interest to maintain accounting and bookkeeping.
But as your business grows, the accounting sector requires a dedicated staff of experienced professionals.
Outsourcing accounting services can provide your business with the right amount of services while being cost-effective.
Let’s get into the best outsourced accounting services so you can focus on growing your business and stay financially savvy with these financial newsletters, without being bogged down by administrative burdens.
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What Are Outsourced Accounting Services?
Outsourced accounting services are a PEO company (Professional Employer Organization), that handles some or all of the accounting processes for a business. They act as a dedicated financial team, allowing businesses to concentrate on their core operations.
Furthermore, outsourced accounting teams serve as an extension of your in-house staff, offering scalability, cost-effectiveness, and expertise that can be challenging to attain through internal hiring for many businesses.
The outsourced firm handles all the functions that an in-house accounting staff can and can be employed full-time or part-time.
🔥 Pro-Tip from FounderIV: Clearly define the scope of work and expected deliverables upfront in an agreement. This includes specifics on services to be provided (bookkeeping, reporting, tax, etc.), communication protocols, and security and privacy details. Defining responsibilities prevents misunderstandings.
Why Should You Outsource Your Accounting?
You should outsource your accounting for several reasons, yet four core reasons stand out:
- Experienced Professional Service. Outsourced accounting firms already have years of experience and are fully equipped with infrastructure and staff.
- Save Money. If your business needs only limited accounting services, outsourced accounting firms have pricing models that let you choose only the needed services.
- Save Time. A business owner needs to delegate tasks to focus on growing the business. Aside from outsourcing an accounting service, if administrative tasks are overwhelming, executive assistant outsourcing is also useful for saving time.
- Ability to scale. If your accounting demands fluctuate from rapid business growth or a downturn, you can ramp up or reduce the outsourced firm’s services.
As a manager, you already have enough human resource issues. CEOs with a strategic focus choose not to increase that burden by having to manage an accounting department, too.
When to Know if Outsourced Accounting Services Would be Useful
Knowing when to outsource your accounting services depends on your business circumstances, but it usually begins with being unable to create financial reports on time. The business may be growing too fast to handle its current accounting practices. Several factors go into outsourcing as your accounting solution:
- Needing to get more out of accounting software, QuickBooks, than billing and collections.
- Delays in payroll or payments to vendors.
- Accounting is taking time away from other necessary duties.
If the business is growing too fast for signs like these, you can choose between hiring an in-house accountant or outsourcing accounting. The latter’s flexibility means they can quickly and resolutely resolve any past accounting issues and provide the exact services your business needs.
Accounting Services That Can be Outsourced
Find an accounting service that fully understands the laws of your business sector, and determine at what time of year these needs are met. From audit and due diligence readiness to financial management, advisory services can help you streamline your accounting function and focus on what matters: growing your business.
1. Accounts Receivable/Accounts Payable Management 💰
Accounts receivable and payable management involves overseeing and tracking the money owed to a business by its customers, and vice versa, tracking money owed to customers or vendors by the business. These are both listed on a balance sheet maintained by an accountant.
The entailments of accounts receivable for the accountant are to prepare customer payments and transactions, create invoices, submit invoices to customers, and maintain customer files.
Accounts payable entails tracking what is owed to suppliers and employees. This involves keeping accurate books, reviewing and recording invoices, payroll processing, and scheduling payments to align with cash flow. It often uses double-entry bookkeeping and the concepts of debits and credits.
2. Record Management 💻
Accounting record management refers to the oversight of the financial documentation that goes into creating financial statements. The accounting records to manage include bank statements, invoices, cash books, and tax documentation. The overall goals are to keep necessary documentation accessible for business operations and compliance, track record locations, and automate aspects of the management process.
To accomplish this, accountants create records of transactions and properly save and retain files with the help of software tools. Helpful software tools utilize taxonomies and retention schedules to streamline organizing records.
Effective management is imperative to ensure security and compliance and allow for audits or investigations.
🔥 Pro-Tip from FounderIV: Maintain open communication by promptly providing company information and documents and reviewing deliverables when received. Identify issues early and course-correct quickly instead of letting problems linger.
3. Preparing Financial Reports 📚
The four main financial reports are the income statement, balance sheet, cash flow statement, and statement of retained earnings.
The income statement records net profits or losses as determined by sales revenue, expenses, and general ledger records.
The statement of retained earnings shows how much a company has earned since its beginning. It shows how much of the profits an owner reinvests in the company. Accountants must record the transactions in the right periods, or it will result in inaccurate reporting.
Balance sheets show exactly what your assets are and where they came from. Accountants use this to determine the business’s liquidity or calculate the rate at which the company generates returns.
4. Controller Services 🎮
An accounting controller is an experienced financial expert who leads the accounting department. They are involved in day-to-day and long-term financial oversight duties and internal controls.
As the finance team’s senior leader, they offer CFO services by recommending new accounting practices that suit your business. This can mean advice, process changes, or improvements.
The controller also prepares and communicates key financial statements and reports to internal and external stakeholders, including handling audits. This includes ensuring accurate and timely income statements, profit and loss statements, budgets, tax documents, and every aspect of the accounting system.
5. Financial Planning and Analysis 🤑
Financial planning is used to understand the current state of a business and identify future achievable goals from it. Elements of critical planning, budgeting, and analysis are constantly used.
From data analysis, accountants create evidence-based insights, communicate them to management, and optimize strategic business decisions that can anticipate financial growth, contractual obligations, capital needs, and potential risks.
Financial Planning and Analysis is typically part of an integrated financial management cross-department that connects budget, accounting, and compliance.
3 Types of Outsourced Accounting Services
1. Local Bookkeeper
A local bookkeeper is an individual or firm based in your geographic area that handles accounting services.
⭐ How it works: You meet and communicate in person and exchange physical documents.
✅ This is a great choice if: You want face-to-face interactions.
❌ This type may not work well if: You rely heavily on digital systems and records.
2. Virtual Bookkeeping
A virtual bookkeeper works remotely, communicating online and via phone. They use cloud-based software to access digital financial records.
⭐ How it works: You communicate digitally and share access to accounting software.
✅ This is a great choice if: Your records are digital and you’re comfortable with online interactions.
❌ This type may not work well if: You prefer in-person meetings and physical document exchanges.
🔥 Pro-Tip from FounderIV: View the outsourced accounting firm as an extension of your finance team and designate an internal point person to collaborate seamlessly; this partnership approach focuses both parties on value-added analysis versus purely transactional work and gives business owners peace of mind.
3. In-House Bookkeeping
In-house bookkeeping means employing accounting staff internally at your company, typically in an accounting department.
⭐ How it works: You have dedicated accounting personnel on-site at your business.
✅ This is a great choice if: Your needs warrant full-time accounting staff and oversight.
❌ This type may not work well if: Your business doesn’t require around-the-clock accounting support.
People Also Ask These Questions About Outsourced Accounting Services
Q: What services does an outsourced accounting firm provide?
- A: Outsourced accounting firms offer comprehensive financial services, including bookkeeping, payroll management, and tax compliance. They act as a dedicated financial backbone for businesses, ensuring accurate and efficient handling of monetary matters.
Q: How does outsourcing accounting services reduce costs?
- A: By tapping into specialized expertise, businesses dodge the expenses of hiring and training an in-house accounting team. It’s a direct way to access specialized expertise without the associated overhead.
Q: Is my financial data secure with an outsourced accounting service?
- A: Protecting financial data is a serious concern for outsourced accounting services. Review their systems, including data servers, computers, user authentications, external storage portals, and data transfer systems. In short, make sure their hardware and software are secure.
Q: What qualifications should I look for when choosing an outsourced accounting service provider?
- A: Look for their qualifications that meet your accounting needs. Identifying your needs will narrow down the accounting firms. Furthermore, look for accreditations and certifications by professional organizations, such as the Association of Chartered Certified Accountants (ACCA), or have certifications such as Certified Public Accountant (CPA), The Chartered Institute of Management Accountants (CIMA), or Certified Bookkeeper.
Q: How often will an outsourced accounting firm communicate with me?
- A: Typically, the longer the time zone difference, the more difficult it is to communicate. You will want to have a communication plan in place with the accounting firm.
