What business processes should be outsourced?
Rational use of time, finances, and other resources is one of the motivators for optimizing the work of the entire company. Therefore, a successful leader periodically re-evaluates opportunities and chooses options for optimizing business processes to achieve better results.
We know that many online stores use the delivery services of well-known shipping companies. This allows them not to spend money on maintaining their own logistics department. Also, actively developing businesses prefer to work with digital agencies in order not to create their own marketing department.
At each stage of development, a situation arises when it is actually profitable to outsource a part of the work to external specialists. Like others, bookkeeping outsourcing allows you to focus directly on the main activity – production, sales, services. When do you know you should outsource your bookkeeping?
According to statistics, 92% of small and medium-sized businesses in the United States outsource accounting, except for large institutions, whose financial level allows setting up their own accounting department.
Bookkeeping outsourcing involves the transfer of bookkeeping tasks of the organization to a third-party company. This helps to optimize business processes and focus on core activities, reduce financial risks and costs for the company and not waste time on preparing reports and calculating salaries.
When do you know you should outsource your bookkeeping?
Almost all companies deal with bookkeeping on an everyday basis, but this process, depending on the field of activity, has a number of little details that one should know and keep in mind. Companies that specialize in the provision of accounting services employ various specialists. They monitor all changes in legislation and adjust their work accordingly.
In the early stages of business development, it often makes sense to contact an outsourced accounting company. Since small businesses have low turnover, a bookkeeper can do work once a week or even once a month. They do not need to be involved in the process from morning to evening every day, so outsourcing is the best option. Ecommerce businesses that do not have a physical office also often choose to have a bookkeeping company take care of the books.
At the same time, small businesses should take into account the specifics of bookkeeping outsourcing:
- You are getting specific services, not a bookkeeper. This can be bill payments, payroll, everyday transactions, expense tracking, bank reconciliation, financial reports, taxes, audit, consultation, and so on.
- Outsourcing companies usually strictly limit the list of tasks that they fulfill under the contract. Additional services are paid for separately.
- Most often, the work is arranged in such a way that the client provides all the information on their own. In other words, the bookkeeper does not call counterparties and does not ask them for documents. In most cases, this is simplified by using accounting software and minimizing cash transactions.
- Outsourcing companies usually take responsibility for all their mistakes, which is an undoubted advantage compared to a full-time bookkeeper. Moreover, if an employee who made a mistake suddenly quits, then the business owner has even more issues to deal with.
- Bookkeeping and accounting companies ensure uninterrupted work because they do not need a vacation, sick leave, and everything that a full-time bookkeeper would require.
What are the disadvantages of outsourcing?
No matter how wonderful the advantages we listed may sound, there are also disadvantages. Many believe that working with an accounting company is inconvenient compared to a full-time bookkeeper. However, it all depends on the level of organization and flexibility of the provider of the bookkeeping services. Of course, you will have to adjust in some ways because your bookkeeper will rather far from you, and sometimes even in another city. But is it really so disastrous?
If you are used to frequent meeting with your bookkeeper and discussing your accounts for hours, then the outsourcing option is clearly not for you. At the same time, it would be much more efficient to arrange your work in such a way that it is convenient for everyone. Typically, communication with a client occurs mostly by phone, chat, or another preferred method. If you do not see this as a problem, then outsourcing might work for you.
Do you need to receive information about cash receipts every day? Please, arrange this with your manager, and they will send you a statement by email every day. Looking for sales data and other financial analytics? This is also not a problem because modern accounting software allows you to generate many useful reports based on accounting data without any extra effort.
If the company is large with a large number of daily operations, then it may not be advisable to transfer accounting to an outsourcing company. This is especially true for large companies with a large volume of workflow. In such organizations, as a rule, there is a whole team where is individual is responsible for their own area of work – wages, inventory, production, and so on. The distance can lead to a loss of efficiency and an increase in the time for processing information, which is simply unacceptable in the era of super-speeds.
You cannot control an outsourcing accountant. The downside, frankly, is dubious because if you know how to manage a bookkeeper, then it is not important for you whether one is working remotely or next to you. Finally, each business owner bears full responsibility for accounting in the organization, so it is imperative to exercise control over accounting.
So, when do you know to outsource your bookkeeping? The answer is not easy, and it is up to you to decide whether the benefits outweigh the disadvantages for you. If you decide to do this, then you need to find out how long the company has been working, what reviews there are about it, how it treats its customers, and so on.
Author: Charles Lutwidge