Outsourcing certain business functions to third-party service providers is not a new concept. Businesses have been outsourcing functions like payroll, IT and human resources for years.
However, many companies haven’t given much thought to outsourcing their accounting and finance functions. Doing so can result in a host of benefits — including freeing up your team to spend more time on tasks that add strategic value to the organization.
Who Typically Outsources Their Accounting Function & Why?
Often the best candidates are companies whose growth trajectory requires that they begin to think bigger, better define their place in the market and how they’re going to move forward. They need better financial clarity but might not be able to afford full-time financial and accounting professionals. These organizations need expertise related to their industry and would benefit from knowledgeable consultants who can offer comprehensive solutions to complex hurdles facing the business.
Outsourced accounting also works well for leaders who find themselves spending too much time in the business processes and not enough time working on long-term strategic planning. This can lead to a number of problems, including misaligned directives, unchecked risk exposure, a lack of focus and direction, and a limited ability to pursue business growth opportunities.
More Advantages of Outsourced Accounting
In addition to freeing up executives to spend more time on high-level strategic planning activities, your company could realize a number of other advantages of outsourced accounting to a third-party service provider that specializes in this. These include the following:
- Saving time and money — Compared to hiring, training and maintaining an internal department, outsourcing your accounting and financial work is not only more cost effective, but also solves business capacity issues. Outsourcing can lower your total costs by eliminated expenses related to employee benefits, training and technology/software costs while redirecting valuable time back to growing your business.
- Anytime, anywhere access to financial data — Use of the leading-edge cloud accounting technology will allow you to close your books quicker and give you real-time reporting. You’ll gain visibility into your financial health with access to financial data and records anytime, anywhere.
- Improved operational efficiency and processes — Outsourcing your day-to-day activities such as billing, payroll and month-end close will free up valuable time to focus on business goals and growth. Rather than chasing after unpaid invoices or manually cutting checks, you can automate these processes and streamline operations.
- Access to expert financial resources — It’s challenging to find and retain staff that have the knowledge and expertise in all areas of your accounting and finance function. Additionally, it’s hard enough trying to juggle the responsibilities of running a business and managing the staff. Outsourcing to a team of virtual accountants ensures your financial records are accurate and up to date, giving you the confidence to make decisions about the future without a lot of oversight on your part.
- Reduced risk of fraud — Maintaining proper internal controls to protect against fraud, theft and human error is required for any accounting and finance function. If you are leaning on just a few people to fill multiple roles, this puts your business at higher risk. By outsourcing, you can have a clear separation of duties and greater oversight to mitigate these risks.
- Greater peace of mind — If your accounting and finance operations are in order, risks of potential threats are low and visibility into the financial health is readily available, this can put your mind at ease and help you focus more on your overall business strategy.
Additional advantages of outsourced accounting and finance function are stronger planning and execution. This will result in better decision making, improved direction and tactical outcomes, and higher profitability.
Fit is Crucial
When searching for a provider, look for a partner — a firm capable of establishing a relationship with the right levels of communication and trust.
Also, business owners should look for industry experience and a firm that has a suite of advisory offerings that can complement the accounting and finance functions. A company’s services can be enhanced by the firm’s expertise in these areas, putting more eyes on the business, which leads to more proactive advice.
Fit is crucial because business owners need to have a strong relationship with their service provider. Trust between the provider and owner is critical in order to eliminate the need for an owner’s day-to-day oversight. But that shouldn’t eliminate the need for the owner’s participation, as their input is key to making financially sound business decisions.