How Outsourcing Your Accounting Saves Your Business
Outsourcing your accounting; for a small business, a great challenge lies in ensuring the continuity of the functions of the company. As the business sees a considerable rise in the scale of operations, the owners have to take measures to adapt, this includes in the accounting department.
Adapting the organizational framework to the requirements of the financial world, while ensuring the interest of the business, is a challenge for owners. The problem is a strenuous one as it tests the grit and determination of business owners.
On one side, the owners are expected to increase the size of operations, while they simultaneously have to maintain existing operations too. These are conflicting policy scenarios that require an owner to take decisions keeping in mind the different dimensions. A business decision that has a long-term objective of growth invariably ends up affecting the sole purpose of maintaining the current operations.
Owners and entrepreneurs are thinking of different ways to tackle this problem. Experts believe that the issue of increasing operations and fewer resources is an indicator of a business doing well. However, after establishing the right direction for a company, the business faces the challenge of maintaining growth levels. A business that is not able to match the efficiency required with the growth levels is bound to fail in the long run.
Businesses are looking for creative and innovative ways to tackle this problem. Outsourcing essential business functions is one suggestion that all experts have to offer. One feature that is core to all businesses, but is time-consuming for all owners, is accounting.
While every business loves the prospect of recording the initial sales and performance, it becomes boring and time-consuming after a while. Even with the help of a friend or an accounting app, this process is still complicated and stressful to handle.
Therefore, a solution that many owners have considered is outsourcing the accounting function. By hiring a professional to record your accounting statements and observe the financial performance, you can save time for other essential functions.
A growing business needs its owners to take good care of it and ensure that it heads the right direction. By outsourcing the accounting function, the owner can take time out to study and research about the more important aspects of the business.
Rather than spending time recording repetitive business transactions, the owner will have time to review the economic and financial situation of the country. Time is of the essence for all business owners; a critical aspect that determines the success of a decision is the timing of that decision.
After outsourcing accounting, an owner will have enough time to make decisions that secure the future of a company. Besides saving time, other factors are enough to prompt a business to outsource accounting function. To elaborate on the significance of outsourcing accounting, we have made a list of some factors that affect the performance of the business.
1. Lower Employee Cost
A business owner saves up to 40% more than the previous cost by outsourcing accounting. By outsourcing your accounting functions, you are free of the responsibility of paying any benefits packages. Since you outsource professionals from other companies to manage your accounting transactions, you are not responsible for their training, equipment, and insurance.
The cost of hiring a new employee is often 150% of their annual salary. This means that you are really saving by outsourcing the accounting function. The less the cost of recruiting and running your accounting operations, the more funds you have to reinvest back in the business.
The improved efficiency that comes with the use of outsourcing accounting is another factor that contributes to saving money. Since professionals are adept at finding financial solutions for a business, they are quick to observe and highlight the key areas where the business needs improvement. They can also pinpoint areas that the company can focus on to boost future growth.
2. Reduced Tax Burden
As mentioned before, accountants that you hire from outsource accounting are experts in their fields. Before looking after your books, these professionals may have come across different businesses going through the same stage as yours.
Their experience provides them with intimate knowledge to deal with all sorts of problems. Another factor that these accounting experts are well-versed with is the tax codes relevant to your business.
Since the tax codes are relevant to their field, these experts take the time out to study them individually. They take the time out to study the changes in tax laws and their applicability. This allows them to recognize ways and methods their clients can benefit from changes in the state and national tax laws.
Since the professionals are aware of the applicability of the law, the owners can trust them completely. This relationship of trust enables a business to make great money in the process using the expertise of the professionals. Business owners can either save the money or reinvest it into the business.
As the professional looks for ways to earn leverage during the tax season, you can focus on crucial issues of the business. You can also use the time to concentrate on devising a plan to improve customer service or efficiency in production.
3. Scalability and Flexibility
While an in-house team is more adept and aware of the challenges faced by the business, problems can arise when setting targets for the group. You need a greater workforce to implement and oversee the growth of the business.
While the greater workforce may be more efficient in achieving the set target, it is the accumulation of the workforce that is the problem for companies. On average, it can take up to 26 days to hire a new employee.
Hiring a new employee does not mean the end of the problem as you need to train them and ensure that they are in-sync with the goals of the business. Plus you also need to factor in the time the new hire needs to hand in their notice and to work through any notice period. If you factor this period into your calculation as well, the wait for a new hire can extend to up to 57 days.
Another problem with suddenly increasing your workforce is that the new hire needs time to settle to the environment of an organization. It is unjust to expect a new hire to mix and understand the values of the business in just a few days. Traditionally, new employees learn from mistakes, and it is only beneficial for the company to give them a margin for error.
However, with growth being the objective, the question is how long a business can afford to provide the new employees with the same margin for error. Given the complicated intricacies of hiring new employees in the accounting department, it only makes sense to outsource accounting function.
An accounting team can match the need for growth with their expertise and by relieving you from the stress of making frequent accounting entries. You are also not required to train and mould the professionals of the accounting firm to the values and principles of your business. The experts can deal with your accounting problem without having to interfere in any of your business dealings.
In addition to the sudden increase in demand reverses, you will be left with too many people on board, and could face the extra costs of maintaining the in-house accounting team. An alternative to this scenario for you is to pay for redundancy.
Outsourced accountants have a team ready employed that can increase or decrease the resources you allocate to the client. There is also a waiting period for any changes, which you should state before finalizing a contract you sign with an accounting team.
4. Top Software
Like all other business procedures, accounting software provides a convenient alternative to manual accounting. With time, the use of relevant software has become a common way to find solutions to many business problems. Not only are software more efficient to use, but they also require little to no maintenance.
However, before using any of this software the owners have to be absolutely sure of the benefits they provide. Choosing what software suits your business can be a tough decision to take, as there are numerous options to choose from.
This is where the benefits of outsourcing accounting can be experienced in full force. When you outsource accounting to an experienced company, you are you can benefit from the software they have chosen for themselves.
This quick decision prevents you from wasting your time and money trying and experimenting on packages that don’t provide the accounting leverage you are looking for. This also means that you don’t have to learn about using a new piece of software or worry about making any mistakes.
5. Invaluable Advice and Peace of Mind
As a business owner overseeing the growth of your business, you have a lot to worry about. There are a lot of questions plaguing your mind at one time. At a moment of high stress and discomfort, a helping hand could be of huge favor for your business.
When you are looking for ways to create investment opportunities, a financial expert from the industry is more than a helping hand. The experience the experts have makes them capable of providing robust advice in the face of adversity. The professionals have knowledge from their previous clients and can tell you of the dos and don’ts of the business in the current scenario.
The advice the professionals give you is usually impartial, which employees of your organization are incapable of providing. An outsourced accountant is not going to be as excitable as you and your team when dealing with the problems at hand. This enables them to take decisions impartially, keeping the scenario and the challenges ahead.
Another benefit of outsourcing accounting operations is the peace of mind you get. An experienced accountant can provide you with peace of mind as you know your finances are being handled by the right person.
With an expert handling your accounting transactions, you have one less thing to worry about. You can turn up to meetings trusting the financial information you have, and present it to everyone with full confidence.
When bidding on government contracts, you are aware that you have the kind of financial leadership that can comply with all regulations or restrictions. Having this before the bidding process puts you in good stead during the application process, placing you above competitors who have not thought much about this.
This peace of mind reflects the improvement of performance in all the other sectors of the business. The time you have to focus on the different areas enables you to take smart decisions after going through the market and studying the indicators thoroughly. This means that the business can pursue its objectives of achieving growth without many hurdles.
Hiring a qualified professional or a company for handling the accounts of your company is one of the best investments in your business. These professionals offer cost savings and quality of information while protecting your business.
These benefits can help an owner in concentrating on activities that are more suited to their skill set.
Therefore, if you are having trouble managing the growing numbers of your business, outsourcing accounting is the solution for you.