Outsourcing a company’s accounting services, or in other words, utilizing a virtual back office solution, is becoming a common practice among businesses in the United States. A majority of small to medium-sized enterprises and big multinationals are beginning to outsource to virtual back-office accounting firms to manage their finances.
A virtual back office improves transparency on how capital is invested. It sheds light on what the main (and the weak) revenue streams of the company are. It also improves the performance of any type of business.
However, outsourcing a company’s accounting is a relatively new concept. Many people do not understand it, leading to numerous myths about the service. These common misconceptions have caused business owners to become reluctant to collaborate with accounting firms. Below, we are debunking some of the most common myths regarding outsourcing your accounting services.
1. Outsourcing Your Accounting Leads to Loss of Control Over the Financials of the Business
As the business owner, you’re the one who’s in control of business decisions, and you are used to things working that way. Every owner wants to be in control, particularly over the finances of their company. This is understandable.
A majority of business owners believe that by allowing an external accounting firm to manage their finances, they are essentially surrendering the internal control they possess. However, if you use a virtual back office for your accounting services, you will still be able to keep your finances in order.
In fact, this will give you more control as you will have a greater understanding of the financial position of your business. Having the correct information will enable you to make the best decisions for the company, giving you a competitive edge.
2. Outsourcing Your Accounting Services Is Expensive and Only Large Companies Can Afford It
This is simply not true. Contrary to this misconception, virtual back office accounting first began as an option targeting smaller businesses. They could not afford to hire a full-time internal accountant. More recently, this service has grown to become an option for big companies that are looking to cut costs.
The reality for many companies — especially small and medium enterprises — is that their accounting departments do not have enough on their plate to keep them occupied for the whole month. These accountants have to be paid full wages for the month, allowances, as well as other benefits like their paid annual leave. In addition, you have to pay for the offices that they occupy and additional utility bills. All these expenses can be eliminated by using a virtual back office. A virtual back office can increase the efficiency of your books and finances, and they will cost less than having a partially used internal accounting department. In fact, a virtual back office saves small businesses 40% to 60% (on average) compared to the costs of hiring someone in-house.
3. Outsourced Accountants Can’t Replace In-House Accountants
Going outside to find accounting help may sound like a daunting task. After all, you can’t be sure if an outsourced accountant will be as committed to doing a good job as an in-house accountant. However, outsourced accountants are professionals. They take on every job with the same level of commitment and dedication.
This team of professionals will crunch the numbers and ensure that the financial part of your business keeps running flawlessly. In addition, outsourcing will help you cut down on the time and money that you would have spent advertising for the accounting position, short-listing, interviewing, employing, and training the new employees. All of this effort can now be channeled into other, more important aspects of building your business empire.
4. Sending Information to a Virtual Back Office Accounting Firm Is Not Secure
This is considered to be partially true because, technically, nothing is 100% secure. With this knowledge, accounting firms put the most watertight security measures in place. This ensures confidential information doesn’t get lost or leaked to the public or a competitor.
It doesn’t matter if you keep your financial data in your home office or in your business office. The chance for a security breach remains high when you store sensitive information on-premises. A virtual back office will also use cloud-based systems that keep your data secure in the event of an attack or outage. Your data will remain safer on the cloud, where a team of server technicians can monitor and prevent malware attacks that might otherwise affect a company with lackluster data security protocols. More importantly, storing data in the cloud allows for easier disaster recovery in the event of an attack or outage, allowing you to recover sensitive data within the day.
5. QuickBooks Should Be Adequate
QuickBooks is a great accounting software that is heavily used by many virtual back office accounting firms. However, it is not sufficient. Most business owners cannot use it to its full potential. Hiring accounting professionals with expertise using this software will guarantee it is fully utilized. You will, in turn, get factual and better financial reports.
The disadvantages of relying exclusively on QuickBooks include:
- Business owners are not sure if they are utilizing this tool correctly.
- It tends to take the owner away from their business
- As the company grows, the systems will become more complex and will require more advanced QuickBooks skills, which the business owner doesn’t necessarily possess.
Virtual back office accounting firms use the latest accounting software to eliminate manual intervention, therefore eliminating the chances for error. Using a virtual back office will allow you to enjoy improved and timely reporting, as well as accounting data that is 100 percent correct.
6. Sending Files to a Virtual Back Office Accounting Firm Takes a Long Time
Basically, this will depend on how you have set up your business. If you are an entrepreneur who is technology savvy, you can easily and quickly send documents electronically through Dropbox or email.
7. Costs Can Get Out of Control
Your company is billed for the accounting services offered at an hourly rate or according to the project. This is mainly dependent on the accounting firm or the contract you’re working with. This may sometimes make the final cost unpredictable for the business owner. However, if you hire a virtual back office that is reputable and professional, they will do their job to ensure that you are only charged for actual services rendered to your company and nothing more.
Some companies even have a fee system where they charge you monthly to keep your costs stable and concise. You also have the benefit of paying for only what you use. Your services can be personalized, so you are not paying for more or less than what you need.
8. Even After Utilizing a Virtual Back Office, You Will Still Require an Internal Accountant
Back office accounting services are designed in a way that they should take the cumbersome accounting job from your company. This frees you and your staff so you can concentrate your skills where they are most required. When you collaborate with a professional accounting firm, you will not have any need for an internal accountant.
9. Outsourcing Your Accounting Services Is a Complicated Process
It is not a difficult process to get an accounting firm that is perfect for your needs. It is especially easy if you have been keeping a good record of the financials of your company. Even if you haven’t kept the best financial records, an outsourced office can help you with your accounting needs. Normally, it takes about two weeks to get a great accounting firm and finalize all the paperwork.
10. Outsourcing Your Accounting Services Is Only Necessary When It Is Time for Filing Tax Returns
While accounting is vital when it comes to filing annual tax returns for a business, the truth is that accounting services are a necessity throughout the year. Changes in regulation may introduce new things that you are not aware of, and you may not be able to relay the correct information to the main stakeholders. Accounting firms have the expertise to deal with any regulatory changes. When you use a virtual back office, you will be able to keep your company compliant with the ever-changing laws and regulations governing businesses and reporting.
Fully Accountable — The Virtual Back Office for All Your Accounting Needs
It is a no-brainer that accounting will take some of your time. However, if you spend the bulk of your workday dealing with accounting issues until you do not have enough time to deal with other aspects of your business, then it is time to outsource your accounting services. Using a virtual back office will free up all of the time you spend balancing your books, and it will allow you to focus this time on other, more important areas of your business. Let Fully Accountable help you. Call us today at (877) 330-9401 or contact us to get started.