Outsourced accounting comes with a lot of preconceived notions. After all, outsourcing any part of your business comes with inherent risks. You need to know you can trust who you’re outsourcing to and what they can offer. However, as this blog shows, many of these preconceived notions are simply misunderstood. From small businesses that lack a dedicated accountant to larger companies with an understaffed accounting department, companies of all sizes can benefit from outsourced accounting services.
5 Outsourced Accounting Misconceptions
Outsourced accounting offers extensive possibilities that can promote your business’s expansion and optimize your financial processes. Below are the most common outsourced accounting misconceptions and why they paint the incorrect picture.
People Will Lose Jobs If Your Company Outsources
Outsourcing carries quite a few negative connotations, and many believe it requires downsizing and costs people jobs. However, most companies don’t outsource accounting jobs wholesale; they hire outsourced accountants to strengthen their in-house accounting department because it frees up in-house accountants to do more important tasks.
With outsourced accountants handling day-to-day accounting, in-house accountants, controllers, and CFOs are freed up to handle more important tasks. That may include financial auditing, creating financial documents like cash flow statements, or crafting business strategies that can help a company get ahead.
Outsourced accounting can take the tedious accounting tasks off your hands, allowing you to focus on the basics of business forecasting, core business processes, and improving your bottom line.
Outsourcing Is Too Expensive
People might mistakenly picture outsourced accounting as rich executives taking private jets across the country to tell you you have to pay them exorbitant fees for their services. The reality, however, is that outsourced accounting services save you money.
The most obvious way outsourced accounting saves you money is through the service’s scalability. These services scale to your needs, and you don’t need to pay salaries for their services or overpay for features you don’t need, resulting in significant savings.
It’s Too Much of a Security Risk
Failing to secure your data doesn’t just hurt your bottom line. It puts your clients’ privacy at risk, an absolute no-no. So it’s understandable if the thought of handing over part of your business operations to an outside company is worrisome.
However, outsourced accounting services ensure security by understanding the most secure, advanced accounting software on the market. They protect your data with state-of-the-art security systems and infrastructure that safeguards your data. They have the resources, the workforce, and the incentive to keep your data secure because their reputation, just like yours, is at stake. After all, an outsourced accounting firm that leaks like a sieve is no good to anyone. That’s why, in many cases, entrusting sensitive financial information to an outsourced accounting firm is a safer bet.
You Need Your CFO/ Controller Department In-House
There’s a tendency to believe you need your employees in the same room as you. Yet, having employees in the office can actually lower productivity. Distractions like water cooler talk, in-person meetings, birthday celebrations, and others can make it difficult for employees to complete their tasks. On the other hand, productivity shoots up considerably when employees work from home. According to a study included in this Harvard Business Review article, employees who were allowed to work from home were 22% more productive than their in-office counterparts after nine months.
In the wake of the pandemic, with more workplaces offering remote work opportunities, not embracing remote work can put companies at a disadvantage when it comes to hiring top candidates or outsourced digital accountants.
Outsourced accounting services take advantage of the ability to conduct business from anywhere with an internet connection. You probably already outsource areas of your business infrastructure, including IT, marketing, and sales. Why should you limit your capabilities to the immediate geographical location of your business?
Outsourced Accounting Is Just Data Entry
Hiring an outsourced accounting firm solely for data entry would be a waste of money, but thankfully, that’s not true. While bookkeeping does require a substantial amount of data entry, outsourced accounting is a far more comprehensive solution that offers clients services like tax auditing, business strategies, and analytics. Additionally, outsourced accounting services give your business access to consulting services you can’t find with in-house accountants.
3 Why Your Company Needs Outsourced Accounting Services
Below are the three reasons why your company needs outsourced accounting services.
Your Business Is in Scaling Mode
When your business starts to scale, you need to be prepared. You shouldn’t try to take on too many roles when your business is in a growth model. You need to focus on running your company during this time rather than basic accounting tasks.
You can grow your business with outsourced finance and accounting services. Outsourced accounting services free you to focus on operations, advertising, and expanding your brand’s reach. They keep you focused on your company’s financial goals while removing some of the financial clutter that can cloud your vision during growth periods.
You’re Losing Money Even Though You’re Generating Revenue
You might have everything in place — a sustainable business model, the right product, and the right clientele. But if you don’t have the right financial team in place, you won’t be able to turn a consistent profit. For example, you may notice that your net profit is not increasing despite an increase in gross profits, which indicates that the company is not strategically managing finances. It’s at this point that you might consider hiring an outsourced accounting service.
Outsourced accounting teams issue projections and can help you plan for a future with increased profits. With financial projections backed by accurate and factual financial statements, decision-makers such as CFOs can quickly dig a company out of a hole.
You Would Feel Unprepared if You Received an Audit
The IRS shows up every year with its hand out, and if you’re not ready to pay or pay less than what you actually owe, you could be in serious financial trouble. But rather than let the tax man strike fear in your heart, you should outsource your tax preparation to an outsourced accounting firm.
Outsourced accountants have the skills and technical expertise to file and catalog every piece of financial information you may need for filing taxes, which makes the process painless and, more importantly, accurate. With services like strategic tax planning, an outsourced accounting firm can plan your tax strategy and provide expert advice so that you don’t pay a cent more than what you owe.
One disadvantage of in-house accounting vs. outsourcing is that the former can often be too close to the day-to-day operations that they can’t see the forest for the trees. However, outsourced accounting firms can perform financial audits that can assess potential risks ahead of time, giving you time to shore up weaknesses before the IRS shows up.
Outsourced Accounting Misconceptions
The world of outsourced operations is somewhat new. However, with every passing year, it becomes more relevant to businesses looking to maximize their operations and return on investment (ROI). Outsourced accountants’ scalability and expertise make them attractive alternatives to any business struggling to stay on top of their financial reporting and adequately plan for their future.
At Fully Accountable, our team of full-service financial experts understands how to make the most out of your business’s finances. We issue clear financial reporting and can advise you on capital procurement opportunities. If you need a less comprehensive package, you can utilize our financial controllers to ensure tax compliance and productive bookkeeping tactics. Regardless of your accounting needs, Fully Accountable delivers.
Contact us today to discover what we can do for your business.
Rachel Scava is the COO of Fully Accountable - a back office solution for outsourced accounting and finance services. Fully Accountable provides full back office services for eCommerce and digital based companies that are looking to grow and scale. Rachel has dedicated her career to helping entrepreneurs and owners reach their highest potential through human ROI. Having discovered that one of the most challenging things for any business is building a high performing team, Rachel has developed processes and procedures to help companies build, train and measure team members that become major assets to the organization. Rachel believes in the theory of Super Employee’s where you can turn any ordinary team member into an extraordinary one. Her passion is people and yours can be too!
