Pros & Cons of Outsourcing Your eCommerce Accounting

Chris Giorgio

outsourced accounting

So, you have an eCommerce business and it’s booming, now what?  Well, first things first, congratulations! You’ve reached the growth phase of your eCommerce business and that is a huge success! However…as eCommerce experts, we know all too well that the success of a growing business can often arrive with equal parts excitement and… stress.  Read on to learn more about eCommerce Accounting!

Many owners find themselves suddenly overwhelmed when realizing, as their business grows, so do their financial tasks and duties, and thus the question of outsourcing arises. With the growth of your online business, your accounting and finance departments need to do more than just manage expenses and conduct basic bookkeeping. Think about it, most bookkeepers you’ve met probably know how to handle billing, collections, payroll, deposits, sales tax, bank account reconciliation and basic financial statements, and they should! 

However, as an eCommerce business owner, you already know that you need much more than a basic bookkeeper, and for obvious reasons. Would a non-eCommerce expert, albeit a wonderful bookkeeper, know where to find all of your relevant financial data across multi-sales channels and omni-channels? Would they be able to give you a thorough and real-time competitive analysis of exactly how your ecommerce business is measuring up to other competitors in your specific industry niche? 

 

Our goal is to provide solutions tailored to your needs, to help you make smart, profitable eCommerce decisions.  Before you take that crucial step, towards booking a free consultation, you might be interested in weighing the pros and cons of outsourcing your eCommerce accounting

We’ve listed out some key points for you to consider, and hope you find this helpful. Of course, we are always just a call away to answer any specific questions you might have for your online business.

Pros and Cons of Outsourcing eCommerce Accounting

PROS

Focus on Your Core Business

To facilitate growth, you might need an extra headcount. As more and more niche business service companies offer specialized services such as eCommerce accounting, and fractional CFO services, many businesses are forced to look outside of their internal staff to scale operational efficiencies. 

This allows them to focus on their core business activities that increase sales and generate more business. For instance, imagine that you hire a full-time bookkeeper instead. This won’t help you achieve your goals (as discussed above) and in fact,  financial and other resources, including office space and equipment, will be tied to them. 

Plus, you just can’t overlook the added costs of hiring full-time employees that require specialized tools. An accounting professional requires specialized tools to deliver their services— these tools can be pretty expensive. We know, because we’ve built our own proprietary software, called Your Back Office,  to solve missing functions in the other ones available on the market. Outsourcing the accounting function allows you to avoid these costs because outsourced companies will roll the cost of these tools into their own operating expenses.

When you outsource, the associated overhead costs of having an in-house accounting team are eliminated. You can then allocate more resources to activities and tools that directly add value to your core competency.

Reliable, Responsible Support

A business considers it a responsibility to provide its customers with a high-quality service that matches the industry standards. A professional accounting company is under a lot more pressure to offer the best accounting solutions to its clients while ensuring compliance with the latest accounting principles and tax laws.

Hence, when you outsource your business accounting function to an experienced and reliable company WHO ARE ALSO eCommerce EXPERTS, you get peace of mind knowing that your finances are being held by an entity that’s well aware of the legal knowledge of the frequently changing accounting standards and laws, as well as ensuring that your unique eCommerce needs are met.

Many accounting service providers have a staff that has experience working in different industries. Hence, it’s important to make sure that you get a personal expert that has thorough knowledge and experience working with multi-sales channels.

Many people wonder how outsourcing their eCommerce accounting function would help them save money when they’re supposed to pay the outsourced service provider, too. Well, as mentioned earlier, you’re able to avoid all the overhead costs associated with full-time hiring including PTO, Workers’ Comp, health insurance, vacation, retirement, and sick leaves.

Moreover, relying on a company that hosts an entire team of accounting & eCommerce experts helps you avoid the risks and additional costs associated with unreliable financials and of course, non-compliance. 

Proactive Issue Resolution

Another benefit of outsourcing accounting is that when you have trained eyes overlooking your books all the time, you don’t need to worry about any accounting blunders. 

The professionals will spot any red flags ahead of time and notify you about issues, such as those associated with cash flows and expenditures, which can be difficult to track without proper expertise. 

On top of that, they offer you insights that give you peace of mind and help you make better and more informed business decisions.

Remember, you didn’t go into business to remain occupied with accounting books. To run your business efficiently and focus on the overall vision and growth, you’ll need to free yourself from the task. However, given the critical nature of the function, you’ll need to rely on a subject matter expert. 

CONS

Communication Limitations

When you outsource a business function to an external entity, there are always limits to your ability to communicate with them. This is why many business owners still avoid the idea of work-from-home and remote teams; there’s just something special about having an in-house staff.

Plus, even when you outsource the accounting function, you have to keep an eye on the most critical things and manage a list of priorities pertaining to financial information. How quickly you get your outsourced company to address those priorities depends on their availability

If you fail to establish a regular communication schedule and clearly outline responsibilities for your accounting provider, your relationship with the outsourced firm can become difficult to manage later on.

When exploring your outsourcing options, consult and discuss with vendors and your teammates about the right communication styles.

Hidden Costs

When you hire an in-house team, you don’t need to worry about hidden costs. However, when you outsource your accounting function, you can’t assume that your accounting service provider will take care of everything associated with your financials. Some firms charge you extra for certain tasks. You may not initially be aware of some costs that may arise, such as those related to additional tools and software. 

If you do outsource your accounting function, take your time to understand how the onboarding process works. To avoid any issues later on, settle the cost of service at the beginning and be sure to set clear expectations. 

Lack of Control

Keep in mind that your financial reporting offers incredible insights into how you can improve business efficiency and achieve growth. After handling the accounting function all by yourself or having full control of your financials, when you outsource the job, you’ll naturally feel as if you’re losing oversight of business spending and activities. 

Some business owners have a habit of holding their financials close to their chest. If that sounds like you, you might be worried that out of sight could mean out of mind, and you would no longer be able to obtain those critical insights that have huge impacts on your firm’s efficiency.

To avoid losing control, it’s imperative that you ensure transparency through regular meetings with your outsourced accounting service provider. The goal of outsourcing your accounting should not be to keep you in the dark but to relieve you and your team from manual data entry so you can focus on your core business functions. 

In fact, a good eCommerce accountant should identify and bring to your attention insightful takeaways from the financial reports and records that you failed to infer yourself. To stay in control, the best practice is to schedule regular meetings with your dedicated personal eCommerce and accounting experts.

Final Word

Now that you’re aware of what outsourcing your eCommerce accounting function looks like and have a clear idea about the associated benefits and drawbacks, think about what’s best for your business. 

Seize your opportunity to strategize with one of our Award Winning eCommerce Experts to see how we can transform your business today! Click here.

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