Accounting is a complicated task that requires attention to detail and skills to be accurately managed. One of the best ways to manage business accounts is by outsourcing them to an accounting services provider. The service providers quicken the process and save crucial time for the business. However, getting the right outsourcing partner for efficient accounts management and business growth is important. Let us learn more about how a business can hire the services of an accounting services partner best suited for it.
When is the right time to hire an accounting services provider?
Businesses initially always go for in-house accounting. But as the business grows and its number of transactions increases, managing the accounting process becomes difficult. In such cases, outsourcing accounting services come as a boon. There are some signs in a business that project the requirement of outsourcing. The signs that it is the right time for the business to outsource its accounting services are:
To lower costs-
One of the biggest benefits of outsourcing accounting services is cost reduction. The costs saved by outsourcing can be used for core activities to enhance business growth. So, when accounting costs are too high, the business will profit from switching to outsourced accounting.
To focus on core activities-
When the business wants to focus on core activities to ensure growth and productivity, it must focus on the core activities. And to so, a business should outsource other important and complicated functions that are too time-consuming. Accounting is the most important business function as it manages the entire financial process. Therefore, outsourcing accounting to an expert third party is the best solution.
When the business is growing-
As the business grows or expands, the number of transactions starts increasing. The voluminous transactions need more time and resources for processing. However, a growing business can’t afford to spread its resources too thin. Thus, it is better to hire outsourced accounting services to manage the accounting function so that the business can focus on more critical activities.
To ensure compliance-
Every business has to follow some rules, regulations, and laws. However, a business’s laws and regulations keep changing regularly, and the business needs to stay up-to-date with them. Accounting outsourcing is the best way to stay compliant and updated with all the rules and regulations. The outsourcing firms keep themselves updated with the industry-related rules and regulations and ensure timely tax filing.
Need for professional expertise-
Accounting management is a complicated task that needs professional expertise to handle. Finding and hiring an expert for in-house accounting is costly, whereas outsourcing is not. Outsourcing firms have skilled and experienced personnel to manage the business’s accounting process.
Which accounting tasks should a business outsource?
A business can outsource all or some activities related to it. Deciding which activities to outsource depends on the requirements of the business. However, some accounting tasks that a business should outsource to an accounting services provider include:
- Data entry and bookkeeping
- Accounts Receivable processing
- Accounts Payable processing
- Payroll processing
- Reconciliation: Bank and Credit card
- Inventory reconciliations
- Financial statement and reports preparation
- Tax filing
Educational qualification of a good accounting services provider
The minimum essential qualification required to become an accountant in the USA is a bachelor’s degree from an accredited institution. In addition, a master’s degree increases the chances of getting a better position with enhanced knowledge. However, to become a licensed accountant or accounting services provider, a qualifying CPA (Certified Public Accountant) is compulsory.
Factors to consider before outsourcing accounting
Numerous factors decide which outsourced accounting services a business should hire. Following are some important factors that a business should consider before outsourcing accounting services:
Determine your requirements:
It includes determining what accounting services the business needs to outsource. Complicated accounting tasks like accounts payable processing, payroll processing, etc., require skilled professionals for proper and accurate management. Sound accounts management helps determine and analyze the overall business performance.
2. The service provider’s expertise:
Always choose the accounting and bookkeeping service provider with the required qualifications and experience. Find a service provider that has experience and knowledge in the industry in which the business operates. Make sure to conduct a background check on the service provider’s team’s qualifications and experience.
3. Careful company selection:
To check the track record of the accounting services provider, get feedback from their previous clients, online reviews, and the working experience of existing clients. Also, the service provider must have a standard security system to prevent business data from breaches, hacks, etc., and maintain confidentiality.
4. Cost-benefit of the service:
An in-house accounting team involves numerous costs, including salary, equipment, office expenses, etc. However, outsourcing the accounting services providers charge a reasonable price based on the work involved and don’t require any equipment or office space from the business. They use the tools required to fulfill the services on their own.
5. Learn about their tools and methods:
Make sure that the outsourcing firm uses the latest accounting tools and methods. Using the latest technology and tools ensures efficiency and accuracy. The business owner must get familiar with the accounting tools and methods used by the service provider to track the work done by them.
6. Inquire turnaround time:
Time-saving is one of the major reasons behind accounting outsourcing. Enquire about the turnaround time from the previous and current clients of the outsourcing firm. It ensures that the work is completed accurately and within the given timeline.
7. Strong communication process:
Proper communication is a must to convey the business goals and strategies for a successful accounting function. It helps keep track of the accounting task. It also allows the outsourcing firm to keep the business updated about any issues. Always have a backup communication system in case of any emergency.
8. Complete transparency:
Transparency and reliability help make the process smoother and build trust when accounting is outsourced to a service provider. Before finalizing an outsourcing accounting services provider, meet the prospective options and observe if they willingly share the important information to establish reliability.
Every business must initially adopt a careful approach to managing its financials. Bad or failure in accounting and bookkeeping affects the profitability and market standing of the business. Therefore, every business must cautiously choose the right way to manage accounts. In-house accounting has numerous shortcomings, which can be removed by outsourcing the accounting function to a third party. However, choosing the right accounting outsourcing firm is compulsory for efficient and successful accounts management.