Outsourced Accounting and Bookkeeping: Services, Benefits, Common Mistakes and More

The accounting function of any organization is much more than just maintaining tax records and payroll; it must positively impact the operations and profitability of the company. To take off this load, companies generally hire outsourced accounting and bookkeeping services that manage financials on their behalf. 

This blog will walk you through the work of an outsourced accounting department, the benefits of working with them, and much more. Keep on reading till the end to learn more. 

What is Outsourced Accounting and Bookkeeping?

Outsourced accounting is the process of a business hiring another company or third party to oversee accounting and bookkeeping. It is an external accounting department that manages all the in-house financials. 

You can either augment your existing team or outsource the entire department; it is totally on the company’s budget. The outsourced accountant brings expertise, scalability, and efficiency that help to simplify the operation of the business. 

Now that you are aware of this, let’s look at the services provided by the outsourced accounting department. 

What are the Services Offered by Outsourced Accounting and Bookkeeping?

Outsourced bookkeeping firms ensure the precision and timeliness of the company’s financial records, eliminating the need to have an in-house accounts department. Here are the services they provide, or the tasks they perform for you:

• General Bookkeeping 
• Business Transaction Recording 
• Tax Filing 
• Employee Payroll
• Following Up with Debtors
• Financial Reports 
• Financial Planning and Strategizing 
• Other Account-Related Services 

Accounting creates a foundation for every company, therefore, it’s always a make-or-break situation because even a minor mistake can have a big impact on the functioning of the business. Thus, working with third-party professionals eliminates this risk and burden. Let’s go ahead and discuss the detailed benefits in the next section. 

Benefits of Outsourced Accounting Department

An efficient accounting team is directly proportional to the growth of any business, as they are responsible for managing the payables and receivables. Accounting outsourcing gives you time to breathe and focus on designing development strategies, but that’s not all; there are many other benefits as well, such as: 

Saves Money 

Using a third party for your accounting tasks is usually less expensive than hiring staff internally. Employing in-house accountants can be costly given that you would be required to provide office space, insurance, sick days, and other employee benefits.

However, hiring an accounting firm gives you access to a team of experts with diverse backgrounds who can easily work on and manage all of your tasks.

Removes Stress 

The company’s financial statements provide information about its financial situation and assist in making informed decisions. All of this can be a lot of work and requires expertise. Instead of panicking and stressing about it, you can hire a third-party accountant to manage your accounts, enter data, collect documents, and conduct audits and taxes. 

More Productivity 

If you have a trustworthy finance team, you can be assured that all of your accounting tasks are being handled smoothly. You will also gain valuable financial reporting insights on your company’s performance, cash flow, planning, and taxes. This will give you time and energy to focus on business dealings and scaling systems. 

Automation and Scalability 

If your company is expanding, using an outsourced accounting service will make life a lot simpler. Accounting practices can be difficult and frustrating, particularly when scaling up.  

Hiring an outsourced accountant means you will be working with an experienced firm that has done this many times before. Not just that, the firm can help you save money on inventory and manual processing systems by developing dedicated software programs to streamline processes and automate tasks. 

Expertise and Lower Risk 

The bonus is the value accounting firms bring to the table. With their years of experience and expertise, they can help you improve your results, plan out your finances, and build strategies to manage money. 

Additionally, they ensure that your books are always correct, payroll is compliant and finished on schedule, and you are not in danger of penalties or regulatory errors.

These are the benefits you can get when you hire an outsourced accounting firm to look after your company’s finances. 

Who Should Hire the Outsourced Accountant?

Take a look below if you are wondering what kinds of businesses and at what scales you should hire an accounting firm. These are the types of businesses that must take advantage of having an outsourced accountant by their side: 

Small Scale Businesses 

Small businesses, whether they run offline or online, generally do not have enough funds to employ an accounting professional or accounting team for bookkeeping and recording. As a solution, small business owners can seek assistance from outsourced accounting, which is a very cost-effective alternative. 

Companies that Need Temporary Help

Any business that is looking for momentary help, maybe because they didn’t get much time to hire, or their employee is on long leave, can use outsourced accounting temporarily. This way they don’t have to pay much to any contractual employee while getting all their work done. 

Large Enterprises 

Large enterprises can hire a full-fledged outsourcing accounting firm that can take responsibility for finances. This way they get easy access to proficient accountants at much lower costs while maintaining the standard quality. Many large companies outsource accounting firms from developing nations.

Growing Companies 

Companies that are expanding their business need funds, and this requires pitching the business ideas to investors. Accurate financial statements can help the organization close deals because they provide investors with a clear picture. Instead of hiring an in-house team, scaling companies can hire outsourced finance firms to get their work done at a lower rate. 

To summarize, all types of businesses can hire and work with third-party accounting firms and get the needed help to fulfill their requirements. 

Common Mistakes to Avoid When Selecting Outsourced Accounting Department

As already mentioned, financial statements are crucial for the operations of the company, but having the right third-party firm by your side is more important. You must look for professionals and firms that have established themselves and have reputable clientele. 

These are the top mistakes you must avoid: 

Not Knowing What to Outsource 

The most common mistake is failing to clearly define your company’s needs and what it can benefit from. You should determine if your outsourcing goal is to save money, gain access to specialized assistance, or save time on long-consuming accounting tasks like bookkeeping and auditing. This allows you to communicate more effectively and evaluate the tasks completed by them.

Not Screening the Past Records 

You will come across third-party services promising quality work, but it’s only worth investing in if they have a good track record. After all, you can not share data and let them handle your finances just based on promises. 

You can either schedule a meeting to evaluate or request references from other business owners based on their experience.  

Choosing the Lowest Cost Solutions 

A third-party firm that provides services at a much lower cost is a good thing, right? Sure, but it doesn’t mean their services will be on par with the standard quality. If you are considering cost as the only hiring criterion, that’s a huge mistake, as you need accuracy and quality in your financial statements. 

So instead of looking for cheaper options, look for a reputed outsourced firm. 

Not Prioritizing Company’s Value 

Any outsourcing arrangement is a long-term partnership, and your outsourced company eventually represents your company and becomes an extension of your brand, sharing a common vision and fundamental values. Therefore, it’s critical to partner with a firm that shares your ideals. Without a unified vision and values, you can only go so far.

These things might appear to be little, but if you neglect them, you’ll find yourself repeating your business goals and may still not get the value you’re paying for. 

So this is all about outsourced accounting, its benefits, and who it is intended for. We hope this blog has imparted useful knowledge with all the information written. If you like it, please share it with your friends to make them aware.