Accounting & Finance

What to expect when you outsource accounting

Prepare yourself for the process.

  • 6 min Read
  • March 31, 2024

Author

Escalon

Table of Contents

Outsourcing accounting services is a strategic move for small businesses seeking to navigate the complex terrain of financial management with precision and efficiency. Accurate and timely financial reporting is not a mere obligation; it guides businesses toward sustainable growth and profitability. Despite this, many organizations need help achieving clarity and compliance in their financial operations.  

Navigating murky financial data and grappling with compliance issues can be daunting for small businesses, often consuming valuable time and resources. However, outsourcing accounting functions presents a compelling solution to these challenges. By partnering with external accounting professionals, companies can ensure data clarity and adherence to regulatory standards, thereby lifting the burden of compliance woes.  

Schedule a call today

Moreover, outsourcing accounting services transcends mere transactional support; it fosters a collaborative partnership to drive tangible results. Beyond resolving immediate accounting issues, outsourced accounting teams serve as strategic allies, delivering accurate financial insights. This transformative approach empowers small businesses to unlock their full potential, leveraging the expertise of external professionals to navigate financial hurdles and chart a path toward sustainable success.

Why do Businesses outsource their accounting services?

Outsourcing accounting services has become a prevalent strategy for small and big businesses and extends far beyond cost savings. At the heart of this trend lies the recognition that financial management is a complex and critical function requiring specialized expertise. By outsourcing accounting services, businesses can tap into a pool of seasoned professionals well-versed in navigating the intricacies of financial reporting, compliance, and analysis.  

One primary reason businesses outsource their accounting services is to gain access to a broader spectrum of expertise. External accounting firms often employ professionals with diverse backgrounds and specialized knowledge, allowing businesses to benefit from insights and perspectives they may not possess internally. This expertise extends beyond basic bookkeeping tasks to encompass strategic financial planning, tax optimization, and regulatory compliance, empowering businesses to make informed decisions that drive growth and profitability.  

By offloading time-consuming accounting tasks to external experts, businesses can free up valuable resources and bandwidth, allowing them to redirect their efforts towards activities that directly contribute to their bottom line. This increased focus enhances efficiency, agility, and competitiveness, positioning businesses for long-term success in an increasingly dynamic marketplace.

For instance, if you’re a small retail business expanding your operations into multiple locations, managing finances across different branches can be a logistical nightmare, with varying tax regulations and reporting requirements adding complexity. By outsourcing its accounting services to a reputable firm specializing in retail accounting, the business gains access to professionals well-versed in the industry’s nuances. This ensures accurate financial reporting and compliance and provides valuable insights into cost-saving opportunities and strategic financial planning. Ultimately, outsourcing accounting services enables the business to focus on its core operations and growth initiatives while leaving the complexities of navigating the economic terrain in capable hands.

What to expect from outsourced accounting?

When businesses decide to outsource their accounting functions, they open doors to myriad benefits and opportunities that can revolutionize their financial management practices. Here are three key expectations businesses can anticipate when they choose to outsource their accounting: 

Expertise and Specialization: Outsourcing accounting tasks grants access to a team of dedicated financial management experts. They possess in-depth knowledge of accounting, tax regulations, and industry-specific nuances. By leveraging their expertise, businesses can ensure accurate financial reporting and compliance with regulatory requirements. This specialized knowledge enables businesses to navigate complex financial landscapes confidently, minimizing the risk of errors or discrepancies. 

Talk to us about how Escalon’s FinOps can help you gain financial insights to make informed decisions.

Cost Efficiency and Resource Optimization: Outsourcing accounting services can yield significant savings for businesses and significantly smaller enterprises with limited resources. This is because it takes away the cost of hiring new talent and training them further and the overhead costs of maintaining accounting software and infrastructure. Not just that, businesses can also scale their accounting functions according to their needs, avoiding the burden of hiring full-time employees during periods of low activity, further enabling small businesses to allocate their resources efficiently and cost-effectively, thereby allowing more room for expenditure in areas of growth and innovation.

Growth, Innovation, & Strategy: Outsourcing accounting tasks helps businesses take off a massive chunk of the burden of their staff, allowing them more time to focus their energies on growth-focused tasks. This delegation of responsibilities to external professionals allows small business owners and staff to focus on innovation R&D and pursue growth opportunities with greater agility and efficiency. Moreover, outsourcing accounting functions relieves business owners and managers of the day-to-day complexities of financial management, allowing them to devote their energy to driving business success and achieving long-term objectives.

Pros of outsourced accounting:

Cost-saving potential: Outsourcing saves money, making it a cost-efficient tool for startups and small businesses with limited resources. 

Increased efficiency: Focusing on core activities enhances efficiency, while outsourcing allows specialists to handle non-core tasks. 

Enhanced quality: Outsourced companies bring expertise and experience, elevating service quality.

Cons of outsourced accounting:

Intellectual property risks: Sharing sensitive business information with third-party providers poses potential dangers to proprietary methodologies or technologies. 

Loss of control: Outsourcing results in relinquishing some control over processes, necessitating a high level of trust in the outsourced company’s ability to maintain quality standards. 

Ethical considerations: Outsourcing may be perceived as taking business away from local areas, leading to potential backlash from the public and stakeholders.

Schedule a call today

The Key takeaway:

In conclusion, outsourcing accounting services presents a strategic opportunity for businesses seeking to optimize their financial operations and focus on core activities. However, it’s crucial to recognize that while outsourcing offers immense time-saving benefits, thereby enhancing efficiency, it also entails certain risks, particularly regarding control and intellectual property. Just as with any business decision, careful consideration of the specific needs and circumstances of the organization is essential when contemplating outsourcing accounting services. Businesses are equipped to make informed decisions that catalyze long-term objectives and priorities by assessing the potential benefits and risks and conducting a thorough comparison. Outsourcing accounting services is a valuable tool that drives growth, provided they approach the process with diligence and foresight.

Want to know more? Since 2006, Escalon has helped thousands of startups get off the ground with our back-office solutions for accounting, bookkeeping, taxes, HR, payroll, insurance, and recruiting — and we can help yours too. Talk to an expert today.

This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal, or accounting advice in this article. If you would like to engage with Escalon, please get in touch with us here.

Talk to our team today to learn how Escalon can help take your company to the next level.

  • Expertise you can trust

    Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.

  • Quality and consistency

    Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.

  • Scalability and Flexibility

    Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.

Contact Us Today!

Tap into the latest insights from experts in your industry

Accounting & Finance

October 15 Tax Deadline: What to Double Check Before You File

If your business or personal tax return was extended back in April, October 15 is the final deadline to submit....

Accounting & Finance

Key Financial Deadlines Every SMB Should Know for Q3 and Q4 

For small and mid-sized businesses, the second half of the year often comes with increased operational demands, from budgeting and...

Small Businesses

From Bookkeeping to Strategic Finance: Preparing Your Family Business for Growth

Is Your Family Business Ready for Its Next Chapter? As a family business leader, you've built something remarkable. Through years...

Accounting & Finance

Subscription Revenue in 2025: Fatigue, Churn, and the Imperative to Diversify 

For much of the last decade subscription models symbolized modern growth, predictable revenue, sticky customer relationships, and rising valuations. But...

Accounting & Finance

Closing the Books in Q4: Common Mistakes That Delay Reporting 

Closing the books at year-end is one of the most important financial events for any growing business. It sets the...

Leadership & Growth

Building a Scalable Tech Stack: How to Choose the Right Tools for Growth 

In today’s business landscape, technology is more than a convenience—it’s a strategic asset that can supercharge growth. But as you...

People Management & HR

The Role of HR Analytics in Strategic Decision-Making 

In the era of big data, human resources (HR) analytics has emerged as a powerful tool that can transform how...

Accounting & Finance

Understanding Customer Lifetime Value and Its Impact on Strategy 

In the world of business, not all customers are created equal. Some make one small purchase and disappear, while others...

Accounting & Finance

Tax Strategies for Succession Planning in Family-Owned Businesses 

Succession planning in a family-owned business is a delicate dance that involves not only leadership and emotional considerations, but also...