Outsourcing is a game-changing solution to building efficient and effective finance functions.
Outsourced accounting is a standard business practice in today’s ultra-competitive world. According to Clutch research data, 37% of small businesses in the US outsource finance and accounting.
There’s no doubt that cost-cutting is an essential reason for choosing outsourcing solutions, but that’s not the only factor.
This game-changing strategy offers numerous compelling benefits to small businesses. By outsourcing, you guarantee the accuracy, compliance, and operational efficiency of financial processes. At the same time, it frees up internal resources for mission-critical activities.
Here’s a comprehensive look at the five most significant advantages of financial process outsourcing.
1. Enables cost savings
Partnering with an external accounting agency enables your small business to obtain high-quality work at a significantly reduced cost.
The most significant savings opportunity through outsourcing is labor expenses. Outsourcing eliminates the cost of salaries, benefits, and other added expenses of hiring a full-time employee, thereby reducing overhead costs. Besides, Auxis’ Report on Finance Labor Cost Savings found that outsourcing finance and accounting positions from New York to Costa Rica lowers labor costs by an average of 42% to 51%.
In addition, you get higher productivity and more efficient, centralized finance and accounting operations.
2. Helps focus on value-creating activities
Transactional tasks such as chasing invoices and reconciling accounts consume much time and energy. Outsourcing these repetitive and redundant accounting tasks enables finance teams to focus on higher-value strategic tasks. As a result, they can deliver more robust analytics and insights for informed decision-making.
3. Drives efficiencies
Outsourced accounting transforms outdated, clunky finance and accounting operations into modern, agile systems. It provides economies of scale and easy access to best practices and cutting-edge technology solutions that make finance departments more efficient and effective.
4. Better access to specialized talent
Finding and retaining skilled finance professionals is a significant hurdle for organizations. A 2024 Salary Guide by Robert Half reveals that companies are experiencing an accountant shortage, causing financial reporting issues and increased workloads that can lead to employee burnout.
Outsourced accounting solves these problems by providing skilled, reliable resources comprising seasoned accountants, bookkeepers, analysts, and CPA professionals. They work together to drive productivity efficiencies and enhance accuracy. Additionally, outsourced accounting professionals bring fresh ideas and perspectives from diverse experiences.
5. Mitigates business risk
Experienced external accounting professionals are often well-versed in most financial situations your business may or may not face. Besides, they can help you stay abreast of your sector’s ever-changing accounting and reporting requirements. This minimizes the risk of penalties and non-compliance due to improper financial or accounting practices.
The final word
As the business landscape continues to evolve and face new challenges, outsourced accounting can be a crucial pillar in achieving long-term success. Embracing this strategic choice empowers businesses to build a robust and resilient financial foundation, propelling them toward unprecedented growth.
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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 contact us here.