As a business founder, you’ve got dozens of tasks on your plate, so the last thing you want to do is spend time reconciling your bank ledgers, paying bills and sending out invoices. One way to take that off your to-do list is to outsource your bookkeeping services, which can help you handle this responsibility without increasing hiring costs.
To help you make this decision a little simpler, we’ve compiled a list of pros and cons about outsourcing bookkeeping services that you should keep in mind while selecting an outsourcing company.
Pros of Outsourcing Bookkeeping Services
Maintain Accurate Records
An outsourced bookkeeper can check the accuracy of your records, thereby adding a layer of precision to your bookkeeping services. They can ensure that your books are always up-to-date and accurate. They can also provide you with all required financial statements, including profit and loss reports, cash flow statements and a balance sheet — on a monthly or quarterly basis.
Makes Tracking Bills and Income Easy
Outsourcing bookkeeping can help you track financial information from your bank statements, credit card reports, payroll records, invoices and more in a single place. Your outsourced team can categorize and explain all your financial statements in an easy-to-understand manner. They can also provide you with consistent access to your financial data.
Access to the Latest Technology and Tools
With the right outsourced bookkeeper, you can stay up to date on the latest regulations and software. The outsourced bookkeepers are highly experienced and can therefore provide you with precise insights. By outsourcing, you can get more experienced guidance and access to the most current technology.
Provides Financial Reporting
By outsourcing your bookkeeping services, you can have complete and accurate financial reports to give investors, tax preparers, banks and anyone else who wants to evaluate your business. Having accurate financial statements can bring you peace of mind, as well as the confidence needed to make the right financial decisions.
Entrepreneurs often start lean but later require a full suite of bookkeeping services as their businesses grow. Outsourcing your bookkeeping enables you to scale up or down resources, according to your specific business requirements. This flexibility also helps you save money in the long run.
Enhance Confidentiality and Security
Professional outsourced bookkeepers can maintain the security and confidentiality of your financial data. A bookkeeper who is up to date on the latest software features or with comprehensive knowledge of the most secure accounting programs can ensure that you aren’t subject to breaches of your sensitive financial information. When you outsource, you can also reduce the risk of internal or external fraud.
Save Money and Reduce Overhead Costs
With outsourcing, you will only pay for the work being done by the outsourced bookkeeper. Therefore, during times when you don’t need them, you don’t have to keep paying salaries as you would an employee. You can also save the money that you’d need to spend on equipment and new software for bookkeeping. Generally, outsourcing bookkeeping service is more cost-effective than in-house bookkeeping.
Save Time and Improve Operational Efficiency
With outsourced bookkeeping services, you can free your team from having to handle repetitive and tedious back-office tasks. You can then allocate more resources to growth-generating activities, such as marketing, reaching new clients and more, that improve ROI. Therefore, outsourcing can help your business become more efficient by reducing late payments and improving the service you offer to your customers.
Now Check the Cons
Risk of Choosing the Wrong Firm
When outsourcing a job for your business, there’s always a chance of the process not quite going the way you wanted. Ask for references and contact entrepreneurs who have done business with the firm to ensure that there are no red flags. In addition, make sure you define the timeline up front before you sign any contracts.
Your outsourced bookkeeping firms may have some add-on costs that you aren’t aware of, so be sure to read all terms and conditions of the pricing policy before you make any decisions.
To avoid your confidential information being compromised, be sure to assess your outsourced firm’s security features. Ask the outsourced company to sign a non-disclosure agreement (NDA) to confirm that your data and information will remain secure and private at all times.
There are limits to your ability to communicate with someone outside your organization. Therefore, make sure you have a fixed point of contact at the outsourced firm who you can contact any time you’re looking for information.