You might have a good handle on every facet of your small business early on in your entrepreneurial journey. But as your company grows, keeping up is challenging, especially in financial management areas such as bookkeeping and accounting. So, consider outsourcing to alleviate some of this burden from your workload.
Turning to outsourced accounting services can be a smart business move. It may come with a cost, but it will likely free up valuable time and resources. Better yet, it allows you, the founder, to realign your focus on business-boosting activities. However, it’s imperative to approach this choice with forethought and planning, as you need to find a top-notch finance expert.
Here are five things to remember when outsourcing your finance and accounting functions.
1. Opt for an all-in-one solution
You may choose to keep your accounting and tax firms separate. But there are pros and cons to consider. On the positive side, having two distinct firms provides additional scrutiny to everything finance-related. Nevertheless, this approach might require you to take on project management responsibilities and facilitate coordination between the two entities. Evaluate your options carefully and decide based on your specific needs.
2. Build long-term relationships with external experts
It’s essential to ensure your accounting team grows with you rather than hiring successive firms to skimp on costs. Finding the right outsourced accounting team and developing a long-term relationship with the team will help avoid turnover costs.
Moreover, it will enable the outsourced team to understand your needs better, tailor their services to meet them, and even spot trends and potential issues more efficiently, saving you time and money.
3. Utilize cloud accounting
Consider switching to a cloud-based accounting system. This technology securely stores all your financial data on a password-protected server, ensuring easy backups and accessibility in case of system failures or disasters.
Suppose you are working with a remote outsourcing team. In that case, a cloud system will make it easier for the team to access the data conveniently.
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4. Keep core functions in-house
Unlike the accounting department, the treasury department handles bank transactions and cash. It’s advisable to rely on trusted internal personnel for treasury access rather than outsourcing accountants to prevent fraud, embezzlement, and financial errors.
5. Don’t outsource invoicing
Invoicing, often seen as an accounting task, has become user-friendly through cloud-based systems. Invoicing requires more outstanding operational expertise than accounting knowledge. As a result, it’s efficient to keep the process in-house.
The final word
Outsourcing is a strategic move that can lead to cost savings, improved accuracy, and enhanced focus on core business activities, ultimately contributing to your organization’s growth and success. So, as you embark on the outsourcing journey, keep the guidelines enumerated in mind to make the most of this valuable business strategy.
Want to know more about startups and what it takes to get started? 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 contact us here.
