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The Ultimate Guide to Outsourced Accounting Services

Posted by Aashna

May 20, 2024

From solving financial issues to enhancing efficiency and cost-effectiveness, unlock growth opportunities with strategic partnerships through our ultimate guide.

You’re a busy entrepreneur juggling dozens of tasks at once, all needing to be completed yesterday. One area that you can’t afford to ignore is your accounting. Most entrepreneurs consider their financial services the most crucial part of their business plan.

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Unfortunately, the accounting function tends to get pushed to the back burner by many business owners because they don’t have the time to invest in it. Digging into the books, handling accounts receivables, checking that all taxes have been deducted, and taking on all the other accounting responsibilities can be a monumental task that company founders often plan to, ‘get to later.’ This, however, can leave your business’ cash flow hurting because, with a serious commitment to your company’s financial position, you could avoid hurting for cash.

Many business owners find that moving from an in-house accounting department to an outsourced one saves them time, money, and stress. Entrepreneurs are outsourcing their accounting functions to specialized accounting firms to improve quality, reduce processing time, and enjoy such benefits as cost savings, access to the latest tech tools, security, and confidentiality, among other features. Check out the following details about using outsourced accounting services that every entrepreneur should consider to make informed decisions before outsourcing.

Benefits of Outsourcing Accounting Bookkeeping Services


Outsourcing your accounting and bookkeeping services provides you access to a team of highly qualified and trained professionals who use the latest technology and tools to ensure your data is accurate and secure. Outsourcing accounting can be a critical asset for forecasting and budgeting through every stage of your business. It can make your business more profitable in the long run by reducing overhead costs and improving your cash flow.

Accounting services can help small businesses find new benefits and strengths while ensuring they complete the revenue-generating responsibilities like sales, marketing, and partnerships necessary to keep your company growing. In addition, consider outsourcing your accounts receivable services to ensure that companies pay you on time. The following are the four significant benefits that you can discover in the long run after you start outsourcing your accounting services.

     1. Solve Business Financial issues


Your outsourced accounting team can provide timely advice to your organization to solve cash flow problems and avoid future issues. They can identify areas damaging your income and suggest strategic plans for your business growth that will keep money coming in. They can keep your financial records up-to-date and accurate while helping you eliminate errors, mistakes, omissions, and oversights in your financial documents. They’ll also be able to address responsibilities you may have put on the back burner but need to bring forward, such as following up on invoices you’ve sent and collecting money owed.

      2. Track and Improve Cash Flow


Outsourcing accounting, bookkeeping, and tax services can provide your company with solutions to improve overall cash flow and deliver effective cost-control measures. The outsourced team can even issue a precise and thorough cash flow analysis and oversee your business. This analysis will help you and your investors review the financial health of your business.

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Your outsourced accounting firm can draw cash flow projections for the next year, the next quarter, and the following week. This will help you see what changes need to be made and when. Use the projections to foresee slow periods and plan what you can do about them.

Accounting consultation companies can start with cash and then add the amount due from customers on specific dates. Then, they’ll subtract the planned expenditures. Once they have a primary cash flow projection, they can measure your actual cash flow against it. When a particular date arrives, if your company doesn’t have the cash that was predicted, the outsourced firm can help you work to figure out why. This will improve your tracking by identifying expenses you may not currently count.

     3. Provide Useful Business Insights


Your outsourced accounting team can generate accurate financial reports for you to predict future costs and revenues and make well-informed decisions. These insights can help you determine the most valuable clients or customers, business profitability, the amount of money to invest in your growth plan, and how to minimize expenses. The team can also provide powerful analytics to help you understand budgeting concerns.

Once you have these reports from the outsourced accounting firm, you’ll never have to wonder about your financial forecasts. Whether investors, partners, or even your board of directors want to see today’s numbers and tomorrow’s projections, you can access them 24/7.

     4. Improve efficiency


Outsourcing accounting services can save valuable time and resources so you can explore new partnerships, improve client relationships, and expand your business. Outsourcing allows you to address growing financial needs with the guidance of economic experts. It provides access to the best software and technology to make your accounting functions more efficient and reliable. In addition, your outsourced firm can adopt robotic process automation (RPA) to bring further efficiency to the process.

Cost of Accounting Services


The cost of outsourced accounting services can vary depending on the size of the company, the number of transactions flowing through your accounts monthly, the number of employees, and overall engagement level. The types of services needed and the background and experience of the professionals will also impact the monthly pricing. The price of accounting services can differ from a one-time consultation fee to short-term problem-solving to a full-time service. According to a recent survey by the National Society of Accountants (NSA) for the years 2020-2021, fees charged on average for business needs can be broken down into several categories:

55% of gross income goes to tax return preparation

15% goes to write-ups

6.8% goes to payroll

3.2% goes to Bookkeeping and QuickBooks

1.9% of financial statement presentations

5.2% from other services

You should evaluate its pricing structure before working with an outsourced accounting firm. Do they bill you based on hourly charges, or is there a flat monthly fee? Can you expand your utilization of their services as your business grows, or will they only allocate a particular number of resources to your company?

How to Outsource Accounting Services


You can outsource to a company that fits your business’ accounting needs by following the steps below.

Step 1: Check the credentials of the team members to ensure that:

  • They have appropriate certifications and licenses.
  • They are up to date on all laws and compliance issues.
  • They have handled the accounting for similar businesses in the past.

Step 2: Confirm that you’ll have a fixed point of contact (POC) for every need and 24/7 access to your records.

Step 3: Ensure the accounting firm has strategies to protect and keep all of your data safe. They should provide a secure way to upload and download documents and send encrypted or protected emails to one another.

Step 4: Check if they will allow you to review your documents whenever you want. They should also provide accurate analytics and insights to make informed decisions for your business.

Step 5: Ask the company for references and contact their previous clients for feedback.

Step 6: Ask the most important questions to you as the business owner, such as their usual turnaround time and whether they ever failed to reach their goal on time.

Step 7: Get price estimates from several different organizations and compare the services they offer with the prices they quote you. Use this data to make an informed decision about which option will work best for you.

Step 8: You can ask the firm to sign a non-disclosure agreement for peace of mind.

Why Use Outsourced Accounting Services


Check the following ten reasons why you should consider outsourcing your accounting functions.

     1. Significant Cost Savings


By outsourcing, you can save on paying employees’ salaries and benefits and the cost of hiring and training employees. You can also eliminate expenses for hardware, software, and office supplies while keeping up with technological advances and upgrades.

When you outsource, you’ll have access to expert accountants, finance professionals, and bookkeepers at a much lower cost. You can also save on infrastructure fees, employment taxes, and other overhead expenses since experts will be employed by your outsourcing firm rather than directly by your company.

     2. Access to the Latest Technology


An outsourced accounting firm invests in cutting-edge technology and software to be competitive. With an outsourcing partner, you can benefit from having access to this latest technology at no additional cost.

     3. Manage Operations in Down Economic Times


As economic situations change, companies shift their workforces, which can be challenging and resource-intensive. Since the outsourcing company is responsible for managing the talent assigned to a project (and paying those team members), you can quickly scale up or down in terms of staffing.

     4. Flexibility and Scalability


As your business grows and expands, having the right software and expertise becomes critical to meeting your accounting needs. Therefore, it’s best to outsource your accounting services to a firm that can scale with your business.

Outsourcing accounting services enables you to scale up or down the provided resources according to your growing business needs. With outsourcing, you only pay for the time and services you need, and you can shift that when your business grows.

     5. Boost Compliance with the Latest Rules and Regulations


A specialized accounting outsourcing company can help you ensure compliance with changing financial and tax regulations regarding city, state, and federal laws. It can help you avoid tax penalties and maximize tax benefits by complying with present federal, state, and local laws. Thus, you’ll always be on top of the new tax or accounting requirements and potential changes.

     6. Avoid Mistakes


Your outsourced accounting team can help you avoid accounting mistakes and government penalties. With the help of these experts, it’s easy to solve even the most challenging issues of cash flow management. Your team of accounting experts will accurately check your books and transaction reports. Thus, they lower the risk of having your books manipulated.

     7. Enhance Data Security and Confidentiality


The team of experts handling your accounting responsibilities can protect your information and keep it safe and confidential. They can implement measures to prevent data security threats with impenetrable security systems. Thus, outsourcing helps you mitigate the risks of a data breach, compromised security program, or internal fraud.

     8. Provide 24/7 Access to Your Records


When you outsource your accounting services to a third party, you can operate 24/7 with a time-zone advantage and access your data anytime. You can be sure that essential tasks will be taken care of promptly.

     9. Save Time


Outsourcing accounting services can free up valuable time for managing and growing your business. As the outsourced company handles your accounting functions, you can focus on value-added, revenue-generating tasks, such as building business strategies, making financial projections, bringing in new customers, and developing new products.

     10. Accurate Financial Reporting


When a company goes public, the requirement for accurate financial reporting fuels the need for quality accounting services. Your outsourced team can provide powerful analytics to help you understand budgeting so you can always make informed decisions. They can also provide you with audit support and appropriate records and assist you with added financial reporting as you grow through the years.

How to Find Small Business Accounting Services Near You


Many entrepreneurs ask, ‘How do I find small business accounting services, bookkeeping, and tax services near me?’ when looking for outsourced accounting partners. However, the company does not necessarily have to be close to your office to do a great job with your outsourced accounting services. In reality, you’ll find excellent companies that can meet all your needs in various locations. 

Accounting services for startups allow companies to grow quickly and efficiently without taking on too much of a financial burden. If you’re considering hiring one of these companies, check out the accounting services firms that offer what you need and then check their references and testimonials to ensure they’ll fit your company.

Using accounting consultation services can be an excellent plan for growth for every small business. By doing your homework ahead of time and studying the market, you’ll be in a great position to take maximum advantage of their offerings.

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Want to know more about how to enhance your financial management practices? In addition to HR, benefits, recruiting and payroll through its PeopleOps, Escalon’s Essential Business Services include FinOps (CFO services, taxes, bookkeeping and accounting) and Risk (business insurance). 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.

Author

Aashna
Aashna

Aashna Vidyarthi is a content writer and literature enthusiast. She has contributed her creative talents to various brands across industries, helping them bring their visions to life through compelling narratives and unique writing. Her love for literature and a keen interest in different cultures are integral parts of Aashna’s creative journey as she continues to weave enchanting tales that resonate with audiences, embracing the power of imagination and the beauty of diverse perspectives. A bibliophile who reads anything and everything that comes her way and enjoys every word.

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