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The Ultimate Guide to Outsourced Accounting Services

Posted by Tasnim Ahmed

September 16, 2020

You’re a busy entrepreneur who’s juggling dozens of tasks at the same time, all of which need to be completed yesterday. One area that you can’t afford to ignore is your accounting. In fact, most entrepreneurs consider their financial services to be the single most important part of their business plan.

Unfortunately, the accounting function tends to get pushed to the back burner by many business owners, because they simply 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 of the other accounting responsibilities can be a monumental task that company founders often plan to “get to later.” This plan, however, can leave your business hurting for cash flow, because without a serious commitment to your company’s financial position, you could end up hurting for cash.

Many business owners find that they save time, money and stress by moving from an in-house accounting department to an outsourced one. Entrepreneurs are outsourcing their accounting functions to specialized accounting firms to improve quality, reduce the time of processing 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 with access to a team of highly qualified and trained professionals, who use the latest technology and tools to ensure that 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 that they complete the revenue-generating responsibilities like sales, marketing and partnerships that are necessary to keep your company growing. In addition, you can consider outsourcing your accounts receivable services to make sure that companies are paying you on time. Following are the four major 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 any future issues. They can identify areas that are damaging your income, and they’ll also 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 that 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 to you.

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 oversight of your business. This analysis will help you and your investors review the financial health of your business.

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

Accounting consultation companies can start with cash on hand and then add the amount due from customers on specific dates. Then, they’ll subtract the planned expenditures. Once they have a basic cash flow projection, they’ll be able to 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 be counting.

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 you with 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’ll be able to 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 financial experts. It provides you 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.

In addition, you can consider outsourcing accounts payable services to ensure that all of your invoices are paid on time and accurately.

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 2016-2017, fees charged on average for business needs can be broken down into several categories:

  • 57.3 percent of gross income goes to tax return preparation
  • 15 percent goes to write-ups
  • 8.9 percent goes to payroll
  • 3.6 percent goes to Bookkeeping and QuickBooks
  • 2.6 percent financial statement presentations
  • 5.2 percent from other services

Before you start working with an outsourced accounting firm, you should evaluate its pricing structure. 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 business?

How to Outsource Accounting Services

You can outsource to a company that’s the right fit for your business’ accounting needs by following the below steps.

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: Make sure the accounting firm has strategies in place to protect all of your data and keep it safe. They should provide a secure way to upload and download documents, and to send encrypted or protected emails to one another.

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

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

Step 6: Ask the questions that are most important to you as the business owner, such as what was their usual turnaround time and did they ever fail to reach their goal on time.

Step 7: Get price estimates from a few different organizations and compare the services they offer with the prices they’re quoting 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 your 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, as well as the cost of hiring and training employees. You can also eliminate expenses related to hardware, software and office supplies while still keeping up with technological advances and software upgrades.

When you outsource, you’ll get 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 costs since experts will be employed by your outsourcing firm and not 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 situations change economically, companies tend to shift their workforces, which can be a challenging and resource-intensive process. Since the responsibility of managing the talent assigned to a project (and paying those team members) lies with the outsourcing company, you can scale up or down in terms of staffing with ease.

4. Flexibility and Scalability

As your business begins to grow and expand, 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 as your business grows.

Outsourcing accounting services enable you to scale up or scale down the provided resources according to your growing business' needs. With outsourcing, you only pay for the time and services that 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 when it comes to 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 on the horizon.

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 put measures into place to prevent the data security threats that exist, 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 at any time. You can be sure that all important tasks will be taken care of in the scheduled manner and on time.

9. Save Time

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

10. Accurate Financial Reporting

When a company goes public on the market, the requirement of accurate financial reporting fuels the need for quality accounting services. Your outsourced team can provide you with 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 they start 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 a wide variety of locations. This has become particularly true during the pandemic, when everyone is working remotely across time zones, and doing so seamlessly.

You’ll find that accounting services for startups can allow companies to grow quickly and efficiently without having to take 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 that they’ll be a fit with your company.

Using accounting consultation services can be an excellent plan for growth at 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.

For more information on outsourcing your accounting services, see our infographic below.


Outsourcing accounting services



Tasnim Ahmed
Tasnim Ahmed

Tasnim Ahmed is a content writer at Escalon Business Services who enjoys writing on a multitude of subjects that include finops, peopleops, risk management, entrepreneurship, VC and startup culture. Based in Delhi NCR, she previously contributed to ANI, Qatar Tribune, Marhaba, Havas Worldwide, and curated content for top-notch brands in the PR sphere. On weekends, she loves to explore the city on a motorcycle and binge watch new OTT releases with a plateful of piping hot dumplings!

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