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What to expect when you outsource accounting

Posted by Devayani Bapat

March 31, 2024

Prepare yourself for the process.

Outsourcing accounting services is a strategic move for small businesses seeking to navigate the complex terrain of financial management with precision and efficiency. Accurate and timely financial reporting is not a mere obligation; it guides businesses toward sustainable growth and profitability. Despite this, many organizations need help achieving clarity and compliance in their financial operations.  

Navigating murky financial data and grappling with compliance issues can be daunting for small businesses, often consuming valuable time and resources. However, outsourcing accounting functions presents a compelling solution to these challenges. By partnering with external accounting professionals, companies can ensure data clarity and adherence to regulatory standards, thereby lifting the burden of compliance woes.  

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Moreover, outsourcing accounting services transcends mere transactional support; it fosters a collaborative partnership to drive tangible results. Beyond resolving immediate accounting issues, outsourced accounting teams serve as strategic allies, delivering accurate financial insights. This transformative approach empowers small businesses to unlock their full potential, leveraging the expertise of external professionals to navigate financial hurdles and chart a path toward sustainable success.

Why do Businesses outsource their accounting services?

Outsourcing accounting services has become a prevalent strategy for small and big businesses and extends far beyond cost savings. At the heart of this trend lies the recognition that financial management is a complex and critical function requiring specialized expertise. By outsourcing accounting services, businesses can tap into a pool of seasoned professionals well-versed in navigating the intricacies of financial reporting, compliance, and analysis.  

One primary reason businesses outsource their accounting services is to gain access to a broader spectrum of expertise. External accounting firms often employ professionals with diverse backgrounds and specialized knowledge, allowing businesses to benefit from insights and perspectives they may not possess internally. This expertise extends beyond basic bookkeeping tasks to encompass strategic financial planning, tax optimization, and regulatory compliance, empowering businesses to make informed decisions that drive growth and profitability.  

By offloading time-consuming accounting tasks to external experts, businesses can free up valuable resources and bandwidth, allowing them to redirect their efforts towards activities that directly contribute to their bottom line. This increased focus enhances efficiency, agility, and competitiveness, positioning businesses for long-term success in an increasingly dynamic marketplace.

For instance, if you’re a small retail business expanding your operations into multiple locations, managing finances across different branches can be a logistical nightmare, with varying tax regulations and reporting requirements adding complexity. By outsourcing its accounting services to a reputable firm specializing in retail accounting, the business gains access to professionals well-versed in the industry’s nuances. This ensures accurate financial reporting and compliance and provides valuable insights into cost-saving opportunities and strategic financial planning. Ultimately, outsourcing accounting services enables the business to focus on its core operations and growth initiatives while leaving the complexities of navigating the economic terrain in capable hands.

What to expect from outsourced accounting?

When businesses decide to outsource their accounting functions, they open doors to myriad benefits and opportunities that can revolutionize their financial management practices. Here are three key expectations businesses can anticipate when they choose to outsource their accounting: 

Expertise and Specialization: Outsourcing accounting tasks grants access to a team of dedicated financial management experts. They possess in-depth knowledge of accounting, tax regulations, and industry-specific nuances. By leveraging their expertise, businesses can ensure accurate financial reporting and compliance with regulatory requirements. This specialized knowledge enables businesses to navigate complex financial landscapes confidently, minimizing the risk of errors or discrepancies. 

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Cost Efficiency and Resource Optimization: Outsourcing accounting services can yield significant savings for businesses and significantly smaller enterprises with limited resources. This is because it takes away the cost of hiring new talent and training them further and the overhead costs of maintaining accounting software and infrastructure. Not just that, businesses can also scale their accounting functions according to their needs, avoiding the burden of hiring full-time employees during periods of low activity, further enabling small businesses to allocate their resources efficiently and cost-effectively, thereby allowing more room for expenditure in areas of growth and innovation.

Growth, Innovation, & Strategy: Outsourcing accounting tasks helps businesses take off a massive chunk of the burden of their staff, allowing them more time to focus their energies on growth-focused tasks. This delegation of responsibilities to external professionals allows small business owners and staff to focus on innovation R&D and pursue growth opportunities with greater agility and efficiency. Moreover, outsourcing accounting functions relieves business owners and managers of the day-to-day complexities of financial management, allowing them to devote their energy to driving business success and achieving long-term objectives.

Pros of outsourced accounting:

Cost-saving potential: Outsourcing saves money, making it a cost-efficient tool for startups and small businesses with limited resources. 

Increased efficiency: Focusing on core activities enhances efficiency, while outsourcing allows specialists to handle non-core tasks. 

Enhanced quality: Outsourced companies bring expertise and experience, elevating service quality.

Cons of outsourced accounting:

Intellectual property risks: Sharing sensitive business information with third-party providers poses potential dangers to proprietary methodologies or technologies. 

Loss of control: Outsourcing results in relinquishing some control over processes, necessitating a high level of trust in the outsourced company’s ability to maintain quality standards. 

Ethical considerations: Outsourcing may be perceived as taking business away from local areas, leading to potential backlash from the public and stakeholders.

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The Key takeaway:

In conclusion, outsourcing accounting services presents a strategic opportunity for businesses seeking to optimize their financial operations and focus on core activities. However, it’s crucial to recognize that while outsourcing offers immense time-saving benefits, thereby enhancing efficiency, it also entails certain risks, particularly regarding control and intellectual property. Just as with any business decision, careful consideration of the specific needs and circumstances of the organization is essential when contemplating outsourcing accounting services. Businesses are equipped to make informed decisions that catalyze long-term objectives and priorities by assessing the potential benefits and risks and conducting a thorough comparison. Outsourcing accounting services is a valuable tool that drives growth, provided they approach the process with diligence and foresight.

Want to know more? 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 get in touch with us here.


Devayani Bapat
Devayani Bapat

With 6 years of experience in copywriting and social media management across genres, Devayani's heart lies with weaving words into stories and visuals into carefully crafted narratives that’ll keep you wanting more. She carries with her, her pocket notebook, a trusted confidante that goes with her wherever she goes, and scribbles down into it anecdotes on the go. Her secret weapon for keeping all things copy interesting! Apart from writing, Devayani is huge on travelling. You'll find her booking her next adventure while she's on her current one. And while on those adventures, you'll find her devouring true crime books one after the other. Whether it's a low down on a recent case or one that occurred 70 years ago, she can cook up a story narration you'll never forget.

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