Entrepreneurs are very busy, which means they typically don’t have time to handle all of the accounting responsibilities necessary to operate their businesses. Outsourcing is one option for companies, but some entrepreneurs aren’t sure which accounting services they can outsource.
Outsourced accounting services are becoming a popular choice among businesses that want to reduce their overhead expenses and increase efficiency at the same time. Entrepreneurs who outsource their accounting services can save time and money, getting access to high-quality accounting services and proactive advice for their important financial decisions.
Generally, the individual goals and needs of a company drive the process of choosing outsourced accounting services. However, an outsourced firm can handle multiple accounting functions simultaneously. Check out these types of accounting services that can be outsourced.
1. Accounts Receivable/Accounts Payable Management
Accounts receivable (AR) and accounts payable (AP) management are two popular outsourced functions. You can consider outsourcing your AR services to make sure that companies are paying you on time. An outsourced AR/AP service can also take care of some or all of the following tasks:
- Invoice imaging and storing
- Invoice approval
- Expense reporting
- Online payment approval
- Check processing
- Handling of vendor inquiries
- Order management
- Customer billing and payments
- Collections management
- Cash forecasting and reporting
- Debt management
Advantages of Outsourcing: 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 developing new products.
2. Bookkeeping Services
Bookkeeping is a continuous and repetitive activity that can take much of your team’s time. But with the advent of cloud bookkeeping software, outsourcing your bookkeeping functions has become much easier. Outsourcing this service can provide you with comprehensive reports that increase financial data visibility and lead to informed decision-making. By outsourcing bookkeeping functions, you can free up your resources from handling the below tasks.
- Employee expense processing
- Balancing ledgers
- Multi-entity and multi-currency consolidation
- Order to cash management
- Procure to pay/e-payments handling
- Subscription/maintenance renewals management
- Time and expense management
- Invoice processing and payments
- Accounting/bookkeeping software setup
Advantages of Outsourcing: Outsourcing your 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. They can keep your financial records up-to-date and accurate while helping you eliminate errors, mistakes, omissions and oversights in your financial documents.
3. Drafting Financial Statements/Reports
Preparing financial documents and reports for external and internal use requires the primary expertise of accounting firms wherein a team of Certified Public Accountants (CPAs) consolidates your expenses and earnings through financial statements. Thus, they can help you track your cash flow.
CPAs maintain your accounting books by recording and updating all pertinent information while ensuring the accuracy and security of your financial data. They can also create your financial reports if you want to disclose your financial performance with board members, stakeholders or the general public.
Advantages of Outsourcing: Your outsourced accounting team can provide timely advice to your organization to solve cash flow problems and avoid any future issues. Your outsourced partners can also provide you with powerful analytics to help you understand budgeting so you can always make informed decisions.
4. Controller Services
Outsourcing your controller services can help you grow your business with strategic guidance and management. It can also provide you with accurate and timely financial reporting and insights. Outsourced controller services typically involve performing the following tasks:
- Audit reporting
- Compliance management
- Employee and vendor communication
- Management reporting
- Policy and procedures guidance and adherence
- Transactional processing oversight
- Cash flow analysis
- Review and preparation of performance indicators
- Review of services or product line efficiency
- Overseeing the overhead expenses and implementation of cost-reduction methods
- Key performance indicator (KPI) reporting
Advantages of Outsourcing: The outsourced team can provide you with 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. They can also provide you with audit support and assist you with added financial reporting as you grow through the years. The team can provide your company with solutions to improve overall cash flow and deliver effective cost control measures.
5. Financial Planning and Analysis
Outsourcing your financial planning and analysis can provide you with an in-depth evaluation of your organization’s financial position to help you make the right business decisions. Outsourcing this service can also give you access to resources 24/7. You can get all required financial data whenever you need it, simultaneously managing the below functions efficiently.
- Preparation of management reports
- Process mining
- Data collection and interpretation,
- Acquisition integration support
- Audit support
- Board and bank reporting
- Company financial data analysis
- Investor communication and reporting
- Planning, budgeting, and forecasting
- Cash flow forecast reports
Advantages of Outsourcing: 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.
These reports can help you predict future costs and revenues and make well-informed decisions. Such 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.
6. Cost Accounting
Cost accounting is an integral part of accounting services that determines the actual costs associated with product manufacturing or rendering a service. Cost accountants work closely with manufacturing, supply chain, marketing and R&D functions to help you make pricing decisions.
Advantage of Outsourcing: Outsourcing accounting services enables 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.
7. Fraud or Forensic Accounting
Forensic accountants can assist a company that has been victimized by fraudulent activities or in which the accounting contact has left without leaving behind any accurate books. Outsourcing this service can help you reconstruct the records of a destroyed business, restore missing documents and much more. Your outsourced team can also analyze your internal processes to ensure productivity, improve security and protect assets from future fraud attempts.
Advantages of Outsourcing: 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. Tax Reporting and Filing
The key to successful tax preparation is finding an outsourcing firm that can help you stay compliant with local, state and federal tax laws. Your outsourced accounting firm can help you minimize vulnerabilities to various accounting and financial computation errors that may affect your business operations. CPAs can submit your returns and declare taxes properly before prescribed deadlines. Outsourced tax preparation services involve several functions to boost proper management of corporate taxes, such as:
- Federal and state income tax returns preparation for businesses
- Tax assistance for collection, filing, remittance and maintaining compliance with tax regulations.
- Franchise tax support
- Payroll tax collection, filing and payment
- Tax planning to decrease a company's tax burden and minimize risks
- Reviewing statements for compliance.
Advantages of Outsourcing: 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 tax laws. Thus, you’ll always be on top of the new tax or accounting requirements and potential changes on the horizon.
9. Payroll Processing
By outsourcing payroll services, you can have access to the latest software versions for payroll processing. Such software can automate your payroll processes once you input the necessary information. With outsourcing, you can reduce the risk of any liabilities related to mistakes in payroll or income tax returns, which can attract heavy penalties.
Advantages of Outsourcing: Outsourcing provides you access to the best software and technology to make your payroll functions more efficient and reliable. In addition, your outsourced firm can adopt robotic process automation (RPA) to bring further efficiency to the process.