Advantages of hiring external services for accounting and bookkeeping
An overview of accounting outsourcing
For small businesses, start-ups and entrepreneurs, hiring an accountant with the right skills to handle financial statements, bank account operations, analyze financial data and prepare invoices can be a daunting task. Finding a qualified person who additionally won't put too much strain on a company's modest finances can be even more challenging in today's market. This is the main reason why more than 1/3 of small businesses outsource their bookkeeping, even though it is widely believed that bookkeeping should be done in-house.
It is important to ask yourself whether you and your staff have the necessary skills and experience to handle the often very complex accounting tasks. By outsourcing your accounting services to a qualified firm with the right knowledge and qualifications, you can focus more on your work and responsibilities and get them done more efficiently and cost-effectively.
Many executive directors have seen the positive effects of outsourcing bookkeeping and accounting services without any adverse effects on their business, employees, or customers. Our clients in Denmark, Norway, Sweden, and Switzerland have experienced the top 7 benefits of outsourcing bookkeeping and accounting, which we will share with you.
The cost-saving benefits of outsourcing accounting services for your business
Many businesses think that outsourcing is an unnecessary additional cost. But, in fact, outsourcing accounting services can save you money without compromising the quality of the work. Outsourcing companies can offer their services at lower cost rates due to lower labor costs in their location. By outsourcing, you only pay for what you need, and you can save money on salaries, taxes, office supplies, and benefits for full-time or part-time employees. Plus, there are no productivity costs associated with hiring full-time employees.
The recruitment process takes a lot of resources to manage, from creating a recruitment strategy to selecting applicants for interviews. It's time-consuming and costly for your business, and you'll need to dedicate time either for yourself or the employee. Outsourcing eliminates this process, saving you time and money.
As your business grows, you'll find yourself spending more time managing your money and less time scaling your business. Outsourcing administrative tasks like bookkeeping and accounting helps you focus your time, energy, and resources on creating business strategies, bringing in more revenue, networking, and building relationships with your customers.
Outsourcing can give you access to highly skilled professionals at an affordable price. When you outsource your accounting and bookkeeping tasks, you are working with a firm that is continuously improving its skills to stay competitive. They have access to training, courses, and other resources to stay up-to-date with the latest accounting trends and solutions. By outsourcing to an accounting firm, you get access to a team of accountants who are knowledgeable and reliable.
Accounting service providers can easily scale your services without the need for a rigorous recruitment process. If your accounting tasks exceed the capacity of one employee, you can easily add more workforce without any lag. Accounting and bookkeeping service providers charge on an hourly basis, allowing you to scale up or down the hours as needed.
Most businesses use accounting automation software to save time and reduce risks. Automating accounting reduces human errors and provides real-time reports to catch potential problems early. It also reduces the probability of internal fraud. Accounting service providers are highly qualified in using automation tools such as Quickbooks, Sage, Visma, Xero, Microsoft Dynamics, SAP, and more. If your accountants are still using only Excel sheets, you may be wasting your time and money.
A good accountant will always provide advice on how to make accounting more efficient. They can work with multiple companies and share their experiences to provide financial advice and help with taxation and accounting software.
When it's appropriate to outsource your accounting and bookkeeping services
Based on our experience working with various Scandinavian and Western companies, outsourcing bookkeeping and accounting services can be an excellent option under the following circumstances:
1. Small businesses that don't need a full-time bookkeeper, but require someone with more skills than an office manager or receptionist can provide.
2. Companies of any size that can't afford a full-time employee with suitable abilities.
3. Growing companies that want to scale their accounting and bookkeeping services as needed.
4. Temporary services are required, such as extra help with end-of-year reports or covering for full-time employees who are on holiday, maternity leave, etc.
However, even if you hire a skilled and qualified person, the executive director or someone in a similar position will still need to be involved in the process. This may involve approving invoices, making deposits, reviewing timesheets, and so on.
5 factors to consider when choosing an outsourcing company for your accounting needs
Once you have made the decision to outsource your accounting and bookkeeping services, the next step is to choose an outsourcing company that is the right fit for your needs and goals. Efficiency and quality of performance are important factors to consider when outsourcing, but there are other essential factors to keep in mind as well.
1. Determine the services you need
You need to be clear on what you need help with, whether it's preparing monthly reports, managing payroll, handling accounts payable and receivable, or just entering data into accounting software. Knowing what you need assistance with will help you find an outsourcing company that can provide the specific services you require.
2. Consider cost
Each accounting and bookkeeping company has their own payment scheme, some charging by the hour and others charging a monthly fee. It is important to choose a payment term that works for your budget, but cost should not be the only factor to consider when making a decision.
3. Look for expertise
Ensure that the company you choose has the right qualifications, experience, and professionalism to handle your accounting and bookkeeping needs. Ask for recommendations from previous or existing clients, check their reputation in the market.
4. Protecting Your Data
When you outsource your accounting services online, it's important to make sure your data is kept safe and secure. A reputable firm will ensure that all your financial information is treated with the utmost privacy and that all transactions are secure. This is especially important because you'll be sharing not just cash flow information, but also confidential data.
5. Flexible Service Agreements
When you're looking for an accounting and bookkeeping service provider, it's important to find one that's flexible and can meet your future needs. Make sure to review the terms and conditions before signing a contract so that you know how to terminate the agreement if you're not satisfied with the service.
6. Accounting Tasks You Can Outsource
You can outsource a variety of accounting tasks to a third-party provider, including bookkeeping, reporting to authorities and management, payroll processing services, account payables (creating payments), account receivables (following up with debtors), and payroll.
If you hire a big-five accounting firm to perform an audit, you cannot use them for your accounting and bookkeeping functions. This is because of independent regulations and standards within the accounting profession.
Outsourcing your accounting tasks can be a great decision for your business. It can save you money and give you more flexibility in terms of contracts and scaling the number of functions. Accounting and bookkeeping can be complex and time-consuming, and require specific knowledge. If you don't have accounting experience, you might make errors that could hurt your business or even lead to bankruptcy.