Is finance accounting outsourcing right for your small business

Oh, how I can so relate to this difficulty of doing multiple tasks and roles, especially if you are just starting with a small business; this includes inventory, marketing, recruitment, technology, and of course, the ever important, finance and accounting. Due to the nature of their businesses, small business owners are forced to multitask as they barely have enough capital, workforce, and time. Industry selection often proves most troublesome for non-finance entrepreneurs mainly in the finance and accounting segment.

Are you losing your sleep over bookkeeping, taxes, financial reporting, and other accounting chores? You are in good company. A lot of small businesses face issues with numbers while they have great ideas, good products&/services, and a desire to succeed. The good news is that there is an opportunity to address the issue with the assistance of professionals regardless of having not very large funds at one’s disposal. So, read the article below to learn whether F&A outsourcing can be beneficial for your small business.

Why Outsourcing Small Business Finance & Accounting Suitable for Small Businesses?

The trend of outsourcing of finance and accounting functions has now become quite popular over the last decade and has expanded beyond the traditional big business sphere. Technological advancements have enabled smaller organizations to outsource and attain professional financial help at a cheaper cost. Here are some compelling reasons to consider F&A outsourcing:

1. It allows you to reach financial experts without adding them to your payroll.

Sometimes due to financial constraints and the nature of the business, you may not be able to afford a professional financial controller. Professionals provide outsourced services whereby you get to have financial expertise on a part-time basis. In this way, you get the opportunity to work with a professional who is knowledgeable as a CFO, but you don’t have to break the bank to pay for the service.

2. Save Time & Money

It is time-consuming and even cumbersome when the company manages the finances in-house especially if one lacks accountants. This is especially true when these tasks are done by a qualified outsourcing firm; your main business operations are in the spotlight. This not only saves time but also costs such as cost of training, cost of salaries and other benefits, cost of turnover, cost of structure, etc.

3. Managing a large number of clients means an increased amount of work to be done in accounting without having to make it a chore.

The tasks in the field of finances and accounts are generally directly proportional to the size of your customer base and the number of transactions. Outsourced services are flexible and are much easier to scale up or down rather than struggling with an in-house talent acquisition department. This makes it possible for you to have much-needed maneuvering space to work on business development.

4. Reduce Compliance Risks

Taxes, financial reporting, payments, payroll – organize small businesses to a range of compliance obligations of which small businesses have no control over or knowledge, save for those imposed by authorities such as the Internal Revenue Service, and banking partners Working with outsourced accounting services helps mitigate compliance risk because each service provider provides a professional opinion on the regulations and the required procedures.

Certain accounting activities are best outsourced due to their complexity and importance in the company.

It is also possible to outsource the whole finance function but what most small business people do is to outsource specific accounting jobs. Typical activities well-suited for F&A outsourcing include:

- Accounting – recording, analysis, and checking of accounts
- Payroll processing
- Accounts receivable/payable
- Expense reimbursements
- Financial statements
- Sales tax/VAT filing
- Tax preparations

Besides, outsourcing CFO services is increasingly becoming popular among growth-oriented small business owners. Outsourced CFO services would assist businesses with cash flow, analytical tools, funding, and strategic advice.

The second topic is how to select the right outsourcing firm.

Here are some tips on selecting an outsourced accounting partner tailored for small businesses like yours:

- The ideal candidate should have prior experience managing the financial aspects of small businesses and their unique requirements.
- Search for the likeliness of employing competent and certified individuals such as CPAs, CAs, or other qualified accountants.
- Technical competence – do they have today’s sophisticated online accounting, analytical tools like dashboards, etc?
- Determine the use of capacity to increase or decrease services on a large scale when necessary
- If needed, extend your service offering to include accounts, taxes, payroll, or any other assistance that you may deem necessary
- Search for reliable accounting services that will provide accurate work with the visibility of the company’s finances.
- Find out how they ensure compliance with data security policies on financial information
- Enquire about the level of support provided to account managers to back-end operations.

Evaluate Cost Structures Carefully

Although the desire to cut costs is the primary reason small business owners look into outsourced accounting partners, the ones offering extremely low service price points should be compared cautiously. Sacrifices made in such aspects as staff knowledge, information protection, and supporting the IT environment are not without cost. Inadequate workmanship results in loss of financial visibility, compliance problems, and other factors that are not justified by short-term cost efficiency.

Also, be careful how outsourcing partners bill for the services; the companies that bill by the hour are considered more favorable for small businesses than companies that bill monthly.

Outsourcing Dos & Don'ts

Here are a few best practices to follow with accounting outsourcing:

DO:
- In selecting a vendor, conduct proper research and analysis about the vendor to be chosen.
- Begin with a small step allowing to outsource only one function like bookkeeping.
- Have a well-discussed RFP and architecture that defines the specific requirements.
- Before setting out, determine the quantitative measures you will use to gauge the achievement of your goals.
- First, audit raw work before agreeing to dedicated large volumes
- Another important requirement is to keep the ownership of source documents within the company.

DON’T
- Select initially long-term rigid contracts locking in all the contracts.
- Outsource everything without any in-between time for the company’s employees to handle the work and take on new responsibilities.
- They tend to hand over documents and not retain or copy the same.
- Approach vendors that have zero prior exposure to the context of small business.

Ready to Benefit?

It is not easy work to oversee the new start-up small firms that are stretched thin when it comes to resources to address aspects such as financing and accounting. Therefore, the timely and effective deployment of solutions that rid the company of burdens can significantly contribute to the enhancement of product/service orientation. As emphasized, outsourced finance & accounting services provide the following benefits: Industry knowledge of the processes, regulations, and tools that are suitable for an entrepreneur like yourself who is keen on sustaining innovation and generating value for your business. Deciding and delegating certain functions to efficient outsourcing vendors offer strengths needed in challenging organizations.

This means that it is necessary to assess the potential of your small business to benefit from F&A outsourcing about the guidelines highlighted above. The pros of outsourced support, with the right assessment procedures and partner choices, unveil still one more perspective for constructing enduring enterprises.

I believe this blog helps in deciding whether finance and accounting outsourcing is a useful addition to the rapidly growing small business. If you need any assistance in evaluating Outsourced Accounting implementation services that offer the needed expertise, technology, and cost platform that aligns with your business, let me know.