Growing an organization is good, but it typically means dealing with more complicated financial accounting.
Outsourcing enables companies of all sizes to handle a variety of problems, including staffing shortages, a lack of specialized knowledge, and disorganized or insecure financial records. The ability to scale, direct access to specialized accounting experience, the reduction of turnover, the availability of tools and processes, and flexibility are all advantages of outsourcing.
After the COVID-19 epidemic, many CEOs and corporate executives are confronted with difficulties such as shifting customer trends, fierce competition, growing digital technology, and the new normal of employee expectations for workplace flexibility.
For firms of all sizes, especially those that are expanding quickly, these ambiguous economic factors and cultural transformations are putting more pressure on staffing. Although it can be tough to get over these barriers, they also give a chance to challenge the “status quo” and improve back-office performance.
Outsourcing gives a significant chance for CEOs to handle any workforce difficulties or business challenges as they navigate the unpredictable pandemic tailwinds and prepare to enter a new age of growth. It gives you the ability to temporarily access specialist insight, generate value before a significant transaction, control overhead costs, and modernize and reenergize company processes.
According to a recent study, 59% of all organizations use external services, with accounting being the most frequently outsourced task. What benefits will outsourcing your accounting department provide to your company?
In this post, we’ll examine five signs that this approach may be appropriate for you and go through the main advantages of outsourcing or enhancing your accounting function.
Five signs your business may benefit from outsourced accounting
To decide whether your company would benefit from outsourcing its accounting needs, consider the following questions:
1. Is your business growing quickly?
Let’s say you’re getting a substantial boost in income—well done! You’re on the fast track to success because your business concept is working. How are your costs, profits, and working capital faring, though? Depending on how you respond, it can indicate that your accounting requirements are changing, there are greater dangers of a breakdown, and more is at stake. It might be time to make sure your present internal team is equipped and staffed properly to undertake these new duties.
2. Do you need help to keep up with your accounts receivable or payroll?
You can determine whether your team is understaffed if you consistently miss important deadlines or experience difficulties collecting money from your accounts receivable on schedule. The failure to gather and follow up on outstanding accounts receivable is crucial to supporting current and future growth and is directly related to being unable to fulfill your payroll obligations, which represent one of the biggest costs for any company. If anything slips behind, you can be in a tough spot if you can’t get financing or cash.
3. Are your financial records organized and producing usable data?
In addition to ensuring compliance, your accounting department should direct your company’s financial management. To help you make wise decisions, organized financials provide a clear account of income, expenses, and investments. Strained or inexperienced accounting staff will struggle diligently to uphold compliance. It might not be able to or have the essential expertise to lead your financial scorecard to add value to the firm.
4. Do your accounting needs fluctuate significantly throughout the year?
Finding the ideal balance between bringing on top talent and the pace at which new recruits become familiar with corporate procedures can be difficult. Consider a scenario where your company sees major changes in labor productivity based on the calendar year, your tax returns are filed late and have huge overages from the tax preparers, or your audits have a significant number of revisions. If so, it can indicate that your accounting team is incapable. By outsourcing your workforce, you may save expenditures when business is slow and get the services you need when you need them.
5. Are you concerned about financial security and checks and balances?
If your internal accounting team consists of just one or two people, you could be vulnerable to hidden hazards. The checks and balances that help reduce the risk of fraud and asset misappropriation can be provided by an independent team.
If you said “yes” to any of them, you might want to consider outsourcing some or all of your accounting duties. The right external resources can accelerate your company’s growth and improve operations, frequently at a lesser cost than setting up an internal accounting division. With an outsourced accounting team, you have rapid access to competent personnel trained in the technical accounting you require.
Benefits of outsourced accounting services
1. Cost and time savings
Maintaining full-time staff can be expensive, and labor costs are often among the greatest outlays for most businesses. You may focus on expanding your company and spend less time managing accounting by using an outsourced team.
2. Direct access to specific accounting expertise
Every firm has unique needs since every company is unique. Through outsourcing, you can get the service you require when you require it. A workforce that has been outsourced will have experience with a variety of accounting and reporting standards, such as GAAP, IFRS, GASB, etc. Additionally, they can offer particular expertise in M&A transactions, capital raising, growing, or shrinking operations.
3. Minimize turnover disruption
You can concentrate on what’s most crucial: making money, knowing that an outsourced accounting team won’t ever abandon you. Each employee plays a critical role in the development of a small company. When one of them dies, the chaos they leave behind can present new difficulties.
4. The ability to scale
Your company can suddenly go through growing pains if your fortunes change if it has expanded quickly. When business is booming, you might need to add more workers to keep up with demand. However, that also implies that you might have to fire workers during a recession. With the help of outsourcing, you may take on extra work without adding to your staff or cutting back if it becomes too much for you.
5. Tools and processes
You should always aim to reduce overhead expenditures, regardless of the size of your firm. By outsourcing, you might save money on particular equipment or procedures that you might otherwise need to run your business. You can get the skills and tools you need to succeed from the proper outsourcing team.
6. Flexibility
You can plan — and adjust, as necessary — by outsourcing particular tasks. Consider that you are preparing to make a significant trade or another market move. If so, an external CFO can offer tactical knowledge as needed.
Your financial accounting requirements expand in complexity as your business expands. Your in-house accountants may only be able to handle the fundamentals, so outsourcing to expert teams with specialized expertise and experience can provide precisely the kind of service you need — and give you the time you need to concentrate on the organization’s other demands.
Tax Smart has a big outsourced accounting staff that is made up of CPAs with a variety of professional specialties and industry backgrounds. We’ll present the best option to satisfy the requirements of your business.
We can provide you with the people, procedures, and technology you need to advance your organization, whether your goal is to simply add more financial knowledge to your team or to implement a full accounting transformation.
