No matter how small or large your business may be, you’ll still need to focus on and manage two main areas of your company: finance and accounting. But these two areas can be very time-consuming, especially as your business grows and becomes more complicated.
While it’s possible to do everything in-house, outsourced finance and accounting services are becoming increasingly popular with small businesses because they can free up so much time and attention while still delivering high-quality results.
What Is Outsourced Finance?
Most business owners are familiar with outsourced marketing or externalizing their sales force. However, many do not consider outsourcing their financial services.
According to the (IAOP) - International Association of Outsourcing Professionals, outsourcing financial accounting is a service provided by a third-party firm that manages an organization’s financial resources, including receivables management, billing processing, and reporting.
In other words, all of these functions fall under financial outsourcing.
For example, many business owners have their own accounting department because they enjoy hands-on bookkeeping. However, if you are looking to cut costs without compromising your cash flow, then outsourcing your financial accounting can help you achieve that goal.
Outsourcing finance services frees up more time for you to spend on growing your business. They also provide a cost-effective solution to many small businesses.
What are the Benefits of Using Outsourced Accountants?
There are many benefits of using outsourced accountants as opposed to a company’s in-house accountants. Perhaps you do not want employees to have access to financial information or are looking for greater privacy.
Or perhaps you need specific expertise that is not available in-house. Whatever your reason, outsourcing accounting services can benefit you greatly. Here are some clear benefits of outsourcing your accounting function:
- Ability to hire talent from around the world
- Reduced operational costs and flexibility
- Security and Data enhancements
- Operational Continuity
How Do I Use an Outsourced Accountant?
Companies can benefit from using an outsourced accountant in a number of ways.
You may want to outsource bookkeeping and tax preparation functions, outsource payroll services, or simply meet with an accountant on a regular basis for help with financial planning.
Whether you decide to hire full-time accountants, bookkeepers, or a mixture of both depends on your needs.
How Does a Company Find an Accountant?
If you’re looking for an accountant, make sure to conduct extensive research before making a decision. You want to find a CPA that knows how to handle your business’s needs.
Accountants may have various specialties. Hiring a general accountant is often more than sufficient for a small business owner like yourself. It will allow you to outsource receivables management as well as outsourcing your financial planning services instead of trying to do them in-house by yourself or trying someone new on every company.
Once you find a candidate, look into how long they’ve been in business. Stay away from companies that have just been founded.
A CPA that’s been in business for several years is more likely to have experience working with businesses like yours. This can help ensure your accounting department stays on track.
Is Outsourced Finance and Accounting Right for Your Business?
The first step to success is recognizing your company’s finance and accounting needs. As a business owner, you may be spending up to 40 hours per week on financial tasks like receivables management, balancing ledgers, financial analysis, and investment planning.
When you decide to outsource your finance and accounting services, you are making time for growth by clearing up your schedule and time to work on tasks that will actually help grow your business.
Having a dedicated team of experts on hand to deal with finance and accounting issues frees you up to work on your company rather than in it.
As discussed previously, outsourcing allows you to free up time for more critical tasks, like planning and preparing for growth.
And when you’re working with a financial partner that can handle payroll processing, compliance management, and other day-to-day bookkeeping tasks, those hours add up quickly. Considering all of this, working with a financial outsourcing firm is a wise decision.
How to Choose an Outsourcing Provider?
Here are a few vital points to ask yourself when you’re researching outsourced financial services:
- Do they have industry-specific expertise?
- Are they licensed and registered in your area of business?
- What is their average turnaround time for projects that come through their door?
- Do they provide any KPI reporting?
- How would you rate them on responsiveness to clients, quality of work, consistency, and overall customer service?
Basically, you'd want to make sure that your outsourcing provider can satisfy all of your financial needs at a reasonable price point. If you don’t ask these questions upfront, then there’s a good chance you won’t be happy with their service when it comes time to close projects.
How Do You Budget When Startups Don’t Have Much Money?
Most small businesses start with a bootstrapped budget, which basically means you have very little to spend on anything other than your product or service.
If you’re using cash flow accounting, then you need to manage your expenses carefully so that there’s enough money to pay for all of your incoming invoices.
Luckily, there are plenty of ways to save money in every department while also managing your debt and credit effectively—starting with outsource receivables management and continuing through outsourcing finance services.
That said, keep in mind that you don’t have to use cash flow accounting if it doesn’t make sense for your business.
While many small businesses do find it helpful because it forces them to be frugal with their spending, others simply set up their accounting software so that they can record all of their expenses on one schedule. It’s up to you! (And your accountant.)