A Beginner’s Guide to Outsourcing Your Accounting
The accountancy profession can play a crucial role in helping businesses grow, so selecting a professional team or outsourcing your accounting is one of the critical decisions you will have to make as an entrepreneur.
However, one of the hidden advantages that many businesses don’t realize is that outsourcing your accounting function provides an opportunity to upgrade your financial processes, by instilling best practices.
So, to educate you on the correct steps for outsourcing, Reckon Services has put together a beginner’s guide to outsourcing your accounting. Through this guide, you will learn how to outsource parts of your accounting to save you time and money.
Outsourcing is in demand: Outsourced accounting is now the ideal strategy for ninety percent of small businesses, as it’s faster and easier than hiring an employee. It’s also more effective to work with an experienced accountant who knows what they’re doing, instead of using a bookkeeper with limited skills. Besides, using an outside accountant or firm affords you the flexibility to hire them on a part-time basis and adjust up or down as needed.
Adopt the 80/20 Rule: We’ve been doing this type of work for a long time, and one of the biggest lessons we’ve learned is that there’s no such thing as 100% outsourcing. Many people believe that they will never have to do any accounting work again once they outsource. Instead, the real goal is to shoot for an 80/20 split.
20% in-house: In other words, most businesses that decide to hire an outside accountant will continue to handle particular light, front-end functions including entering orders, invoicing customers, and paying bills. These tasks usually represent about 20% of the accounting workload, and they can quickly get done by regular employees, or by business owners themselves if they wish.
80% outsourced: In turn, your accountant’s job will be to handle the technical issues and back-end accounting work. It includes designing and maintaining your system, reviewing and matching transactions, managing your bank feeds and bank rules, reconciling key accounts, making journal entries, preparing accurate financial reporting, and keeping an eye on tax issues. These specialized tasks represent most of the real accounting work, and this is where you want a skilled professional in charge.
Here are some of the thing that you need to avoid while outsourcing accounting services:
Don’t go for the cheapest: The idea of outsourcing your accounting means a reduction in costs, but it doesn’t mean that you sacrifice the quality of work. ‘Cheap things always attract’ is something that we all agree on, but slaughtering your morals, will adversely impact your company’s reputation and goodwill.
Half knowledge is a dangerous thing: We are all aware that knowledge is power and research is all about creating new knowledge. So, outsourcing the accounting tasks that are outside your core competency is a viable option. However, before deciding on outsourcing certain jobs, you should do your due diligence and list companies that you can trust with your confidential data, as accounting is a business language that must be kept in safe hands.
Also, don’t hire a firm that just sends newsletters to your mailbox, as automated tools are available to handle these basic processes. Instead, choose a company only after you have complete knowledge about the procedures you want to outsource and how it will modernize your business workflow.
Advice From The Pros
Trust the action, not the word: Nowadays, genuineness is rare, so you should never be dependent on any outsourcing accounting firm’s words until you assess their actions. Therefore, consider keeping a separate manager who stays in touch with the outsourcing company and monitors their working efforts.
Outsourcing is not a straightforward solution to your problems: You should memorize the concept “master your strengths and outsource your weaknesses.” It will help you to outsource challenging financial tasks to a reliable company that charges an affordable cost. After all, the goal of outsourcing is reducing the inefficiencies and delivering quality services that will allow you to be more focused on day-to-day business activities.
Be proactive and scale: When you outsource your accounting, you can expect to minimize large investments in human resources, technology, and infrastructure, while maximizing your production, thereby scaling up and being able to react to change more quickly.
At Reckon Services, our goal is to exceed your expectations. As the go-to experts in Mississauga, ON, for all your accounting and bookkeeping needs, you can feel confident about outsourcing your company books to us.
We specialize in management reporting, financial controlling, corporate taxation, and personal taxation. We also offer payroll services for clients.