What is Outsourced Bookkeeping and the benefits for your Business?
Considering the importance of keeping your finances in order, the importance of having a highly skilled and responsible bookkeeper is essential to any company.
- What is Outsourced Bookkeeping?
- Who should use Outsourced Bookkeeping?
- What are the Benefits of Outsourced Bookkeeping?
- Technological Advancements in Bookkeeping
- Pitfalls of Outsourced Bookkeeping
1. What is Outsourced Bookkeeping?
Outsourced Bookkeeping is the process where a business contracts out all the responsibilities of its books to an individual or accounting firm without hiring them directly into the company.
2. Who should use Outsourced Bookkeeping?
No matter the size of your business, or the industry you are in, the process of hiring an accountant or bookkeeper can be a daunting task. Along with the usual challenges of recruitment, finding someone with the right skillset at an affordable price can be very difficult.
As with many outsourced services, the use of outsourced bookkeeping can allow you to access a high level of experience at a fraction of the cost. By simply not directly recruiting the person/firm, you can save on basic expenses such as insurance and taxes.
In this article, we will highlight the benefits you can gain from the process of outsourced bookkeeping, but also inform you of any pitfalls so that you can make the best decision for your business.
Your priority, especially as a start-up or small business owner, should be the decision as to whether you need a bookkeeper or an accountant. Is there a more important role or responsibility that will benefit your business at its current stage? What is more crucial or necessary for you? In most cases when it comes to the financial aspect of your business you should be as strict and organised as possible.
If the decision is that you need greater control over your finances, then the second check on your list should be to highlight the difference between an accountant and a bookkeeper, and which one it is that you require. Although aligned within the same industry, there are many differences between the two professions. The main differences are the qualifications and services provided.
Accountants, namely Chartered Accountants, are qualified to perform bookkeeping duties and as such can be used to perform outsourced bookkeeping duties. But the difference here is that an accountant will be better qualified to deal with a much broader range of services, such as overseeing financial data, analysing data and offering financial strategies. A bookkeeper, whilst maybe possessing the knowledge to do many tasks, cannot sign off on tax documents or audits.
The reason this is a crucial element for you as a business owner is to make sure you are aware of the actual services you need before making a decision. Accountants may be more expensive given their qualifications or bookkeepers may not be qualified for the tasks you require. If you are confused as to where to look, most accounting or bookkeeping firms will offer a free consultation before partnering, so don't be afraid to make a couple of appointments and speak to the professionals.
3. What are the Benefits of Outsourced Bookkeeping?
As mentioned above. The main benefits are regarding cost and experience, but for varying reasons.
- Training and Management
Although there are many parts of financial management that different workers may feel comfortable with, the professions of accounting and bookkeeping are ones that require specific qualifications, ones that do not form a part of a normal degree course. In this sense, it can be difficult for a business owner or manager to actually train a bookkeeper as the bookkeeper more than likely knows much more about the processes and procedures than you.
- Get MORE for your money
To put it simply, outsourcing services is usually down to cost. But the main benefit of outsourced bookkeeping is that you should be accessing a much higher level of expertise and knowledge than if you were hiring someone full time for your business. Consider that the person or business you are outsourcing to is trying to run their own business just like you are, and therefore (once you make the right choice) are looking to provide you with the best possible service so that they keep you as a client long term.
When looking at outsourced bookkeeping, this is a particularly important element for a start-up or small business with ambitions to grow or are entering a growth stage already. Focusing on scalability in any business is extremely important and is often one of the major challenges for any growing business. Having this critical part of your organisation outsourced to a firm you trust and that is already set up to deal with your scaling needs can be a huge weight off the shoulders of any business owner.
- Flexible Agreements
The landscape and needs of every business are different and in today's world, usually changing also. Maybe your greatest need is in general bookkeeping, but maybe you would like an added-on service such as payroll? It's possible that you have good control over your financial documents and merely need a qualified eye to look over things a few times a year. Many businesses are seasonal and only need a small range of services at specific times. All of these situations are better handled by outsourced bookkeeping as you will be able to find an agreement instead of having a full-time staff member sitting on their hands for half of the year.
- Concentrate on your Business
Arguably the most important benefit of outsourced bookkeeping is the enablement of your focus where it matters - on your business and your value offer to your clients. Therefore businesses pay top dollar for experts in different fields, and it's the reason so many hours are wasted when businesses don't. Why waste your time and efforts on an area you don't understand when there is a cost-effective solution right in front of you? This gives you back the time you need to concentrate on the reason you started your business in the first place. Allow yourself to focus on your clients and how happy they are with your product or service.
4. Technological Advancements in Bookkeeping
Every aspect of our daily lives is affected by technological advancements, and it will come as no surprise that the world of accounting is being positively affected by technology also. While many business owners may choose a simple logbook or Excel sheet to record transactions etc., the scope of expertise that you can gain from outsourced bookkeeping reaches further than simply best practises.
There are now many different software platforms that can be used no matter the size of your company, and this is also one of the reasons that can make outsourced accounting even more cost-effective. Most accountants and bookkeepers are using some form of cloud-based software, and part of their service will be to implement and train you on a certain service. Although there will be a learning period for you and your staff, you will further streamline your business and allow for less time to be spent on these tasks in the future.
It is always a good idea to educate yourself in anything that may help your business, so check out our list of Best Accounting Software.
5. Pitfalls of Outsourced Bookkeeping
Although we have seen the many benefits of outsourced bookkeeping, with any decision for your business, the pitfalls must be investigated. The negatives we are highlighting below may be common and seem obvious, but in most cases in business, it is the little things that matter the most.
Unless you have the cure for the common cold or the secret to growing money on trees, your financial documents hold the most important and confidential information possible for your company. As with any relationship, make sure to shop around and get as many references as possible.
- Hidden Costs
If you are choosing outsourced bookkeeping with cost-saving in mind, then you must be sure that you have outlined everything you need from them or made it clear that they inform you of everything that you will need. Especially with a growing business, work and tasks can accumulate and lead to costs you didn’t realise from the beginning. This does also come under trust, but as long as you have been clear and communicate well, this should not be an issue.
One of the downfalls of any service that you have outsourced is communication. Of course, not being able to walk down the hall for a quick chat can pose small problems. But with more and more companies learning how to communicate effectively with such things as work from home, this is all down to aligning expectations from the beginning of the relationship. Ensure that you have regular meetings set, with a direct contact for any urgent needs.
As any business owner knows, you want to get the best talent and knowledge for the most affordable price. This in turn is what leads most businesses to outsource certain projects or tasks in order to gain from more qualified and skilled individuals or businesses so that their companies can benefit to the highest degree.
But the usual problem is what delays or stops businesses from doing so - how to find the right partner?
We all know about fake reviews online and not all of us have a network that can fulfil our needs, but when it comes to outsourced bookkeeping, you can find exactly what you need at WELINK ACCOUNTANTS. In just a few clicks you will find a bookkeeper who deals with your industry, as close as possible to you geographically and has their contact details listed for you to contact them for free. No middleman, just a service that will connect you to the individual or firm that will perfectly suit your needs.