The traditional American business structure calls for various departments within the organization. There’s sales, marketing, advertising, shipping/logistics, IT, accounting, etc. Each of these departments is led by a manager who reports directly to the company’s CEO, president, or owner. The segmentation works by splitting up responsibilities so that every individual within the organization has a crystal clear understanding of what they do and whom they report to.
Though there’s nothing wrong with this traditional structure – and the majority of large Fortune 100 companies use a very similar setup – it’s not designed with every type of company in mind. In particular, small businesses don’t always have the manpower and resources to work within these constraints.
In these situations, it often makes sense to outsource certain arms of the business. And if you’re looking for somewhere to start, finance and accounting services are a natural fit.
What is Finance and Accounting Outsourcing?
In simple terms, outsourcing is the long-term contracting of a company’s business processes to an outside service provider with the intent of maximizing resources, skills, and output. Outsourcing typically involves non-core functions that can be handled with equal or greater results by someone outside of the organization.
Because of the technical, time-consuming nature of the responsibilities, many small businesses make the decision to use outsourced accounting services and/or consulting firms to handle the day-to-day financial duties that come with handling accounts payable, accounts receivable, invoicing, taxes, and other important financial management duties.
The 8 Biggest Benefits of Outsourcing
The accounting function of your business is an important one. But with so many other office tasks on your plate, outsourced accounting services are worth a second look.
Here are some of the key benefits your business will enjoy by shifting to this approach:
1. Reduces Costs
Money talks. While the decision to outsource your finance and accounting functions shouldn’t be purely monetary, it helps to know that you’ll save money in the process.
Take a moment and think about what it costs to maintain an in-house accounting department. Even if it’s a small team – say two people – you’re spending a significant chunk of money keeping things up and running. There are salaries, payroll taxes, benefits – including health insurance and retirement contributions – equipment, office space, and the list goes on and on. When you outsource, your costs are much lower and more predictable. You don’t have to pay for benefits, office space, payroll taxes, etc. This can save you thousands of dollars per year.
2. Saves Time
Time is one of the few things businesses can’t buy more of. When you outsource finance and accounting, you can reclaim hundreds of hours of precious time each year that would otherwise be spent pouring over spreadsheets, reconciling accounts, addressing cash flow, and performing dozens of additional office tasks that ultimately yield minimal immediate ROI.
An outsourced service has the people, systems, and expertise in place to efficiently handle all of your accounting functions. What would take you days to complete internally only requires a few hours. It’s a far more efficient way to run your business.
3. Enables Strategic Redeployment of Staff
Because of the significant challenges that accounting presents, many small businesses ask employees to perform double-duty and help out with tasks like data entry and financial reporting on top of their own daily responsibilities. This bleeds companies dry and leads to friction, frustration, and high turnover.
When you outsource your accounting to another firm, you’re able to strategically redeploy your staff, maximize time, and reduce the frustrations that come with forcing employees to handle tasks that are outside of their wheelhouse.
4. Increases Access to Latest Tech
Businesses that do all of their own finance and accounting often have trouble keeping up with the latest technologies and innovations in the industry. It gets expensive updating software and buying new products. It’s even more expensive to train employees on how to use them.
Outsourced finance and accounting services have to stay up to date in order to remain competitive in their field. Thus, when you work with one of these companies, you benefit from having access to the latest technology at no additional cost to your business. This makes you instantly competitive without paying a premium.
5. Improves Likelihood of Following Rules
Finance and accounting aren’t like marketing and advertising. Whereas there may be room for creativity and interpretation in the latter areas, you must follow stringent rules and requirements in the former areas (otherwise, you could face stiff financial and legal repercussions).
When you use an outsourced service partner, you don’t have to worry about staying up to date on all of the newest trends and changes. When tax laws are adjusted or the IRS tweaks how your business has to report something, you don’t have to spend hours researching how to respond. Instead, your outsourced accounting service takes the lead.
6. Offers Total Scalability
Ask any small business owner about growth and they’ll tell you that it’s a good thing. After all, growth means more sales, higher revenues, and (presumably) greater profitability. However, there’s a dark underbelly of small business growth that few talk about: scaling up in an efficient and cost-effective manner.
For small businesses that lack the proper resources and strategic vision, scaling up in response to growth can be highly problematic (and even fatal). It can expose faults in the foundation of the company and generate more problems than answers. When you outsource your accounting, you don’t have worry about growth negatively impacting your finances. That’s because outsourced accounting is infinitely scalable. There’s no need to hire more people, add office space, or change the way business is handled. Everything is handled for you.
7. Enhances Data Security
When you handle your own finance and accounting services, you have to constantly be aware of data security and the risks you face. And no matter how skilled your team is, you’re always reliant on (a) the security features of the software you use and (b) the security of your servers and networks that house the data. If either of these becomes compromised, serious trouble will follow.
Outsourced accounting services understand the serious threats that exist in regards to data security and go to great lengths to establish robust and impenetrable security systems that would otherwise require a huge investment on your part. This allows you to save money and avoid the issues that come with data breaches and security compromises.
8. Lowers Overall Stress Levels
At the end of the day, outsourcing your company’s finance and accounting responsibilities provides huge emotional relief for you and your employees. It’s one less thing you have to worry about or stress over – particularly at the end of each financial quarter and year.
Instead of stressing out over accounting, your team’s time, energy, money, and creativity is freed up to build the brand, engage customers, and convert leads into sales. And if we’re being honest with ourselves, this is a far better use of everyone’s resources.
Outsource With Taxfyle
At Taxfyle, it’s our mission to make finance and accounting outsourcing as easy as possible. When your business contracts with our company, you benefit from working with vetted and licensed tax professionals with years of experience. As a result, you’ll enjoy expert financial reporting and exceptional accounting at scale.
Ultimately, this leaves you with the time and resources to focus on other integral aspects of building your brand. For more information on how outsourced accounting services can help your business, request a demo today!
