As we dive into the world of outsourced accounting, let’s have a look first at the tale of two entrepreneurs.
Entrepreneur A – One-off solopreneur client who was forced by the bank to seek the services of a CPA in an effort to secure a line of credit. They were surprised to see how much money their business was making and, in an effort, to do better, sought my help to set up and learn the intricacies of QuickBooks. I made sure they were aware that our firm would be happy to partner with them through our outsourced accounting services and they promised to give it some thought given the additional expense it would create. Today, they called in frustration because keeping proper records and doing his own accounting was too time-consuming.
Entrepreneur B – An outsourced accounting client who has been in Africa for almost a month, off the grid camping and doing safaris with little to no communication. Let’s be mindful that they have a booming medium-sized business with clients that require attention, but they don’t have anything to worry about because their outsourced accountant is putting in the work, reconciling their clients’ monthly reports, effecting transactions and payments on their behalf, reconciling the business’ bank accounts and extending support to other staff members.
Entrepreneur B got it right from the beginning, they knew that as a greenhorn entrepreneur, they needed to focus on the business’ core activities and that accounting was not their forte, so they outsourced the accounting aspect of the business to us while learning over the years what the numbers and trends represented.
Let’s look at some of the factors taken into consideration by Entrepreneur B that propelled her decision to outsource her accounting functions.
Why Outsource Accounting?
- The requirement for time and effort is significant and can take away from the focus of main income drivers.
- In-house accounting for small to medium businesses could prove to be pretty expensive and burdensome on the budget.
- Accounting requires knowledge of tax laws and regulations which can be quite complex. Not being able to keep up to date with changes in regulations can lead to mistakes and issues with unintentional noncompliance.
- Strategic thinking and planning are impaired when focus is directed towards trying to keep up with the demands of bookkeeping and reporting.
- Integrity is fundamental for entrepreneurs especially where investors are involved. Being able to provide timely and accurate reports provides a high level of assurance for all stakeholders.
- When an entrepreneur does not have a background in accounting, managing their finances can be stressful.
- Financial risk management is not at the top of an entrepreneur’s to-do list and being able to mitigate those risks, detecting and preventing fraud, proper internal controls, and cash flow management, is better left to the experts.
The Benefits Of Outsourcing Your Accounting Functions
Today was a eureka moment for Entrepreneur A because all of the above issues exist in their business as well. Fortunately, they have come to realize that there are invaluable benefits to be had through outsourced accounting so what are those benefits?
- Cost and Time Savings: more bang for your buck
Hiring an in-house accounting team means increased payroll, benefits and taxes, recruitment and training costs, increased supervision and management, and additional software and technology costs, just to name a few. An outsourced accountant already has the knowledge and access to the most up to date software and technology. Outsourcing frees up valuable time that could be better spent on strategy and other critical areas.
- Access to Expertise: they already know
Outsourcing your accounting allows you to tap into the expertise of experienced financial professionals that are often up to date with regulations, standards, and best practices.
- Focus On Core Activities: you do what you’re good at
By outsourcing accounting activities, businesses are able to focus on their core activities and strategic goals which increases productivity as resources are directed to primary business functions.
- Scalability: watch your business grow
The flexibility that comes with outsourcing is remarkable. Being able to direct attention to the core competencies of a business creates room to grow and adapt to the ever-changing business environment.
- Enhanced Financial Reporting: it’s a good look
Accounting professionals are well versed in reducing the risk of errors, promoting enhanced financial statements and analysis, which is ideal for creating insights in a business’ financial health and performance.
- Risk Management: one step ahead
Outsourced accountants can provide risk management advice and help to identify potential financial issues before they become a problem.
Essentially, outsourcing your accounting functions can provide a strategic advantage by leveraging external expertise and resources, allowing businesses to operate more efficiently and effectively. Whether you have a eureka moment or just want to be more strategic about your business operations, Avanopti Accounting is ready and willing to be your trusted partner. Give us a call to see how we can help you achieve peace of mind.