Outsourcing bookkeeping, bookkeeping and auditing services are an increasingly common solution for small businesses today. Why? The benefits that were once only available to medium and large businesses are now becoming more apparent to small businesses. With an Australian based bookkeeping team, business owners and entrepreneurs have access to qualified, well-trained staff who can help their businesses perform better, grow faster and make more money. This can often be much less expensive than having an in-house bookkeeping department.
Why are companies turning to outsource?
Cost savings, focusing on core business functions and solving capacity issues are the main reasons for outsourcing. Leading companies use outsourcing to drive change and improve business results. Pro Outsourced bookkeeping services Companies, from sophisticated ledgers to specialized management reporting and auditing services, are designed to complement your staff and transform your finance function. More than just a bookkeeping solution, we can create a platform that will increase your profits, improve your cash flow and grow your business.
Some Advantages of Outsourced Bookkeeping
Using outsourced bookkeeping services is often less expensive and more efficient than hiring in-house staff to perform financial functions. Outsourcing eliminates the overhead costs associated with hiring staff, such as paid time off, health insurance, pensions, vacation, workers’ compensation and sick leave. In addition, using the expertise of an entire team rather than one (or more) employee(s) has the benefit of reducing the risk of non-compliance and unreliable financial results – especially for small startups.
2. Proactive approach
As a CEO, you didn’t join the company to become a competent financial professional and handle the books. You want to run your business and focus on the overall growth and vision of the company. So an outside bookkeeping team has the advantage of being proactive, as they can sound the alarm early on and keep you informed on things like expenses and cash flow. By constantly monitoring your financial situation, you can gain peace of mind and the confidence to make sound financial decisions.
3. Reduction of fraud
Fraud is an unfortunate consequence of the fact that many small businesses can only rely on one person to keep their books. Indeed, it is very easy to manipulate accounts and not detect fraudulent expenses for months or even years. There are many signs that fraud is taking place, the most common of which is when an employee is under financial pressure and does not know what to do. Don’t blindly trust your employees without any follow-up or reporting. This means you are opening the door to fraud.
- Internal Control
By outsourcing your bookkeeping services, you can strengthen your internal controls by having multiple eyes on your transactions and reports. Fraud can never be 100% eliminated, but a dedicated team familiar with bookkeeping best practices is far more likely to spot anomalies than an overworked individual.
Some Disadvantages of Outsourced Bookkeeping
1. Hidden Costs
With any paid service, the scope can expand when a task becomes multiple, which can result in additional costs you didn’t originally consider (or forgot about). Make sure your monthly relationship is clear and set your expectations upfront to minimize risks like this. If you’re not sure, we offer a detailed 5-step process you can follow to get a clear picture of how the introduction process works.
2. Less control
- Outsourcing team activities comes with one caveat: You can’t walk down the hallway and ask questions about every financial event that occurs. Sure, you can call your account manager and get weekly updates and monthly reports, but that requires trust in your relationship with your outsourcing company.
- It can sometimes be uncomfortable for business owners to give up control of their accountants. Start with a comprehensive onboarding process that defines roles, policies and procedures, sets expectations and ensures timely communication.
It’s not local
- Using an outside team doesn’t necessarily mean you’ll get an immediate response. Not being in the same office can have its limitations. However, a good outsourced bookkeeping firm should have a good communication policy that your team can easily access. It’s important to consider whether your priority is to respond immediately or to think carefully to get the right answer.
- If you don’t have a communication plan and division of responsibilities with your outsourced, your relationship with them will become opaque and difficult to manage once you get started. Take time to discuss the outsourcing team, including their goals.
What does it mean by Non-Profit Organizations?
Non-profit organizations have a similar psychological profile and management cycle and need new and improved bookkeeping solutions. The executive director of a non-profit organization is usually not an accountant, but a passionate philanthropist. The executive director may find a qualified volunteer to do the bookkeeping work, but usually, that person leaves the organization as the bookkeeping work increases.
New Small business
There are usually a number of reasons why a small business owner would consider a new bookkeeping solution, including
- To raise money from outside investors
- The CEO will not be able to be involved in all aspects of the business.
- To enter an accelerated growth phase in the company’s life cycle.
- The need to use QuickBooks instead of invoices and receipts
- A desire for interaction and communication between technology systems
- The need for more sophisticated financial information for data-driven decision making.
However, just as with small businesses, accurate financial information is critical to the growth and survival of a nonprofit organization. Nonprofit organizations may consider a new bookkeeping solution if any of the following events occur
Responding to warning signs
If your small business or nonprofit organization is experiencing any of these signs, you may be ready to act as your accountant’s accountant. At this critical juncture, as a CEO or executive director, you must decide how to manage your bookkeeping department. There are several options, each with different ramifications in terms of costs and benefits.
Options for modernizing your accounts
- Subcontract to a separate company (for example, hire a separate billing and Collection Company and a separate Value Added Reseller to develop and implement bookkeeping software.
- Outsourced the bookkeeping and bookkeeping to a CAS (Client Bookkeeping Services) company to do all the bookkeeping work.
- Even if you have the energy to consider all of these options, client bookkeeping services are growing rapidly because they often offer the best value for growing businesses and non-profit organizations.
- In terms of cost savings, it is at least 30% cheaper to outsource than to set up and maintain your own bookkeeping department. But the real value of outsourcing isn’t just the money you save.
- According to the Outsourcing Institute, companies choose to outsource for a number of reasons: to improve their core business, to avoid the risks and costs of hiring additional staff, and to gain access to outside experts they cannot afford.
For most businesses and nonprofits, bookkeeping is not a core competency. Core competencies are the unique selling points, competitive advantages and leadership qualities that are responsible for a company’s growth.
Companies that belief in outsourcing should outsource functions that are not part of the company’s core competencies and that take personnel and resources away from the business to generate revenue. By outsourcing bookkeeping, management can focus on sales, service assurance.