Some small business owners consider having an internal team to manage their finances or, in some cases, manage it themselves. This might be suitable for some, but most businesses could really benefit from outsourcing their accounting to a specialist.
There are numerous reasons why outsourcing your financial management makes business sense, here are eight.
1. You Can Concentrate On What You Are Good At
Unless you have experience and training as an accountant, you are unlikely to have the best accounting skills. You are, however, an expert in your own industry.
Therefore, if activities like accounting are outsourced you will free up more of your time to concentrate on the tasks you are great at. This can lead to great productivity and better quality of work.
2. Lower Employee Costs
When you outsource your accounting operations, you can save up to 40% of the costs compared to the cost of an employee because you don’t have to pay for any benefit packages, training or equipment, and your insurance could be lower.
The cost to hire a new employee can be as high as 150% of their annual salary. So by outsourcing you could really be saving money.
The less it costs you to recruit and run your accounting operations, the more funds you can reinvest into the business or the more profits you can take home.
3. Reduce Fraud
Employee fraud is a massive problem and it is unlikely any business with employees is completely immune from some sort of theft.
We’ve covered before how employee related theft can affect your business, but those statistics didn’t cover fraud in general.
Statistics highlight that companies with fewer than 100 employees are most vulnerable to fraud and face an average yearly loss of $155,000. Outsourcing your accounting can be a way to detect fraud within a business.
4. Lower Tax Burden
Accountants have intimate knowledge of their profession and know all the tax codes relevant to your business.
They take the time to understand new tax laws and where they might be applicable, and recognize how their clients can benefit from changes in state and national tax.
This can mean that you are able to make more money, which can be used as a reward for your efforts or be reinvested back into the business.
At the same, all of this is done for you by someone else so you aren’t rushing around during tax season. Instead, you can just concentrate on your business and provide a great service to your customers.
5. Scalability And Flexibility
When you have an in-house team, scalability becomes a big challenge. If you suddenly grow and need a greater workforce within your accounting department, it can take up to 26 days to hire a new employee.
This does not include the time which might be needed for the new hire to hand in their notice and work through any notice period. If we include this, the wait time for any new hire could be up to 57 days.
In addition, a new hire needs time to settle within your organization and it could take them six months to reach their full potential.
Until then, your business and your accounting team specifically, might suffer. In addition, if the sudden increase in demand reverses, you will have too many staff and could face extra costs in maintaining the in-house accounting team or alternatively, in paying redundancy.
In contrast, outsourced accountants have a team ready employed that can increase or decrease the resources allocated to a client. There may be a waiting period for any changes, which should clearly be stated in any contracts you sign with an outsourced accountancy team.
6. Access To Top Software
Choosing what software is best for your business can be really difficult. There are numerous options and to the uninitiated they can all look the same.
When you outsource your accounting duties to a professional firm, you can benefit from the accounting software they have chosen based on their experience.
This prevents you wasting your time and money trialling packages which don’t offer you the accounting coverage you need.
It also means you don’t have to learn how to use a new piece of software or end up making mistakes in financial entry because you don’t know the system.
7. They Can Offer Invaluable Advice
When you are looking to expand your business or seeking investment opportunities, an experienced financial expert can be a great support in your decision making.
They will have knowledge of similar scenarios and might have invaluable information for you to consider; which might help you avoid unreliable investment and reduce the cost of those that are suitable.
Their advice is usually impartial, which employees might not be. Of course, just keep in mind that an outsourced accountant isn’t going to be as excited as you are about any projects you are considering.
8. Peace Of Mind
A qualified and experienced accountant can provide you and your leadership team with peace of mind.
You know your financial management is being handled by the right people and when you turn up for meetings, you can be assured that the financial information will be accurate and presented in a way that everyone understands.
Finally, you know that when you bid on government contracts – you have the required financial management in place to comply with any regulations or restrictions they place upon you.
Having this before the bidding will also put you in good stead during the application process and place you above those competitors who haven’t thought about this yet.
Conclusion
A qualified outsourced accountant is one of the best investments for your business. They offer cost savings, quality of information and protection for your business.
These benefits can help you concentrate on activities that are more suited to your skill set.
Do you outsource your accounting operations? What is preventing you from outsourcing your accounting functions?
Let us know in the comments below or contact a member of the Ragain Financial Team to discuss your options.
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