According to one study that was recently published by PricewaterhouseCoopers, approximately 68 per cent of businesses surveyed currently outsource at least a portion of their workforce. Outsourcing has been a growing trend that, among other things, has been fueled by changes in technology and new workplace dynamics.
Among the many different processes and services that could potentially be outsourced, outsourced accounting been growing at an exceptional rate. Very few new business owners are certified public accountants (less than 5 per cent) and, naturally, these business owners will tend to want to delegate their accounting needs to the experts.
Both small businesses and Fortune 500 companies can potentially benefit from working with an outsourced accounting firm. Ideally, your business will want to choose a firm that offers scalable solutions. This way, no matter what the volatile future might have in store, your business will already have the systems and processes in place that it truly needs to succeed.
In this article, we will discuss 9 of the most commonly cited reasons businesses choose to outsource their accounting and bookkeeping needs.
1. Expert Tax Advice
When doing your taxes, your business will not only need to make sure that you are complying with all relevant laws and regulations—you will also want to make sure you are taking advantage of as many possible tax credits and tax deductions as you possibly can.
The tax landscape can be incredibly complicated, which is why it almost always makes sense to bring in an outside expert. With a qualified accountant by your side, you will be able to improve your bottom-line and develop a strategy that will help make your taxes a bit more manageable.
2. Accurate Future Forecasting
In order for business to make better decisions, it is going to need to have reliable data in hand. If just a single input in your financial forecast is incorrect, your business might find itself quickly falling into debt or, in some cases, missing out on otherwise lucrative opportunities.
Your fractional CFO can help you build a tested financial model that uses up-to-the-minute data. The more confident you can be in the data that’s available, the easier it will be to know that you are making the right decisions for your business.
3. Pre-Established Processes
Accounting involves both strategic thinking and mathematical consistency, which is why the industry is frequently considered to be “both an art and a science.”
For accounting processes that don’t involve creativity, your accounting partner will offer pre-established systems that your business can immediately begin to take advantage of. Linking QuickBooks to your bank accounts, for example, is just one easy way your business can begin to save time without sacrificing quality.
4. Reduced Costs
Hiring an outsourced accountant, or a fractional CFO is one of the easiest ways for your business to begin improving its total bottom line. When compared to hiring an in-house expert, a fractional CFO—who is only working for your business a fraction of the time—can offer many of the same benefits for 10 percent or even less of your current costs.
Ultimately, the total cost reduction will depend on your current practices and accounting needs. But it is easy to see how the savings these accountants offer can really begin to add up.
5. More Free Time
In addition to being able to save on costs, in the traditional sense, hiring an outsourced accountant can also help you begin to save from an opportunity cost perspective as well.
If someone else is managing your books for you, there will be considerably more time in the week to focus on the components of your business that are actually generating revenue. With more time to prospect clients or expand your marketing efforts, your monthly revenues will continue to grow.
6. Automated Statement Generation
As a business owner, you will be responsible for generating many important financial statements, including your income statement, your balance sheet, and your statement of cash flows.
These critical statements can impact many portions of your business including your estimated tax obligations, your ability to access new credit, and your ability to someday issue an IPO (if this is a future goal). By accessing the infrastructure provided by your new accountant, you will have the statements you need to make big decisions and pursue big goals.
7. Increased Security
Because accounting involves sensitive financial information—your own, your employees’, and your essential business partners’—you will want to take active measures to ensure that all information remains entirely secure.
All qualified outsourced accounting firms will have invested in additional cybersecurity, and physical security, in order to make your information safe. In the rare event that any information is compromised, they will also have systems in place that make it easy to set things straight.
8. Legal Protection
While there is no law against any business owner making the decision to do their own taxes, you should still note that making the decision to do so is going to come with some risks.
If you do choose to file your own taxes, you will assume the entire responsibility for making sure they are accurate and are submitted correctly. Most people who aren’t experts tend to want to avoid this major responsibility. Working with an outsourced CPA will help protect your business from various legal risks and also help reduce the risk you are exposed to as a business owner.
9. Continuous Support
In 2020, we have seen just how quickly things in the business world can begin to change. In some cases, people lost many crucial elements of their support system, including their accountants.
However, if your business has an outsourced digital accountant on staff, you will be able to continue operating and effectively managing your books, no matter what might occur. With continuous, reliable support, an outsourced digital accountant will be one of the most reliable resources you have during times of crisis.
Before deciding whether it makes sense to hire an outsourced accountant, you should begin by comparing all of the different options that are currently available.
However, there are quite a few reasons why 68 per cent of businesses make the active decision to outsource. By taking the time to consider each of the benefits mentioned in this article, you will be able to decide if outsourced accounting is right for your enterprise.