Is It Better to Outsource Accounting?
As a business owner—especially a small one that you’ve grown yourself—it can be difficult to let go of nearly any part of the business. It may even feel difficult to hand over the accounting, which isn’t one of the more glorious parts of running a business, because it may feel like losing your grip on the business’s numbers.
But is it better to outsource your accounting? What benefits do you stand to gain from it? Will it make your business operate more efficiently?
More and more businesses, large and small and everywhere in between, are turning to outsourced accounting services not just to free up more time, but also for the value it provides to the business. Businesses are always looking to operate with more efficiency and to create greater profit, and many of them see an opportunity to do just that by outsourcing accounting.
Let’s look at some reasons to outsource accounting.
Can You Outsource Accounting?
Before we talk about whether it’s better to outsource accounting, we should talk about whether you even can outsource accounting and what that looks like.
In short, the answer is yes: you can outsource your accounting. Outsourcing your accounting means using an outside service or person to fulfil your bookkeeping, instead of someone who works for you full-time. And by using a cloud-based accounting software, you can hire an accounting firm—also called a “virtual bookkeeper”—from anywhere. This is particularly helpful if the accounting firm specializes in a specific industry or offers a service you believe is right for you.
The long list of outsourced accounting services don’t stop at bookkeeping. While that’s the foundation of what’s available, many also offer monthly accounting, cash flow forecasting, outsourced CFO, and operational support, among other services. And while all of those rely on consistent, thorough bookkeeping, they also offer a higher level of support than you may get from an internal accountant.
What Are Reasons to Outsource Accounting?
Every business is different, and they each may have a unique reason for outsourcing their accounting—or other business functions for that matter. But a 2020 Deloitte study found that most companies outsource for one of three reasons.
As a business owner, it should come as no surprise that most other businesses are trying to reduce their overhead. Outsourcing accounting gives businesses a clear reduction in costs. By outsourcing, you’re getting a full team with a variety of skills who can oversee your finances from standard bookkeeping to even acting as CFO. This saves you the cost of one or many salaries, benefits, the cost of hiring and retention, and more.
Focus on the Business
Accounting takes a lot of attention. It’s a daily task that adds up, and requires even more time at the end of each month to close the books. As a small business owner, it’s not always easy or practical to keep up with it yourself. By outsourcing even the most tedious parts of bookkeeping—let alone the other services you may gain—small business owners are able to refocus that time and energy by focusing on the direction of the business. They can put more energy into making decisions and leading it into the future, all while gaining insights from consistent data.
As mentioned above, outsourcing accounting gives business owners an opportunity to focus more on the business. But more than that, it gives them a big chunk of time back in their day. That’s more freedom to find work/life balance, or even dive into another venture if they want. By taking the actual doing of the accounting off your hands, your time is open to anything.
Raise Money or Sell Your Business
Many small businesses are looking to raise money…whether it’s from family, angel investors, private equity, or venture capital. Not only is it essential that you have clean books, but your business valuation, and therefore how good of a deal you get, can be partially dependent on how your books are presented. Outsourced accounting can help you prepare your books for an investment—or help you prepare your business to be sold.
Track Accounting KPIs
If a business has outside advisors in the form of a board of directors or investors, there are typically performance tracking expectations. Business owners often need help creating accounting dashboards that track the metrics and KPIs their advisors care about. Outsourced accounting services can help set up dashboards and provide the expertise to know which KPIs to track.
What Are the Benefits of Outsourcing Accounting?
To outsource your accounting, it’s got to benefit a business owner in at least one specific way, and help them make better business decisions. Many business owners find multiple benefits to outsourcing accounting.
Creating and Monitoring Budgets – Accounting services, and the data they’re able to provide, help businesses develop informed budgets and, most importantly, stick to them. Should things need to adjust, they’re able to make adjustments in real time because budgets are always being monitored.
Dictate Spending – Business decisions always create reactions. Making major purchases or hires can have consequences on your finances. With informed finances, you can better plan for those major financial implications.
Monitor Finances – How is your company really doing? An accounting service will monitor your financial health and provide you with powerful insights that can help you know where you stand—and how to make better decisions.
Outsourcing your accounting has a lot of upsides, and it probably makes sense for your business. Ready to get started? Contact Milestone today. We use the latest cloud technology to provide you with insights about your finances, and meet your financial goals.
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