Outsourced Accounting Services Meaning
When you’re a small-to medium-sized business owner, you’re responsible for a lot of tasks. You can hire out some roles, sure, but full-time positions can feel prohibitive when cash flow isn’t predictable. When you’re stretched too thin, you’ll hear others suggest to you that you outsource some of these responsibilities.
When you outsource something, you’re hiring another company or person to fill a role within your company, without hiring someone as a full-time employee. This allows you to save money on benefits and other costs associated with full-timers. Nearly any business-related service you can imagine can be outsourced, from human resources and hiring to marketing and advertising.
Of all the services you can outsource, one that many business owners overlook is accounting. It’s a heavy lift, requiring regular attention to detail. And, beyond that, it’s a core component of running a business and keeping daily operations moving smoothly. And if numbers aren’t necessarily your strong suit, it may be better to outsource your accounting. But what exactly is the meaning of outsourced accounting services?
Outsourced Accounting Services Meaning
When you choose to outsource your accounting or bookkeeping, you’re hiring a service to oversee your books for your business and otherwise offer you the same services that would be delivered by a full accounting department.
Some common services that an outsourced accounting service may offer include:
- Accounts receivable
- Accounts payable
- Credit card transaction posting
- Customer invoicing
- Financial reporting
This is by no means extensive, and some outsourced accounting services may specialize in certain areas.
Why Do Companies Outsource Accounting?
Traditionally, small- to mid-sized companies outsourced their accounting services (among other things) to help relieve scattered owners and small teams. With the myriad of responsibilities that fall on them, accounting can easily fall by the wayside. Because it’s such a vital component of running a business, it’s important that someone pays particularly close attention to it.
Accounting includes more than just balancing the books. It’s also about making sure the company receives payments, pays invoices, and more. But most importantly, accounting can provide a company with key insights that can help make them run more efficiently and effectively. And with so much focus on reducing costs and increasing overall performance, even larger companies are beginning to outsource accounting services.
On that note, is it cheaper to outsource accounting? That question has an answer in two parts. When you outsource your accounting services, you’re usually able to save money in payroll because you’re not paying insurance or other benefits. Of course, that’s just assuming you’re hiring a single accountant. Under normal circumstances, to get the breadth of skills—not to mention the time and resources accounting work requires—that you’d get when you outsource accounting, you would have to hire multiple people with different skill sets.
Companies outsource their accounting because it’s an efficient way to get a full team of professionals focused on their books without the need to hire internally.
Is it Better to Outsource Accounting?
When it boils down to it, is it better to outsource your accounting? It’s not a simple yes-or-no question, but for most businesses the pros of outsourcing really stack up.
When you consider the cost of hiring one or two full time team members, the outsourcing option often looks pretty good. It is a popular, cost-effective solution for many small and mid-sized businesses.
Yet what really makes a difference are the additional services that outsourced accounting service companies provide. Some offer cash flow forecasting, for example, which can help you make more informed decisions as you’re planning for the future. Some may also offer CFO services that deliver strategic insights that can drive decision-making in real-time.
Think of it like this: with an outsourced accounting firm, you get a team of professionals that can cover a wide range of services at a fraction of the cost of building an internal team. In many cases, an outsourced accounting service company becomes like an extension of your own team. And it makes sense; they know your books perhaps better than you do, and they’re able to provide you with ideas and suggestions that can help you change and grow your business. This is especially helpful when you don’t have a background in accounting yourself. Seeing and understanding the numbers and translating them into business decisions are two different skill sets.
If you’d like to gain these kinds of insights and even more from your financials, contact Milestone Business Solutions. We combine the latest cloud-based technology with experienced accounting professionals to help you meet your goals. We’ll focus on your finances, while you focus on running your business.
As a business owner—especially a small one that you’ve grown yourself—it can be difficult to let go ...
Seasoned HR professional joins Milestone team to lead focus on strategic initiatives INDIANAPOLIS, IN (September 29, 2021) Milestone is pleased to ...
Many small business owners wear multiple hats as they work to keep their business not only alive, but successful. For ...
Stay in the know