Businesses often struggle with managing their resources and find it difficult to keep track of their company finances. To avoid making costly mistakes, many opt for outsourcing bookkeeping services. If you don’t have the time and resources to manage bookkeeping or need an accounting team specialising in your industry, outsourcing bookkeeping services could be the best option for your business. Though outsourcing your bookkeeping is beneficial, you must keep some important factors, like business needs, budget, etc., in mind to get the right service provider for your business. There are pros and cons to outsourcing any service; it is important to understand both to make an informed decision. Before outsourcing your accounting and bookkeeping, let us consider the factors you must consider.
1. Why outsource bookkeeping services?
Before outsourcing any services, it is important to understand why you want to outsource them. Outsourcing bookkeeping services can be beneficial for a variety of reasons, including:
- You want to focus on core business activities- A dedicated accounting team can help free up the time and energy you need to focus on core business activities, like marketing, sales, and operations. Whether hiring and onboarding employees or managing your accounting functions in-house, many time-consuming tasks come with managing the accounting and bookkeeping processes.
- You don’t have the expertise or resources to provide accounting services- If you don’t have an in-house accounting expert or don’t have the resources to bring on an accounting team, outsourcing bookkeeping services can be a good option.
- You want to reduce accounting-related costs- Outsourcing bookkeeping services can help you reduce your accounting-related costs by taking advantage of economies of scale available through outsourcing.
- You need accounting expertise in a specific industry- If your business is heavy on accounting or you work in a specific industry that requires specialized accounting expertise, outsourcing bookkeeping services can help you. Doing so will help you find accounting professionals with the specific knowledge and experience you need.
2. Check your current bookkeeper’s credentials
Before outsourcing your accounting and bookkeeping functions, it is important to ensure your existing bookkeepers are qualified and have the necessary experience. Businesses often outsource bookkeeping services if they don’t have the internal resources to manage their bookkeeping functions or need bookkeeping expertise that their in-house finance team doesn’t have. If your business is considering hiring an outsourced accounting and bookkeeping team, it is important to check the credentials of your potential bookkeepers. This includes checking their educational background and industry experience.
- Educational Background- When hiring an outsourced bookkeeping team, you must ensure your bookkeepers have the necessary educational background. Educational background varies by industry, but most bookkeepers have bachelor’s and master’s degrees. Bookkeepers can also have CPB (Certified Public Bookkeeper) certificate, but it is an optional certification.
- Industry Experience- Besides educational background, bookkeeping experience is also important when hiring an outsourced bookkeeping and accounting team. Ensure the bookkeepers you hire have experience working in your specific industry and are knowledgeable about your industry’s regulations, processes, and financial reporting requirements.
3. Determine the type of outsourcing service you need
Before you begin searching for an outsourcing services provider, you must understand the different types of outsourcing services you can outsource and what each provides. You can choose to outsource your bookkeeping services only or choose an outsourcing service that covers other business functions, including bookkeeping. Some of the most common types of outsourcing services include:
- Outsourced bookkeeping- This is the general term used to describe the outsourcing of bookkeeping functions, including but not limited to recording and tracking transactions, accounts receivable processing, accounts payable management, cash flow management, and payroll.
- Outsourced accounting- This is a more specific outsourcing service that focuses on accounting functions, like financial reporting and managing the financial aspects of your business.
- Consulting and advisory services- This outsourcing service provides strategic advice and guidance for your business, like strategy development and implementation, corporate governance, organisational design, and more.
- Business process outsourcing- This is another more specific outsourcing service that focuses on managing various business processes, like marketing, sales, and customer service.
Identify your desired outcomes and KPIs
Before you begin the process of outsourcing your bookkeeping services, it is important to identify the desired outcomes and KPIs you want outsourced bookkeeping and accounting services to help achieve. Just like any other process or department in your company, outsourcing services are best when they are focused on achieving a specific goal. If you have an accountant or bookkeeping team in-house, then it is important to identify what aspects of your bookkeeping and accounting functions they don’t have time or resources to handle or what they are not proficient in doing. When outsourcing accounting services, you want to ensure they are helping achieve your desired outcomes and KPIs.
Bookkeeping outsourcing checklist
There are several things to consider when outsourcing bookkeeping services, including:
- How will you source and select your outsourced accounting and bookkeeping team? If you decide to outsource your bookkeeping and accounting functions, you can source and select your bookkeeping team in various ways. You can use an accounting firm you have previously worked with, an online accounting marketplace, or hire an accounting firm remotely.
- What will your outsourcing agreement look like? Before you sign an outsourcing agreement, it is important to make sure it outlines everything you need it to and protects your business.
- How will you manage the outsourcing process? Managing the outsourcing process is just as important as choosing the right outsourcing partner in the first place. Make sure you have exit strategies in place in case you need to end the outsourcing relationship or your outsourcing partner experiences issues.
An expert bookkeeping team or accountant can help significantly reduce the stress of managing your company’s bookkeeping functions. However, before outsourcing your bookkeeping services, it is important to understand the factors affecting your business. Therefore, you must be very careful in finalising an outsourcing bookkeeping services provider. With the proper research, you can find a bookkeeping outsource that is a good fit for your business.