A Guide to Outsourced Accounting: What It Is, Who Needs It, & How to Find the Right Provider

Key Takeaways:  

• Outsourced accounting can take many forms, with the right partner offering solutions that meet any and all of your accounting needs, from payroll to reporting and beyond. 
• Outsourcing your accounting allows you to focus on business growth knowing experts are paying attention to key financial data to support this growth. 
• Finding the right outsourcing partner is key to success. Consider your business needs and budget carefully as you evaluate potential firms. 

Being successful doesn't mean that you do everything yourself. In fact, many of the most successful people have climbed the ladder of life because they know how to delegate.  

Money is an essential part of your thriving business, but so is your passion, leadership, and expertise regarding your products and services. Your effort and time are better spent managing your business as it matures and grows. In-house bookkeeping won't be sustainable for much longer, so why not look into outsourced accounting? 

The best outsourced accounting services will offer accounting and financing options that remove the strain on your resources. Meanwhile, you can focus on your core business and chase your dream ventures. If you're not already convinced, read further for our complete guide to outsourced accounting. 

What Exactly Is Outsourced Accounting? 

Outsourcing for accounting has advanced significantly in the past decade, particularly with the rise in popularity of secure, cloud-based accounting technology. The focus has changed from just capturing and coding accounting transactions, which is commonly referred to as bookkeeping, to providing business advice and guidance fueled by accurate and timely accounting data.  

These types of services go by many names, including outsourced accounting services, cloud accounting services, or client advisory services (“CAS”).  

Service providers act as your virtual accounting department and can take over most, if not all, of the daily accounting tasks needed to run your business. The resources they use are typically accountants — not bookkeepers or clerks — and they can assist in all areas of your accounting, including: 

• Payroll  
• Accounts payable  
• Accounts receivable  
• Transaction coding  
• Management of financial reporting  
• Sales invoicing  
• Vendor bill payment  
• Budgeting  
• KPI trending  

The best outsourced accounting services will keep you informed on management information and financial reports. They will design their work around your specific needs and work with you closely rather than giving you “boilerplate” treatment. 

CAS includes providing you with reports and consultations to review your balance sheet, profit and loss statements, and other key metrics. An effective CAS team won't just keep track of your finances, but will also help you take charge of the numbers to take your business further. 

In return, you don't have to spend money on the overhead necessary for a full-time, in-house accounting team. 

Why Should I Consider Outsourcing Accounting?

When you first started your business, doing the accounting yourself or hiring a part-time bookkeeper made sense. With little extra capital to spend on hiring, you wanted to do as much as possible for the least cost. When your business grows, however, it will need more employees to run it, so it might be time to consider delegating responsibilities. 

If you are leading a startup that has already raised some capital, outsourced accounting services can help you take that step toward next-stage growth. If you are leading a mature business, outsourced accounting can effectively and efficiently navigate your complex finances.  

If you run a larger company, you probably already have an in-house team. It's likely that you are now growing more rapidly, and your chances of significant events like acquisitions are high. The current team on your payroll may not be able to handle these factors. 

To help you make your decision, below are several reasons to hire an outsourced accounting service: 

Cost-Effective Accounting 

It is often more expensive to keep an in-house accounting team on the payroll than to outsource accounting services. The overhead costs of hiring an employee, including retirement, insurance, and PTO, vanish when you outsource. 

For small- and medium-sized businesses, the thought of outsourcing might be intimidating financially. Outsourcing is often thought of as a technique for large, mature businesses, but recent technological advances have turned the tables. Cloud-based accounting technology has allowed outsourced accounting to become a viable option for all by lowering costs. 

In addition, CFOs and controllers are often expensive and may take equity. You can eliminate this significant expense by hiring an outsourced accounting service instead. 

Peace of Mind 

When you decided to start a business, it's likely that you didn't plan to be a highly trained accountant. When a business is small, it's possible to keep your eye on the books. But when things get more complicated, you can become overwhelmed. 

It's not your job to be qualified to handle all your accounting needs. Accounting outsourcing companies exist to give you peace of mind. Not only will they take care of the numbers, but they will translate those numbers into actionable plans for you to improve your business. 

You can also rest assured that your accounting is being handled properly. It's easier for fake expenses and errors to go unnoticed when only one person is handling the finances. Outsourced accounting reduces your risk of fraud by keeping trained eyes on your books and spotting red flags as soon as they appear.  

If you are using CPAs to handle your outsourced accounting, this gives an even higher level of assurance that your accounting is correct. First, CPAs are governed by a high level of regulation and ethics. Second, CPAs have continuing education requirements to stay current with advances and changes in accounting and tax regulations. There is absolutely no way a business owner has the time to stay abreast of the flood of complex changes coming from the government that could impact their business. Having a highly trained and committed team of accountants taking care of your accounting will allow you to focus on growing your core business. 

Continuity Is Key 

New employees require training and time to become knowledgeable about your business and perform well. What’s more, there’s always the risk that your in-house accounting employees leave. If they walk out the door, so does the time spent training them along with that hard-earned institutional knowledge. 

To replace them, you'll have to retrain, losing time again as a new hire learns your business.  

With outsourced accounting services, you are guaranteed continuity. Accounting outsourcing companies will stay by your side through thick and thin, assuring that there will be no lost time or resources. 

Efficiency Driven by Technology 

Bookkeeping can be archaic, especially when you're still keeping track of paper receipts. Accounting outsourcing companies often use the latest technological advancements in security, data storage, and more. You gain access to this technology at a fraction of the cost thanks to economies of scale. 

Taking advantage of the latest technology ensures that your data is secure. It will not only be protected from malicious people but also stored safely so that you will never suffer any data loss. The latest cloud advancements mean that even physical damage will not risk data loss. 

Using new technology also means that you can be even more informed and engaged with your business’s financial situation. Outsourced accounting services use technology so that you can access your data, reports, and consultations whenever and wherever you need them. 

Make sure that the service you are considering has a high level of comfort in managing this kind of technology. The best outsourced accounting services will have strong technological competence and be current on upgrades, updates, and patches. 

Hiring Outsourced Accounting 

Once you've realized the benefits of outsourced accounting services, you will need to make a plan for finding the right company. Accounting outsourcing companies exist for different budgets and needs, but the best will be able to accommodate you while providing exceptional service. 

When deciding on a company, consider your unique needs, budget, and expectations. Ask yourself the questions below: 

What Does Your Business Need? 

Accounting can become very complex, which means there is a multitude of services offered by outsourced accounting companies. The number of services offered might be impressive, but that doesn't mean you need to take advantage of them all. 

Your business likely doesn't need every service available. It will save you money to take inventory of what services you need to outsource, which you can perform in-house, and which you don't need at all.  

Additionally, it is very important to consider which accounting activities are core to your business. For example, invoicing and collections are points at which a business can touch and build relationships with their customers in an indirect way. To fully convey your brand and unique value to customers, it may make sense to keep tight control of these areas. 

Make a list of priorities and consider if you need an expert to help with deep insights or just someone to help with repetitive tasks. Being upfront about your needs will help a company tailor its services to you. 

What's Your Budget?

It's true that outsourcing your accounting needs can save you money on overhead and training. Estimates purport that the cost of bookkeeping can be reduced by 40% through outsourcing. Outsourced accounting pricing comes in a wide range, so you need to consider how much you can afford. 

Also, understand the difference between a staff augmentation outsourcing solution and a more developed outsourced accounting service. The former is designed to provide the lowest possible cost. The latter is about embracing technology to automate everything so that qualified accountants and CPAs can provide a higher level of oversight and guidance for your business. 

When you know your budget, you'll also be able to use your priority list and narrow your search. You might find you need to cross something off your list or that you have room to add more services. 

If you plan on removing your in-house accounting team, you can use that money toward your budget. Talk to several companies and get quotes to make an informed decision. 

Propel Your Business Forward with Outsourced Accounting 

When you choose outsourced accounting, you choose a bright future for your business. Hiring a team of highly qualified accountants to monitor your finances, track KPIs, and compile detailed reports will clear your path to success.