Pros and Cons of Using Outsourced Accounting Services

I do not think there is a business operator or manager out there who is not constantly looking to streamline and improve processes with their business. Improving internal workings in any business as well as ensuring that the operation runs smoothly should be at the heart of what every business strives to do. Outsourcing your accounting department could do just that. It is one improvement that will allow your business to turn its head towards other more business-critical activities; while paying people who do accounting for a living to do it well and properly.

Making the decision to outsource accounting tasks, as well as record keeping, and other financial tasks will entail hiring a professional to do these tasks for you instead. Though this might seem scary for us control freaks who like to have everything done inside the business, it is actually a productive and completely safe way to do it. Accounting firms have years of knowledge and a background of information when it comes to accounting and bookkeeping tasks, simply because they specialise in it. Every employee who works for an accounting firm is going to have an educational and work background in finance and the tasks that you will be paying them to carry out. Accounting firms hold industry knowledge and accounting experience which is hard to come by within an already established business; which allows for highly qualified and trained specialists to be involved in exactly what they are good at; accounting.

The biggest drive for companies when they choose to outsource accounting tasks are the massive number of upsides it presents. The biggest advantage of outsourcing accounting is the sheer time saver it is. Accounting work requires a clear head focused on that topic alone; and if done within the business itself, this is hard to find. Most people in a business are focused on multiple aspects at once. Outsourcing accounting allows the rest of your employees to focus on the more important core functions of your business, while the pedantic work gets done by a professional in the right field. However, some companies struggle to accept an outside source being in control of and responsible for the finances of their company. So, lets have a look at the pros and cons.

Pros and Cons of Having an Outsourced Accounting Department

Before making any big decisions, it is important to weigh up the potential pros and cons of that decision, as well as financial implications and potential risks it may expose your business to. Even the perfect business idea may have some drawbacks, so it is important to consider everything before accepting the idea of just anything.

Pros:

1. Cost Savings within the Business

If accounting services are outsourced, the employee cost of hiring an in-house accountant is not there. Employees are expensive! They need monthly packages, medical insurance, government contributions, retirement and pension contributions, and paid vacation. Cutting these costs will save you on your overhead expenses, but also on your equipment expense as well. The necessary tools for accounting and bookkeeping need not be kept on site specifically for the business if accounting duties are outsourced. Accounting firms will have their own equipment, which takes this off your hands.

2. Accounting Firms are Experienced and Knowledgeable

Experienced accounting providers will have the information and knowledge needed to carry out a professional job; as well as the education to back it up. Someone who does accounting as a job and has done so their whole life will have much more technique and information than someone who simply picked it up as they went along. This is through specialisation.

3. Increased Efficiency within the Business

An accounting firm with years of experience in their field will allow your business to become more efficient overall. As your business’ financial management improves, silly mistakes and errors that may have been occurring will be ironed out. This will improve your company’s overall ‘look’ to outsiders, and also allow your business to take on a new air of expertise alongside this. Excellence promotes excellence, as I heard once.

4. Internal Controls within Business will Improve

The potential for mistakes and for fraud will reduce drastically once accounting controls are outsourced. The fact that they are an outsourced company will mean that a committed team of accountants will be constantly checking over your numbers and your books to check for issues and potential red flags. This will drastically reduce your business’ capacity for errors or frauds.

5. Better Allotment of Time for your Business Activities

Outsourcing accounting duties within your business will allow the employees you hire to be solely focused on business-critical activities, with no attention deviation. Having a hired accounting firm will mean that your business can focus on the things that it does best, rather than worrying about niggly things like accounting.

Cons:

1. Reduction in Control

Communication within a company is easier if you use an in-house accountant, especially when it comes to finance related questions. An outsourced accounting department is not always going to be there. Outsourcing also reduces overall control that you have over the accounting department, which can be very dangerous if not handled correctly.

2. Hidden Costs

Some less reputable accounting firms can sneak in untold costs without your knowledge and become awfully expensive all of a sudden, which is a massive drawback. However, this can be avoided through primary legal arrangements and going for a reputable firm.

3. Complete Reliance

If the firm that you choose is not trustworthy, or in the case of financial disaster; having complete reliance on an outside firm is not ideal. It also puts your financial records at risk in the potential case of a hack on their side.

Some accounting firms can bring a great deal of positive aspects to your business, and some can detract massively. It is all about who you choose. However, most businesses that choose to outsource accounting, reap the rewards massively in the long run.

About the Author:

Emily Henry is a content writer for Simple Grad and Top essay writing services. She has a very patient husband of over ten years, who is her biggest supporter.