7 Signs That It Is Time To Outsource Accounting
Deciding whether to outsource your accounting can be a significant decision for many business owners and managers.
As a business owner, accurate accounting is crucial for assessing business performance and making informed decisions. While managing accounting in-house may be feasible for new businesses, growth often signals the need to consider outsourcing.
Time, a valuable resource for CEOs and small business owners, is often consumed by managing the finance function. The responsibility of optimizing systems for efficiency often falls on one individual, which is not ideal.
This article highlights some signs that you may need additional help from an outsourced accounting firm.
1. Limited Time
As a business owner, you wear many hats. However, trying to do everything can leave little time for managerial projects. Outsourcing your accounting services frees up time for you to focus on these crucial tasks.
According to a study cited by the American Psychological Association, multitasking can cost up to 40% of a person’s productive time due to mental blocks from switching between tasks. If managing your financial records and payroll takes as much or more time than serving your clients, it’s a clear sign to consider outsourcing your accounting services.
2. Delays in Accounting and Payroll
If your sole accountant is unavailable or your accounting reports are regularly late, it disrupts your business operations. Outsourcing can ensure consistent, timely management of your financial records and payroll.
3. Insufficient Resources
Employing, training, and maintaining a quality accounting staff requires time, money, and resources. Outsourcing gives you access to high-level accounting professionals, saving you money and the task of managing an in-house team.
4. Rapid Business Growth
A fast-growing business can stretch your resources thin, hindering future growth. Outsourcing your accounting allows you to focus on scaling your business. Even moderate growth can overwhelm in-house accountants, making it hard to accurately manage your financial details.
5. Financial Losses
If your business is generating revenue but still losing money, disorganized accounting could be the culprit. Outsourcing your accounting to professionals can help organize your books, potentially turning losses into profits.
6. Worries About Employee Fraud
Outsourcing accounting services provides an extra layer of protection against employee fraud. An external team will meticulously manage your finances, ensuring accuracy without the cost of multiple employees and related expenses. The extra pairs of eyes checking for irregularities can be invaluable.
7. Not Ready for Audit
If your financial records are still stored in filing cabinets, you’re lagging behind technologically. A disorganized accounting process can result in lost documents and hard-to-find information, which could be problematic during an audit. An outsourced accounting team can ensure that all financial documentation is accurately tracked and easily accessible. By outsourcing, you can leverage this technology without having to learn it yourself, and move towards a paperless accounting workflow.
In conclusion, outsourcing your accounting functions can provide numerous benefits, from saving time and money to ensuring accuracy and transparency in your financial management. Recognizing these signs will help you make an informed decision and allow you to focus on growing your business.