CPA at Centaur Digital Corp, helping busy business owners decrease the amount of time and energy needed to manage their accounting system.
There are various departments and functions within any business that must collaborate to offer products and/or services to its customers. Not all businesses are the same; thus, functions like the accounting department might not be as important in some businesses as others. Depending on your business needs, there can be advantages to outsourcing noncritical functions, including allowing you as a business owner to focus on other functions.
Traditionally, the accounting department wasn’t a function in a business that could be outsourced—in most manufacturing businesses it still isn’t. The pervasive nature of business accounting makes it hard to extract that function from operations. However, in the current digital world, especially one focused on services, there are various ways a small business can outsource the accounting department.
Many small businesses rely on a part-time bookkeeper or accountant to show up at the business location. When all the documents are physically present, a site visit is the most expedient way to update the books. Although this is still outsourcing, it can be inefficient and usually more costly. The general transition to cloud-based accounting has presented another option.
There are different levels of outsourcing that businesses can target depending on the budget and desired level of control. Usually, the more you can outsource the better, but be mindful of the implications and remember to keep control over the core functions. Here are some tips to help you successfully outsource your accounting department.
Tip One: Use The Cloud
If your accounting is not yet done in the cloud, you may want to consider it as an option. Change can be hard, so if you choose to upgrade, consider consolidating some of the work by outsourcing and upgrading to the cloud in one go. Additionally, relying on outside help will allow you to attract talent that might not be available locally.
Tip Two: Consider An All-In-One Solution
Some businesses prefer to keep their accounting and tax firms separate. This can be beneficial since you will have two separate firms checking the work. The disadvantage, however, is that you might have to project manage and help coordinate between them. Weigh your options and act accordingly.
Tip Three: Reduce Turnover
A key cost that many small businesses overlook is employee turnover. There is typically financial cost associated with employee turnover. The same applies to finding the right accounting firm to outsource to. You need to make sure the accounting firm is the right fit to help you outsource to avoid the costs of finding a new firm.
Tip Four: Keep Treasury In-House
Unlike the accounting department, the treasury department consists of people that have actual access to the bank accounts and cash—don’t confuse the two! It’s usually best to only allow treasury access to trusted individuals. To avoid not just fraud or embezzlement, but also financial mistakes, you should rely on key individuals in your business for treasury access rather than outsourced accountants.
Tip Five: Don’t Outsource Invoicing
Invoicing is traditionally thought of as an accounting function, but the ease of creating invoices in a cloud-based accounting system makes it accessible to everyone. Since invoicing usually requires greater operational knowledge than accounting knowledge, it’s typically more efficient to keep this function in-house. There’s no need to send invoicing data to an accountant when you can easily enter that data yourself.
If you feel now is the best time to start outsourcing your accounting department, you have a choice of firms that specialize in it. Although you may lose some control, you can devise ways to mitigate that while increasing your business’s efficiency. The ultimate goal is to free up time and allow yourself to focus on the core function of your business.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.