Business owners and CEO's are tenacious, fast learners, hard workers and generally capable of overseeing and managing their bookkeeping and accounting staff in-house. But if doing so wastes money (a lot of money) and time (a lot of YOUR time), why would you want to? It's just like flushing precious capital down the drain, but in a way that causes eyestrain and makes you want to pull your hair out. We know this, because we've seen the numbers!
Here are five of the biggest reasons why you're wasting money by keeping your accounting in-house...
1. You’re Not a Business Accounting Expert
Yes, your bookkeeper does a good job handling the basics and your accountant generates required financial statements. But business accounting isn’t just about checking the boxes. By not having an expert, professional team, you’re missing out on the insights and advice you get from management accounting.
Simply reviewing traditional financial statements each month, without also looking at management reports of key performance indicators, puts your business at risk.
You can't make decisions by only looking in the rear view mirror. Without scorecards that show you Trailing Twelve Months (TTM), you don't have a true picture of your actual key performance indicators.
What management monitors gets done. If you don't measure performance of the key drivers in your company, you are leaving money on the table.
If your CPA has you set up only to track expenses just to lower your taxes, instead of profit management, it may be time to re-assess your financial management.
If you don't have management reports and KPIs with leading indicators, you are missing out on opportunities to capitalize on the biggest money-makers in your business. Also, you won't know what levers to pull when the economy inevitably starts to collapse.
2. Your Time Costs More Than You Think
If you think the time to manage your bookkeeping and accounting in-house will save you money, then it’s time to check your self-worth. As the head of your business or organization, your time is the most valuable time in the company. You should spend it on things like sales, marketing, and strategies to drive growth.
Wasting your time (& money!) dealing with mistakes or errors, hiring and training non-revenue generating office staff, shifts focus away from your core competencies that generate revenue. It also means you’re likely paying the highest paid employee in your business (you) way too much to be too involved in basic and inefficient tasks of your business's finance function.
3. Inaccuracies Driving Up YOUR CPA Expenses
Maybe your bookkeeper is great at handling the books, but you’ve hired a CPA for tax assistance, perhaps with payroll and bank compliance.
As your business grows, having a self taught bookkeeper can hold you back. If you are just getting the basics, and not actionable financial intelligence, you are likely not making as much money as you should. That's because you’re wasting your own valuable time dealing with low value cash flow functions. Even worse, you are probably paying your CPA to fix mistakes at the end of the year, which means spending even more of your precious working capital.
When you have an expert who can do it right the first time, you save time and make more money.
4. You Can’t Trust Your Numbers, So You Don’t Use Them
Speaking of inaccuracies, they’re not just expensive; they cause impotency if you have numbers you can't trust. If you think you have the wrong data, then your financial reports are flawed. Many CEO's don't even know there are ticking time bombs in their financial reports.
What are you looking at when making decisions in your business? Are those reports, accurate, timely and actionable? If not, you have one hand tied behind your back.
Not looking at actionable numbers means you’re unable to make decisions based on data, therefore, wasting more money. This leads to gut-feeling decisions and reaction-based management – making decisions in reaction to a problem that’s already occurred.
With proper leading indicators and reliable financial insights, you can make data-driven decisions that drive performance, profitability and growth.
5. Your Software Could Be Outdated, But You’re Not Sure
In my early accounting career, we did accounting in bound, pencil-scrawled general ledgers. Thankfully they have gone the way of gramophones, and not only has accounting software become a primary pillar of every business, the entire bookkeeping function is being automated. The smart business owners are turning those trusted bookkeepers into business analysts.
Every business requires, not only a good general ledger software, like QuickBooks, but most businesses run and average of twelve apps and integrations that simplify processes like billing, collections, payroll, expense and time tracking.
If you’re not living the world of business accounting systems, there’s no way you can stay abreast of the latest programs, releases, updates, and integrations. Most importantly, you’re likely living with systems that don’t talk to each other which means wasted cost and missing data. If you don’t have a fully integrated Smart Back Office you are paying money for manual processes and not getting the actionable financial intelligence.
With the right accounting technology and systems in place in your business, your entire operation will improve. With a Smart Back Office you’ll increase efficiency, reduce error, speed up reporting , get more data, spend less money.
How do you make sure your software, and the bookkeepers and accountant running it are up-to-date and efficient as possible? Are you confident your in-house financial team is armed with the knowledge and expertise they need for your business to have a successful and smart back office?
Access an Entire Bookkeeping and Accounting Department without the Outrageous Price Tag
Your business may not yet big enough to house an entire floor of bookkeepers, accountants, and controllers with an in-house CFO, but it doesn’t mean you can’t harness their knowledge and expertise for the benefit of your business’s present and future.
Outsourced client accounting services provide all the advantages of a billion-dollar business’s back office without the billion-dollar overhead. It’s like having a state-of-the-art accounting department down the hall, but you don’t need to pay for the hall.
With an outsourced partner like GrowthForce, you can access an entire team of bookkeeping and accounting professionals, on an as-needed basis. In addition, you'll get accurate financial data delivered on-time, designed to help you make decisions that increase profits and wealth.
With scalable services designed to grow with your business, your back office will always be exactly what you need the entire way to becoming a billion-dollar business.