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How Do Outsourced Accounting Services Work?

    

8 min read

outsourced accounting services for businesses

Outsourcing is the practice of hiring a third-party provider to manage any aspect of a business. Of course, the most popular business functions to outsource are those that are not directly related to the core function of your business but that are still absolutely necessary for its operation.

Key Takeaways

  • Lower Cost and Higher Impact: At a minimum, you'll need a bookkeeper, an accountant, and a controller. The respective average annual salaries of these employees in the U.S. are about $44,000, $62,000, and $251,000…

  • Accounting System Design, Implementation, and Execution: Outsourced accounting providers have time-tested bookkeeping and accounting systems, policies, and procedures that they can tailor to your business's unique needs and systematically implement…

  • How to Outsource Accounting in Your Business: Before you begin the search, take the time to evaluate your business's needs. Think about what you are looking for in an outsourced provider, the types of services your business could benefit from…

 

For example, some of the most commonly outsourced business functions include marketing, legal, human resources, information technology, and, of course, bookkeeping and accounting. Thirty-seven percent of businesses that use outsourcing choose to outsource bookkeeping and accounting processes. 

What is the cost comparison between an in-house vs. outsourced accounting team?  See How Your Cost Compare- Get Custom Pricing!

What Are the Benefits of Outsourced Accounting for Businesses?

Save Time

Outsourcing non-core business functions saves business leaders time. Without a complete back-office staff (i.e. a team of at least three people) managing the bookkeeping and accounting, business owners and managers end up spending loads of time on the business's books. While maintaining the back office is necessary, it is not the highest-value business function on which a business owner could focus their time. Your time is better spent focusing on the core function of your business. 

Outsourcing your back office will save you time so that you can focus on what you do best and drum up more clients for your business. 

Read More: The Pros & Cons of Outsourced Accounting Services

Lower Cost and Higher Impact

While you could hire an in-house team to manage your back office, you're going to need at least three employees to ensure adequate separation of duties and balance of powers. Without three employees, you won't have proper checks and balances in place, and you will be highly susceptible to fraud. 

However, three in-house employees with the necessary education, experience, and certifications to manage the bookkeeping and accounting function of a business come with a high price tag. At a minimum, you'll need a bookkeeper, an accountant, and a controller. The respective average annual salaries of these employees in the U.S. are about $44,000, $62,000, and $251,000

Hiring in-house will end up costing you hundreds of thousands annually on salaries alone. (These figures do not include comprehensive employee costs such as paid time off, insurance, benefits, etc.) 

In addition to the high cost of an in-house back office, you'll also have to deal with coverage issues when employees take time off or quit their jobs. 

Comparatively, outsourced accounting providers come at a much lower cost with the average annual cost ringing in at about $40 to $60 thousand. Plus, you won't have to worry about coverage issues, since you'll be working with a dedicated team located at an entire firm of experts. 

Reduced Risk of Fraud

Working with an outsourced provider significantly reduces your risk of fraud. You'll not only be working with a dedicated three-person team, but you'll also benefit from the experience and industry knowledge of professionally designed and implemented accounting systems that are built for security in addition to effectiveness. 

Better Compliance

Professionals working in the accounting industry stay abreast of the latest changes in rules, regulations, and laws that affect their clients and the industries they work in. As a result, you can rest easy knowing that your business is always operating compliantly, ready for an audit, and well-prepared for tax time. 

World-Class Financial Expertise

If you aren't running an accounting firm, then you likely can't afford (or justify affording) paying for the top talent in the bookkeeping and accounting industry. If you outsource your accounting, though, you will be able to access world-class financial expertise from some of the most brilliant minds in the industry because outsourced accounting firms can offer (and justify) the upward mobility and high salaries that these kinds of professionals demand. 

Advanced Technology and Automation

Accounting industry professionals keep up with the latest advancements in bookkeeping and accounting tools and technology. As a result, your business will be on the cutting edge of technology. You'll get to leverage some of the most advanced and effective tools and technology available for automating and improving processes while getting the most out of your financial data. 

Flexible and Easily Scalable

With an in-house back office department, it's necessary to anticipate how your business's needs will change seasonally or as the business grows. You'll need to maintain the right staffing and back-office capacity to handle your company's daily transaction load, vendor list, client list, payroll, and more. 

With outsourced providers, however, you can easily and readily scale (up or down) the services you receive and pay for as your business needs them or doesn't. 


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Improved Leadership and Your Business's Operation

With advice and guidance from experienced bookkeeping and accounting professionals, business leaders can leverage their back offices to make the most of their numbers and financial data. Outsourced experts can help you learn to read, understand, and use your financial and management reports to your business's benefit. We can help you identify which metrics are most important to your business and which you should track to set and measure progress toward your goals. With outsourced accounting, you can learn to make data-driven decisions to lead your business into a successful future. 

How Does Accountancy Outsourcing Work?

With the right partner, outsourced accounting is a simple process in which your accounting services provider helps you navigate an efficient and easy-to-use bookkeeping and accounting system to facilitate a remote collaboration designed to make your back office work for you. 

A Complete Back-Office Team

At GrowthForce, we assign an entire financial team to each of our clients. This team consists of a bookkeeper, a staff accountant, and a controller (accounting manager). This team works together to manage the client's back office, providing a wide range of services such as:

  • Bookkeeping and Accounting Services
    • Banking transaction entry
    • Accounts payable processing
    • Payroll
    • Job costing
    • Expensify processing
    • Billing and accounts receivable
  • Controller Services
    • Expensify reconciliation
    • Revenue recognition
    • Bank and credit reconciliation
    • Accrual-basis month-end close
  • CFO Services
    • Management KPI deliverable
    • Job profitability analysis
    • Utilization analysis
    • Industry benchmarking
    • Budget development
    • Leadership development

Outsourced accounting services provide a combination of regular financial reports for tax and compliance-purpose accounting in addition to management reports for the purpose of management accounting. As a result, outsourced accounting helps you stay compliant and operating legally while also improving the management, operations, and success of your business. 

Read More: How Much Do Outsourced CFO Services Cost?

Accounting System Design, Implementation, and Execution

Outsourced accounting providers have time-tested bookkeeping and accounting systems, policies, and procedures that they can tailor to your business's unique needs and systematically implement to simultaneously simplify and supercharge your back office. 

An outsourced accounting system is designed to facilitate collaboration between the business and the outsourced provider while mitigating fraud risk, maintaining regulatory compliance, and creating a smoothly functioning back office designed to support the business or nonprofit's mission, goals, and future vision. 

Comprehensive Technology for Automation and Collaboration

An outsourced accounting service provider uses technology to automate, simplify, and improve the business's bookkeeping and accounting system and more. These tools begin with a comprehensive accounting software system such as Intuit QuickBooks Online (QBO) or Sage Intacct.

The base accounting software chosen primarily depends on the business's size and subsequent back-office needs. SMBs are very adequately served by QuickBooks software, while mid-market companies or fast-growing medium-sized businesses are typically better served by Intacct. 

An outsourced accountant will then pair your accounting software with several of the hundreds of fully integrated applications that are available to automate and improve other aspects of your business, its operations, and its management. Paired with the right integrations for your business, outsourced accounting providers can transform your basic accounting software into an enterprise resource planning and management tool by tracking both financial and non-financial metrics to evaluate trends and improve efficiencies. 


The Guide to Outsourcing Your Bookkeeping and Accounting

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Considering outsourcing? It starts with weighing your pros and cons. 

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Scalable Services to Meet Your Growing Business's Changing Needs

Outsourced accounting services are typically scalable and flexible. Since outsourced providers work with a wide variety of businesses in various industries, they intentionally design their services and packages to meet a wide variety of needs, budgets, and business sizes. 

For example, GrowthForce offers three basic tiers of outsourced services: essential, advanced, and complete. Each tier provides a deliberate selection of bookkeeping and accounting services, controller services, and CFO services designed to meet the needs of businesses in various stages. 

How to Outsource Accounting in Your Business

The first step in outsourcing your business's back office is to find an outsourced accounting service provider that is right for you. Before you begin the search, take the time to evaluate your business's needs. Think about what you are looking for in an outsourced provider, the types of services your business could benefit from, and what you hope to achieve by partnering with an outsourced accountant. 

Next, look for a provider with a good track record, relevant certifications, and experience working successfully with other clients in your industry. Take your time to shop around and schedule consultations with plenty of providers. Be sure you understand the ins and outs of the services you sign up for and all of the potential costs involved. Ask plenty of questions about communication, procedures, and the software and applications you will be using. 

As your working relationship develops, you might find that you can scale back or scale up services to better meet the needs of your business's back office. Primarily, focus on selecting an outsourced provider with whom you are comfortable working. You want to make sure that your business's needs are met and that you have an outsourced provider who feels like a true partner who cares about the success of your business just as much as you do. 

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