Outsourced accounting means partnering with a firm that is entirely dedicated to the accounting and finance functions of your business, from entering daily transactions all the way through presenting and interpreting timely key performance indicators that are relevant to your business.
Outsourced accounting means focusing your staff on the core functions of your business, abandoning trying to find and train your own finance and accounting staff, and contracting with a team that specializes in accounting and finance for those functions.
Outsourced accounting is giving up the struggle of hiring, training, and retaining staff for a position that most business owners don’t have the capacity to administer. Many business owners also find the current list of candidates available to be slim and underqualified.
An outsourced accounting relationship can be arranged in the way that works best for your business. You may have a well-oiled machine when it comes to running your payroll, creating customer invoices, and matching customer payments to invoices, but beyond that your staff is stretched, making mistakes, and getting burned out. An outsourced accounting team can step in and take care of bill pay, recording payroll, reconciling your accounts, amortizing your expenses and revenue to the correct periods, and create a monthly dashboard to give you visibility into your business that you can trust.
That arrangement is one example. There are many possible arrangements, and the beauty of using an outsourced firm is that you can scale up or down as you determine the best fit.
A quality outsourced accounting firm vets and utilizes the best solutions available on the market. In today’s rapidly changing technology landscape it pays to have a team keeping you at the front of the pack.
Having a team of accountants familiar with your business on a day-to-day basis means that when questions come up you have someone readily available to intelligently discuss your options.
Anomalies in your finances can be more easily discovered throughout the year when your books get timely and accurate adjustments.
Accounting staff turnover, benefits, and related costs are taken off your plate. The outsourced firm takes care of training any new team members on your account, maintains the competitive compensation required to retain quality talent, and maintains a pipeline of talent.
Your accounting team is dedicated to accounting and finance. There is no need to fill hours with other tasks outside of a staff member’s strengths to keep them at full-time, and the accounting team is using their skillset for the highest and best use.
There are several options on the market right now that promise to deliver reconciled books at a very low cost (some as low as $200 or less per month). It is important to draw a distinction between bookkeeping and fully outsourcing your accounting. Basic bookkeeping does not replace an accountant needed on your staff.
Basic bookkeeping will ensure that each line on your bank and credit cards statements is recorded in your financial software. Paying attention to the correct treatment of each of those transactions is another matter (is that large withdrawal a distribution or a business expense?). Determining the correct period for that expense or income is another matter (is that large deposit paying an invoice you already recorded or is it truly income in the current month?). While bookkeeping may replace some busy work, it generally will not get you a full picture including relevant and accurate information.
Outsourced accounting can also automate accounting busy work for you, but the meat of outsourced accounting is interpreting and adjusting the data to paint an accurate, trustworthy portrait so that you are ready for your tax return (and audit, if you have an annual audit). Most importantly, an outsourced accounting team is delivering a dashboard to you on a regular basis so that you can better run your business throughout the year.
Contact us at Mahoney if you need help deciding whether you need an outsourced accountant.
Additional reading: Benefits of Flexible Budgeting