The True Cost of Outsourcing Your Accounting: Factors and Savings Explained

Tired of deciphering confusing invoices or worrying about payroll deductions? Dreaming of a world where accounting doesn’t feel like a financial black hole? The answer might be closer than you think: outsourcing your accounting services.

But before you dive headfirst into the world of outsourced numbers and spreadsheets, wouldn’t you like to know the real cost of outsourcing accounting services and not just the advertised rates? These details often get overlooked when you use offshore accounting.

Here, we’ll reveal the factors that influence outsourced accounting pricing, compare the costs of outsourcing with maintaining an in-house team, and uncover hidden savings you might not know exist. 

We’ll equip you with the knowledge to make a decision that balances your books and boosts your bottom line. With detailed comparisons and practical tips, you’ll learn how to maximize value and optimize your outsourcing strategy.

9 Factors Affecting the Cost of Outsourcing Accounting Services

Understanding the various factors that influence the cost of outsourcing accounting services is crucial for making an informed decision about how to handle your accounting functions. Here are nine key elements to consider:

1. Company size and industry 

Larger companies and those in heavily regulated industries (like healthcare or finance) typically require more complex accounting, leading to higher costs.

2. Scope of services required

Basic bookkeeping, which includes recording financial transactions and maintaining ledgers, is often relatively affordable.

However, comprehensive services like tax preparation, audits, financial analysis, or strategic financial planning will increase the cost of outsourced accounting due to their complexity and the specialized knowledge required to carry them out.

3. Frequency and urgency of accounting tasks

If you require real-time updates, daily financial reports, or quick turnarounds, expect to pay more than if you only need monthly summaries.

4. Experience and expertise of the provider

Some of the top finance and accounting outsourcing providers with highly specialized knowledge or a proven track record of success might charge more for their services.

5. Technology and software

Advanced accounting software and tools can streamline processes, but they might also come with an additional cost. Consider whether the efficiency gains justify the potential extra expense.

6. Location of the outsourcing provider

Outsourcing to a provider in a region with a lower cost of living, like Latin America (LatAm), will generally be less expensive than hiring a firm based in the US or Europe.

7. Service model

The best accounting firms offer various service models, each with its own pricing structures. You might encounter hourly rates, fixed monthly fees, or project-based pricing. Choose the model that aligns best with your budget and needs.

8. Additional services

Do you need payroll processing, financial consulting, or other specialized services? These extras will add to the overall cost. Be sure to inquire about all potential add-ons to get a complete picture of the fees involved.

9. Regulatory requirements

If your business operates in a heavily regulated industry, you might need an accounting firm with specific expertise, which could affect pricing.

By considering these factors, you can better understand the pricing landscape of outsourced accounting services and choose a provider that fits your financial needs and budget.

Actual Cost of Outsourcing Accounting Services

So, how much does it cost to outsource accounting? Let’s break down the costs involved in outsourcing your accounting activities so that you can make an informed decision that fits your budget:

Actual cost vs. hidden costs

When exploring outsourced accounting, it’s essential to be aware of both the direct costs and potential hidden fees. 

Actual costs are the fees explicitly outlined in your contract with the provider. They can include:

• Monthly or hourly rates
• Software and technology fees
• Onboarding fees

Hidden costs are less obvious accounting outsourcing expenses that can sneak up on you, such as:

• Communication costs
• Currency conversion fees (for international providers)
• Additional service fees (for requests beyond the scope of your contract)

Average price and price range

The average cost of finance and accounting BPO services can vary significantly depending on the factors mentioned earlier. However, here’s a general idea of what to expect:

If you’re looking to hire accounting talent directly, platforms like Near can help you find qualified professionals in regions like LatAm, often at a lower cost than hiring domestically. Here are a few examples of salaries for accounting roles in LatAm for candidates you can hire through Near: 

Near charges a monthly fee per hire, which varies depending on the role. There are no up-front fees, and you only pay if you successfully hire a candidate.

Monthly cost and overhead costs

It’s crucial to compare the monthly cost of outsourcing with the potential overhead costs of maintaining an in-house accounting team.

By carefully evaluating both the direct costs of outsourcing and the potential savings on overhead, you can make an informed decision about which option best suits your business’s financial needs and long-term goals.

How Outsourcing Reduces Accounting Costs

Outsourcing accounting services is a cost-effective solution that offers numerous financial advantages for businesses. By shifting accounting responsibilities to an external provider, you can achieve significant cost savings and operational efficiencies. Here’s how outsourcing can help reduce your accounting expenses: 

Savings on payroll, benefits, and overhead

Hiring and maintaining an in-house accounting team can be a substantial financial burden. The Society for Human Resource Management (SHRM) estimates the average cost per hire to be approximately $4,700. Some experts suggest the actual expense could be up to four times the position’s salary when all factors are considered. 

These costs include not only salaries and benefits but also office space, equipment, and software licenses. Outsourcing can alleviate these expenses, converting them into a predictable monthly fee and simplifying budget management.

Elimination of training and employee costs

It costs large businesses in the US an average of around $500 just to train new employees. This cost goes up to approximately $1,100 for small businesses. Furthermore, staying current with accounting regulations and software requires ongoing training and development. 

Outsourcing removes this burden, as the provider has a team of experienced accountants and takes responsibility for keeping their skills sharp.

Access to a dedicated team

When you outsource, you gain access to a dedicated team of accounting professionals with diverse expertise. This ensures your financial tasks are handled accurately and efficiently, often exceeding what a single in-house accountant could achieve.

Scalable solution for sustainable growth

As your business grows, so do your accounting needs. Scaling an in-house team can be challenging and costly. Outsourcing allows you to easily adjust your service package to match your evolving accounting requirements, ensuring you always have the right level of support without overspending.

How To Optimize the Costs of Accounting Outsourcing

To maximize the value of accounting outsourcing, use these strategies:

• Define clear objectives: Specify your needs to avoid paying for unnecessary services.
• Choose the right provider: Compare outsourcing firms based on their expertise, pricing, and service offerings.
• Leverage technology: Opt for providers that use advanced accounting software to enhance efficiency and reduce manual errors.
• Negotiate contracts: Seek flexible terms that allow scalability, and avoid long-term commitments if you’re unsure.
• Regularly review services: Periodically assess the provider’s performance and adjust services as your business needs change. 

Final Thoughts

Outsourcing your accounting can be a strategic move that saves money, improves efficiency, and frees up your time to focus on core business activities. By understanding the factors that influence outsourced accounting costs and following optimization tips, you can make an informed decision that benefits your business.

If you’re looking for a hassle-free way to find top-tier accounting talent tailored to your specific needs, Near can help. Our platform connects businesses with skilled accounting outsourcing professionals in LatAm, simplifying your accounting process. 

Take the next step toward financial efficiency—contact Near today by filling out this form.