If you’re aiming to streamline your financial operations and foster business growth, outsourced accountants might be the solution.
This article will delve into the role of outsourced accountants, the responsibilities they can take on, and situations in which it’s beneficial to hire them.
We’ll also discuss the advantages outsourcing accounting can offer your company, as well as the potential challenges of doing so and how to navigate them for a successful outsourcing experience.
What Is an Outsourced Accountant?
An outsourced accountant is a part of a professional team from an outsourced accounting firm. They provide a range of financial services to businesses, like bookkeeping, financial reporting, and industry-specific financial operations, tailored to meet the company’s specific needs.
Compared with an internal accounting department, an outsourced team of accounting professionals can adapt to your accounting processes and handle your finance and accounting needs in a more flexible and scalable manner.
What Responsibilities Can You Delegate to an Outsourced Accountant?
By outsourcing accounting tasks, you can enable your internal team to focus on their core activities while ensuring that your financial operations run smoothly and efficiently.
From bookkeeping to regulatory compliance, here are the top responsibilities outsourced accountants can handle:
Bookkeeping and data entry
Outsourced accountants can handle a wide range of bookkeeping and data entry tasks.
In addition to providing support in journal entry maintenance, they can prepare a variety of periodic reports and maintain up-to-date and accurate records. These professionals can also ensure that your business is adhering to regulatory standards.
Financial analysis and reporting
Financial analysis and reporting are crucial aspects of the accounting function that are essential for making informed business decisions.
Outsourced accountants can provide valuable insights into cost control, profit maximization, and cash flow enhancement. They generate customized reports catering to your business needs, aiding you in understanding your financial standing.
They also provide ongoing analysis of the company’s financial health, focusing on key performance indicators such as sales and net income.
Payroll processing
Payroll processing is a complex task that requires attention to detail and an understanding of employment laws. Outsourced accountants may handle payroll processing by providing the following professional services:
- Ensuring compliance with employment laws
- Minimizing the risk of errors
- Maintaining data security
- Making sure that funds for tax payments are available
- Managing the reporting, collecting, and depositing of employment taxes with state and federal authorities
Accounts receivable and payable management
Managing accounts payable and receivable is crucial for maintaining a healthy cash flow. Outsourced accountants can take on these responsibilities by managing customer billing, tracking accounts receivable, and ensuring payments are collected.
In addition, you can outsource accounts payable to an external accountant to help maintain business relationships by ensuring timely vendor payments.
Regulatory compliance and risk management
Regulatory compliance and risk management are also vital elements of financial management. Outsourced accountants can guide your company through these complexities by staying updated with evolving global and regional regulations.
These finance professionals can mitigate risks related to accounting operations and reporting and maintain compliance with international financial rules.
When Should You Hire an Outsourced Accountant?
The services of a professional outsourced accounting firm can help meet your accounting needs quickly and efficiently. Here are a few common scenarios in which hiring an outsourced accountant can be a game-changer for your business:
You’re struggling to hire
Hiring an in-house accounting team can be a daunting task, especially if you lack expertise in HR or accounting.
Small businesses often face challenges in finding a single employee capable of handling all types of accounting tasks. In such situations, outsourcing may be a more practical solution, giving you access to a team of experts without the hassle of recruitment.
You’re a fast-growing company
The financial situation of fast-growing companies changes rapidly. As transactions increase and financial management becomes more complex, having an outsourced accounting team can make it far easier to scale financial processes.
Outsourced accounting providers offer expert support without the overhead costs of a full-time hire, allowing you to reinvest savings into your core business activities.
Moreover, they often give you access to modern accounting systems and customized management reporting, facilitating real-time financial visibility for better decision-making.
You need temporary help
There could be times when you need temporary help, such as during peak seasons, at tax times, or when your in-house staff is unavailable. In these periods, temporary outsourced accountants can be a boon.
They can provide specialized skills for certain complex financial projects or one-off events that your in-house staff may not be equipped to handle.
What Are the Benefits of Hiring an Outsourced Accountant?
From access to niche financial knowledge to the ability to leverage modern accounting tools, hiring an outsourced accountant can bring a wealth of advantages to your organization, including:
Cost savings
One of the primary advantages of hiring an outsourced accountant is the potential for cost savings. By eliminating the need for additional office space, equipment, and related overhead costs, you can significantly reduce your expenses for accounting services.
It’s possible to save further by outsourcing to certain parts of the world, such as Latin America (LatAm), where living costs are lower and accountants can offer reduced rates. See how you can cut salary costs significantly by hiring LatAm-based talent in our salary guide.
Increased efficiency
Outsourced accountants can improve the efficiency of your business operations by allowing you to focus on core activities. The time saved by outsourcing accounting tasks can translate directly into increased productivity.
Furthermore, outsourcing empowers businesses to adapt to seasonal demands or spurts of rapid growth more efficiently.
Access to specialized accounting expertise
Hiring outsourced accountants grants you access to a larger pool of experts with specialized knowledge and experience in various financial activities. Choosing an accountant with the right skill set can help your business navigate the complexities of financial management with greater confidence and precision.
The ability to utilize powerful accounting technologies
Outsourced accountants bring the advantage of cutting-edge tools to your financial operations, enabling them to streamline various accounting tasks.
They are well versed in using advanced accounting software such as QuickBooks, Xero, and FreshBooks, which facilitate everything from transaction tracking to generating detailed financial reports.
Additionally, they might employ specialized tools for payroll management, such as ADP or Gusto, and use platforms like Expensify for expense reporting.
Your company can benefit from these powerful accounting technologies without needing to purchase them independently, as they are often part of the outsourced accountants’ arsenal.
What Are the Challenges of Hiring an Outsourced Accountant?
Hiring an outsourced accountant can be a strategic move, but it’s not without its hurdles. It’s important to recognize and plan for these potential challenges to ensure a harmonious and productive partnership with your outsourced accounting provider:
Navigating different time zones
Working with an outsourced accountant often means collaborating across different time zones. This could lead to scheduling difficulties, communication delays, and potential disruptions in workflow.
Establishing a workflow that accommodates time differences is crucial for maintaining a steady communication stream and timely delivery of services. Choosing a nearshore accounting provider located in a similar time zone is another way to mitigate this challenge.
Ensuring data security
When you outsource accounting tasks, you are sharing sensitive financial data with an external party.
The security of your information is vital—a single data breach costs US organizations an average of $4.45 million.
Ensure the firm you partner with has robust data security measures in place to protect your information from breaches and cyberthreats. This includes secure data transmission methods, strong authentication protocols, and regular security audits.
Aligning outsourced services with your company culture
Your company’s culture and the outsourced accountant’s working style should be compatible to avoid friction.
Misalignment can lead to misunderstandings and a disconnect in values, which may affect the quality of work and the overall business relationship. Discuss your company's principles and expectations up front to ensure a good cultural fit.
Final Thoughts
Outsourced accountants have a critical role, and their services can offer significant benefits for your business. However, it’s crucial to be aware of potential challenges and prepare adequately to ensure a successful partnership.
If you’re interested in working with an outsourced accountant to handle your financial functions, see our comprehensive guide to accounting outsourcing for more strategic insights and tips.
Frequently Asked Questions
What are the different types of accounting outsourcing?
Accounting outsourcing can be achieved through nearshoring, offshoring, and onshoring.
Onshore outsourcing refers to contracting accounting services within your own country.
Nearshoring is when you partner with accounting providers in nearby countries, often to leverage similar time zones and cultural affinities. Offshore outsourcing involves hiring accountants from distant countries, commonly for cost savings.
Each type offers different benefits and considerations regarding cost, communication, and collaboration.
Can outsourced accountants provide strategic financial advice for long-term business planning?
Many outsourced accountants excel in offering strategic financial advice. They utilize their extensive expertise to aid in long-term business planning, financial forecasting, and decision-making processes that align with your company’s business goals and growth objectives.
How does outsourcing accounting functions affect internal staff dynamics?
Outsourcing accounting functions can enable internal staff to adopt a more focused and strategic role. This allows them to concentrate on core business functions while outsourced professionals use their specialized knowledge to handle the day-to-day financial tasks.
It’s essential to manage this transition effectively to ensure everyone understands their roles and to maintain a collaborative work environment.
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