Outsourcing accounting and bookkeeping procedures is an emerging trend among businesses of all sizes. Well-managed finances allow companies to make sound long-term projections and crucial business decisions. So, it’s important to weigh the advantages and disadvantages of delegating these processes to an external service provider.
Startups and small businesses don’t have the luxury of spending extended hours – periods that can stretch to more than 80 hours (or two weeks’ worth of work) per year – on accounting and bookkeeping processes. Outsourcing these laborious processes gives in-house employees and executives more time to focus on the core functions of the business.
Businesses can save up to 40% on operating costs by outsourcing their accounting processes. Instead of incurring costs for hiring, training, equipping, and retaining in-house accountants and bookkeepers, businesses can reallocate financial resources to activities that generate more direct value to the company.
By entrusting critical finance management functions to a team of qualified and experienced specialists, startups can avoid making their employees wear too many hats – a counterproductive but common practice among small startup teams.
Outsourcing these critical back-end functions to experts also protects businesses from costly errors. Third-party accounting and bookkeeping firms are not only trained professionals; they also use licensed, up-to-date programs (or in some cases proprietary applications) that ensure data security through encryption.
Just as your company is dedicated to deliver high-quality services or products in your industry, so is your outsourced accounting service provider committed to you. They are, in fact, under contract, so you can count on them to deliver their service as agreed.
Outsourcing services and procedures (in general) encourages documentation and standardization of business operations. Doing so makes it easier for third-party service providers to integrate into and understand the company’s processes and workflow. Centralizing processes is also a key step that allows businesses to scale in the future.
When outsourcing your business’s accounting and bookkeeping credentials, you are entrusting sensitive company information to an external entity. Make sure to look into the provider’s track record – client history, published testimonials and reviews, news features – to gain a better idea of the outsourcing firm’s reputation.
As with any ongoing outsourcing partnership, it pays to maintain regular meetings or check-ins to ensure transparency as well as to address any issues or problems as they arise.
Unless your provider has the same business hours as you do, you may have to defer consultations on critical issues that arise. Peak business seasons also demand that both you and your provider collaborate face to face or are online at the same time.
Working with an outsourced service provider means abiding by their own systems and work styles. Check client testimonials and reviews beforehand. Ask your potential provider key questions to determine if they’re the right fit.
The nuances of your company’s structure and operations may be lost in translation if you outsource your backend operations to a provider unfamiliar with the language of your business – or even the English language. Fortunately, Philippine-based outsourcing partners are fluent both in English and in the systems related to your business.
Outsourced service providers can be expected to maintain a professional connection with the business, but may fall short of delivering results in accordance to the company-wide culture that its managers may be trying to cultivate.