Though not the most exciting part of a business, accounting is an absolute essential. It is well known that managing a business' finances can be quite tedious and time-consuming. In fact, accounting goes beyond simply counting expenses and revenue and even acts as a guide for complying with laws and regulations, analyzing your business' financial health, and give you data to improve growth strategies.
As a business owner, one of the main things on your mind, next to increasing revenue, is usually managing expenses. You are also aware that your company needs to stay on top of certain industry rules that you have to follow, as well as look your growth.
Sounds like so many things to think about, and many businesses might close shop if and when the numbers don't match. That's why it's important to keep your business plan evolving, your financial records updated, and your accounting team in tip-top shape.
One way in which business owners often try to keep their expenses down is by doing everything themselves in house, or hire a one-man team to do everything. This is usually the case with small business accounting.
While keeping some processes in-house or doing it on your own has some benefits, it also has its drawbacks. So how do you decide which is better?
When is it time for you to outsource your business' accounting processes?
1. Lack of Manpower
Most businesses generally start out pretty small. Which means the owner or CEO is usually wearing more than one hat—including the Hat of Accounting. In other cases, the company hires one person to do all kinds of tasks within the scope of accounting. Eventually, the business will increase in size, which means revenue would also increase.
Once this happens, the business' accounting processes needs to extend beyond mere bookkeeping. At the end of the year, the owner has to look at profit and loss statements, create annual financial records, and talk to other firms to update themselves on regulations in their industry. A more dedicated team of accountants is needed at this point.
In this case, there are two choices: to outsource, or not to outsource. If you don't outsource, you can still keep your budget low in the short run, but you may lose sight of your long-term goal for the company, which is to grow. On the other hand, when you choose to outsource, especially for a young and growing business, your accounting operations works out more profitable. You as the CEO/Owner need to focus on the eventual growth of your company while a team of specialized accountants will crunch the numbers for you.
2. More Sophisticated Technology
At some point in your business Accounting journey, things are going to start getting more complicated. It will no longer be just a matter of tracking a few invoices or basic bookkeeping.
This usually happens when the business experiences revenue growth, hires more employees, or starts accepting investor capital.
When this happens, more sophisticated financial records are needed to keep the business running smoothly, and to improve decision-making.
At this point, more upgraded accounting software and technology is needed. To keep investment costs down and get access to the best technology, outsourcing your accounting processes is recommended.
Outsourced accounting teams most likely are more proficient in navigating updated software & technology that enable them to work in a protected environment, safely working on the numbers without worry of a cyber threat. At the same time, highly-trained accountants in outsourcing companies often have knowledge in different types of accounting software that go beyond simple bookkeeping records. With their knowledge of technology, outsourced teams can work with your in-house team to double-check on data and other processes to ensure that your numbers are sound and continuously growing.
Other Times to Outsource
There are some other more visible triggers to help make the decision to outsource your business' accounting. These include:
- Reaching a certain amount in revenue. It's up to you, the owner, to decide what's the right amount. But a good range would be a 15-25% growth year-on-year. You can start small, with three outsourced accountants to complement your in-house team, and grow from there. One of the best things about partnering with a reputable & trusted outsourcing company is that they grow with you.
- When the in-house team is experiencing burnout. While companies want to avoid this, it's still a norm: people do get burnouts and choose to either take a leave or resign. This costs billions of dollars every year. Hiring a team of outsourced accountants can ease up employee burnout and save you a fortune on labor costs.
- Your team is lacking expertise. Yes, you have an in-house team. But how often do they receive proper training to stay fresh in their field? Do you have the budget to send them to training seminars, or give them other opportunities for professional growth? A small business might hire people who have not specialized in accounting. Outsourcing gives you guaranteed access to a highly-trained team that's constantly learning thru competency-based learning & development training programs. While not all companies give that opportunity, it's good to spot out a potential partner that does.
Contrary to popular belief, Accounting is a core function of a business. Your business will fail without it. Literally. But with outsourcing, you can focus on building your business while keeping your finances in order.
All you need to do is partner with a globally-trusted outsourcing company.
Infinit-O is a trusted F&A solutions partner that can help you build and operate a dedicated team of accounting professionals of every level including certified public accountants designed specifically for your unique needs, with cost savings of up to 70%. We can help you meet your goals, whether they be growth, better productivity or simply bottom line cost savings. With access to excellent talent who use cutting-edge technology, we provide some of the best strategic solutions for your business. We are ISO-certified and GDPR-compliant, so your company and client data are safe with us.