Despite the computerized accounting software, handling accounting can still be overwhelming because of the numerous tasks involved in the process.
Accounting personnel inventory all unrecorded assets, income, and expense accounts. They also keep a complete record that needs to be filled out by business associates or customers and many more.
The day-to-day tasks can be so time-consuming and draining that many enterprises look for better ways to save valuable time. Companies need to handle their accounts correctly and securely; thus, outsourced accounting is an ideal solution.
Outsourced accounting means they can free up more of their time, make more sales, and focus on the growth of their organization.
What is outsourced accounting?
Outsourced accounting is a service that allows businesses to farm out their accounting needs to a third-party provider specializing in these services. It involves payroll, bookkeeping, financial reporting, and other accounting functions.
Accounting tasks are often time-consuming and tedious, and many small businesses need more employees to devote hours of work each week to fulfill their roles.
In such cases, many business owners outsource their accounting and bookkeeping to an outsourced accountant rather than an in-house bookkeeper.
According to 2019’s Clutch survey, accounting is one of the most commonly outsourced technical tasks by small businesses (37%), similar to IT services.
There are many reasons businesses outsource their accounting needs, but the most common is to free up time to focus on core business activities.
Common types of outsourced account services
Outsourced accounting is an excellent way to improve cash flow while maintaining financial control.
Here we have the different types of outsourced accounting services:
Accounts receivable and accounts payable management
Accounts receivable (AR) and accounts payable management involve collecting and monitoring invoices, ensuring they are paid on time, and verifying the proper payments.
Both are two essential aspects of accounting because they represent a significant portion of business assets.
With outsourced accounting, businesses can ensure that their AR is adequately managed. While it does not accumulate too much, it also warrants that payments are made promptly using any available means.
Preparing financial reports
This outsourced accounting service comprises preparing financial statements, such as income statements, balance sheets, and cash flow statements.
These reports can also include projections or other information that helps firms evaluate their company’s performance and decide how to improve it.
When companies hire an outsourcing company, they can use these reports to analyze their cash flow and other important metrics to help them make better decisions.
Record management
Record management’s goal is to keep track of all these pieces of paper to use them when preparing tax returns or other financial reports later on down the road.
Many businesses acquire outsourced accounting to manage their records, so they don’t have to worry about filing taxes or paying taxes on time every year.
Controller services
Outsourced controllers give companies more flexibility. They provide accurate data with less room for error than an in-house accountant might have when performing the same tasks.
This translates into fewer stock errors, fewer payment errors, and fewer administrative errors overall. Thus, it improves the accuracy of financial reports used internally and externally by investors, lenders, and other stakeholders.
Key benefits of outsourced accounting
Below are the advantages of outsourcing accounting tasks:
Cost-effectiveness
It’s difficult to find affordable qualified accountants for small businesses with limited budgets.
Outsourced accounting is less costly than in-house accounting. This will help firms avoid spending money on unnecessary items and resources that could be put toward growing their company.
Accounting expertise
Outsourced accounting companies can offer advice on how best to manage their finances, which could help increase profits or decrease costs over time.
In addition, they will also be able to handle all aspects of account reconciliation and ensure that everything remains up to date at all times.
Automation technologies
Accounting software has evolved over the years and can now automate a lot of tasks that used to be done manually. This makes it possible for companies with limited resources to achieve the same level of accuracy as larger companies.
Outsourced accounting firms have access to automation technologies that allow them to provide services at a lower price.
Security
Another key benefit of outsourced accounting is security. Outsourced accounting firms use secure data centers equipped with state-of-the-art security systems.
A third-party service provider has adequate security measures in place to ensure that data is protected from all threats.
This security measure safeguards data from potential threats like hackers, malware attacks, and other risks associated with managing a business’s IT infrastructure.
Increase flexibility to meet business needs through outsourced accounting
Accounting is a key part of any business. It needs to be done effectively and efficiently to ensure that the management makes the right decisions at the right time.
It can be difficult for small businesses to find the time or resources required to do this effectively, which is why many companies outsource their accounting.
Outsourced accounting means firms have access to a skilled team who can provide expert advice and assistance with their accounts.
Ultimately, it can help businesses save money and increase efficiency, and it gives companies more flexibility as they grow or change over time.
