Accounting is a necessary function of any business, but it can also be time and resource-intensive. To simplify matters, some businesses choose to outsource their accounting needs to a third-party provider. Outsourcing your business’s accounting comes with both advantages and disadvantages, so it is important to consider your options carefully before making a decision.
Advantages of Outsourcing
Some of the advantages of outsourcing your accounting needs are listed below.
- Outsourcing is cost-effective.
In many cases, outsourcing your company’s accounting needs to a third party will be less expensive than hiring staff members to handle this task in-house. Hired employees are often entitled not only to a salary but also to employment benefits that raise your overhead expenses even more. With outsourced accounting, you avoid all of these costs. This can especially be useful for new businesses, as well as for smaller businesses that lack substantial financial resources.
- Outsourcing reduces the risk of fraud.
When you hire someone to complete your accounting tasks in-house, the temptation for fraud is great. This individual has access to all of your business’s financial accounts, as well as the power to move money. A dishonest employee could commit fraud for years without notice, costing your business a substantial amount of money over time. When you outsource your accounting needs, however, you will have multiple specialists overseeing your accounts. This greatly reduces the temptation and risk of fraud.
- Outsourcing may help you build a better business.
The professionals who handle your accounts when you choose to outsource are trained and knowledgeable. If any red flag appears, they will notice it immediately, giving you the chance to rectify the problem before it grows. Not only does this provide peace of mind and confidence, but it also allows you to make informed financial decisions for the benefit of your business.
Disadvantages of Outsourcing
Some of the disadvantages of outsourcing your accounting needs are listed below.
- There may be hidden costs.
Although outsourced accounting can often be cost-effective, there may be hidden costs, depending on the service you choose. For example, if you don’t read the fine print, you may believe you are paying the full cost of the service in the form of a monthly fee, only to find that some of the services you received were not included and will cost extra. To avoid this potential disadvantage, it is important to be thorough and clear about your expectations and responsibilities when forming the initial relationship with your accounting provider. Seek a service provider that is transparent from the start.
- Outsourced accounting may not be as easy to contact.
Having an in-house employee handling your accounting needs gives you immediate access to information about your accounts and answers to questions whenever you need them. An outsourced accounting provider, however, may not be as readily available. When comparing different options and providers, be sure to ask about responsiveness in the event of a question or concern.
- Outsourcing takes away some of your control.
Outsourcing your business’s accounting needs requires you to give up some measure of control over your accounts. When accounting is outsourced, you will no longer be overseeing every transaction. Instead, you will need to trust your accounting specialist to handle tasks properly on your behalf. Because so much trust is required in this relationship, getting to know your accounting specialist and thoroughly investigating the service provided before signing a contract is highly recommended.
Outsourced accounting isn't right for every business owner, but it can offer significant advantages. To determine whether outsourcing is right for your business, consider the pros and cons carefully, or request a demo from AccountingDepartment.com below. If you choose to move forward with outsourcing, be sure to compare multiple providers before you make a selection. Remember to ask about the services provided, the fees, and the availability of your accounting specialist to address questions and concerns.