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What Businesses Need to Know About Virtual Accounting

Entrepreneurs and business owners considering contracting with a virtual accounting firm need real information they can use that informs better decisions. If you are reading this article to learn more about small business bookkeeping solutions, you are in good company. Experts who track these things say that there are more than 95,000 online searches every month related to bookkeeping in the United States alone.

This article explains some of the advantages and disadvantages of working with an outsourced bookkeeping or accounting partner.

Is Virtual Accounting a Good Option For Your Business?

Virtual accounting services, also known as remote bookkeeping and cloud bookkeeping, provide numerous benefits for businesses of all sizes. Entrepreneurs are often experts when it comes to their products or service. However, some do not know where to start when it comes to setting up a general ledger, a single-entry bookkeeping system, or an integrated system that allows automated flow between all major financial accounting functions. The latter means that business owners can access inventory, replenishment, accounts payable, accounts receivable and budgeting files via one application.

Business owners who need a user-friendly solution to monitor financial activities that improves control while lowering costs often experience the greatest benefits. Beyond gaining tighter control, advantages include:

Flexibility to Scale

Responding to changes in sales volume, market considerations, and other factors often mean a business needs to quickly increase or decrease in-house accounting staff. Companies that experience seasonal workflow changes find that an outsourced accounting team provides an always-on-demand workforce that solves issues associated with demand fluctuations. This flexibility means no layoffs during slow periods, which could trigger unemployment claims. And, no rush to hire additional staff when volume suddenly surges. Furthermore, cloud bookkeeping and digital record keeping improve accuracy, faster billing, and better cash flow management.

Digital Record-Keeping Informs Better Decisions

Digital record-keeping and virtual accounting services provide real-time data that informs better buying, pricing, and replenishment policies. Digital record-keeping literally eliminates backlog bottlenecks during periods of peak sales volume. Since online bookkeepers provide state-of-the-art technology that continuously monitors your records for duplicate entries and other errors, and allows 24/7 access to files from any device, you'll most likely avoid any costs associated with updating existing hardware and software.

Improve Cash Flow Management with Enhanced Accuracy

Online accounting services deploy the best tools to organize financial transactions. These firms may specialize in one industry – say, healthcare, retail, or real estate – or they may hire professionals trained across multiple industries. Finding an outsourcing partner that offers experienced bookkeepers in your field is critical for success. With advanced technology and an experienced workforce that knows your specialty, cash flow management improves with accurate invoices, receipts, and other financial data to drive faster customer payment and collection. Improved cash flow management also lowers overhead costs and payroll spending.

Reduced Payroll Spend and Other Costs

Many entrepreneurs and small business owners find that an off-site accounting team works well with a small in-house team. You gain an experienced staff without the expense of recruiting, hiring, training, and retaining more employees. These web-based firms allow businesses the flexibility to bring on help when needed and cut back on outside support when the workload is manageable. Your virtual accounting team may include bookkeepers, CPAs, and inventory specialists. Or, you may find you only need a bookkeeper to maintain accurate records that your current CPA or tax professional needs to file tax reports.

Potential disadvantages and How To Avoid Them

Naturally, while there are advantages to outsourcing bookkeeping activities, there may be some disadvantages you should be aware of. For example, if you do not do your due diligence, you may partner with a company that does not have experts trained in your industry or niche market. Hiring a team with limited knowledge about your particular product or service could potentially create more problems and solutions.

Sometimes, it's difficult to coordinate some aspects of your business remotely. Inventory tracking presents a challenge for some businesses. Highly-specialized customer invoicing and factoring agreements may also require extensive hands-on knowledge or training to make the partnership work efficiently. Finding the best fit entails carefully considering your business's unique workflow. It may be better to maintain an in-house team if coordination will create a burden for your internal workers.

Finally, while an outsourced bookkeeping service can give you tighter control over cash flow, you may lose some control. Remember that even though you are handing off the excess – or maybe even the majority – of your financial management activities, as a business owner, your company's financial health is ultimately your responsibility. Finding a partner with a proven track record, backed by verifiable references, improves peace of mind and ensures you can monitor your records. If you don't feel comfortable, continue interviewing candidates.

Let Handle It

Not every business is well-suited to cloud-based bookkeeping partnerships. However, if your current bookkeeping solutions aren't helping you make wise business decisions, it's worth your time to explore virtual accounting options.'s virtual client accounting services could be just what you need to experience all of the advantages of virtual accounting services.


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