Is your company struggling to tackle all its accounting needs? Companies that have lost a CFO, outgrown their bookkeeper, changed their offerings, or experienced high growth can have difficulty finding the right accounting expertise — at the right price — in today's tight labor market. Outsourcing is a possible solution. Here are eight benefits this option can provide your company and its bottom line.
- Access to Top-Notch Expertise
Recruiting and retaining talented professionals can be challenging, especially for smaller businesses with limited resources. When you outsource, you have ready access to highly experienced accountants who are up to date on best practices. Outsourcing firms have qualified team members with expertise across the entire spectrum of accounting roles — from bookkeeper to CFO — and specialized knowledge for you to tap into as needed. That means they're likely to handle the aspects of your finance function correctly the first time and cost-effectively.
- Access to the Latest Technology
Outsourcing provides ready access to sophisticated, updated accounting and tax software and other technology tools. Smaller organizations frequently lag behind their larger competitors in adopting such tools, which might be cost-prohibitive until they've been on the market for a while. Reliance on outdated systems could put you at a disadvantage.
- Reduced Staffing Costs
Business owners sometimes regard outsourcing as just another cost. It may be more accurate to view outsourcing as an opportunity to cut your accounting costs while maintaining the quality of the output. After all, staffing is often one of a company's most significant expenses. By outsourcing your accounting function, you can avoid paying staffing-related expenses, including:
- Salaries,
- Benefits,
- Employment taxes,
- Unemployment benefits, and
- Training.
Outsourcing may also allow you to avoid the high cost (and frustration) associated with recruiting and managing staff. While you still have to pay outsourcing firms, their charges are usually much lower than employing full-time staff.
- The Ability to Scale Costs as Needed
Many businesses have fluctuating accounting needs during the year. For instance, they might be busier at year-end and tax time or when pursuing a significant capital investment project, such as a merger or public offering. Outsourcing allows you to pay only for what you need when you need it. In effect, you can convert fixed staffing costs into variable outsourcing fees. With outsourcing, you can dial your level of service up or down on demand. And you don't have to worry about keeping full-time accounting staff busy in slow times to head off layoffs — or scrambling to bring on new hires or pay overtime when the workload is heavier.
- Smarter Resource Deployment
Outsourcing frees up time for your management team to focus on growing the business through marketing, operations, networking, and relationship building. In addition, lower-level accounting staff with extra bandwidth can be assigned to work in other areas that could use more staffing, such as procurement or customer service. This can translate to better service, increased customer satisfaction, and higher profits. Moreover, you won't have to worry about critical accounting employees calling in sick, using leave, quitting, or otherwise leaving a gap.
- Enhanced Decision Making
External accountants who work with multiple clients across industries obtain a higher level of business intelligence than those who have worked solely for one company. You can leverage this expertise to make better, more timely business decisions. Plus, outsourcing firms can usually answer your questions and provide analytics faster than in-house staff with fewer resources.
- Reduced Exposure to Compliance Risk
In-house accounting staff typically have their hands full, keeping up with the day-to-day tasks, such as journal entries, invoicing, bill payment, and account reconciliations. They often need help to stay on top of the latest tax, accounting, and regulatory requirements. Inadvertent mistakes can leave your company vulnerable to legal judgments, penalties, fines, and unwelcome media attention. On the other hand, outsourcing firms closely monitor such developments and promptly respond by adjusting their processes and procedures.
- Improved Fraud Prevention and Detection
The Association of Certified Fraud Examiners estimates that organizations lose 5% of their revenue to employee fraud every year — and 12% of frauds occur in the accounting department. Financial reporting scams are the least common type of fraud but also the costliest, with a median loss of nearly $600,000, compared to roughly $100,000 for asset misappropriation schemes. Using external accountants significantly reduces your risk of fraud by company insiders. External accountants are also more likely than employees to flag objectively suspicious activity immediately and may have fewer opportunities to collude with others to commit fraud.
Accurate, Timely Financial Reporting Is Critical
Accounting isn't necessarily the most glamorous part of running a successful business, but it's essential. If you can't find or afford to hire well-qualified professionals to handle your financial reporting needs, consider outsourcing as a temporary or permanent solution.
We’re Here to Help To learn more about how a customized approach might work for your organization, contact Greg Pepin at gregoryp@reynoldsrowella.com today.
Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve. Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.
