In recent years, the business world has witnessed a significant shift towards outsourcing various aspects of operations, and accounting is no exception. Outsourced accounting services have gained immense popularity among businesses of all sizes. With the advent of digital solutions and remote work, delegating accounting functions to third-party experts has become easier and more efficient. In this guide, you can delve into the world of outsourced accounting, highlighting what it is, its numerous benefits, who can benefit the most from this financial strategy, and providing data and statistics to support these insights.

What is Outsourced Accounting?

Outsourced accounting, in simple terms, refers to hiring a third-party entity outside of your organisation to manage your accounting and financial functions. These functions encompass a wide range of tasks, including bookkeeping, payroll processing, financial reporting, management accounting, tax compliance, accounts payable, accounts receivable, and other related services.

The Benefits of Outsourced Accounting Services

Outsourcing your accounting functions has many advantages, making it an attractive choice for businesses. Here are some key benefits: 

  • Cost Savings

Hiring an outsourced accounting firm is often more cost-effective than maintaining an in-house accounting team. The expenses associated with in-house accountants, such as office space, insurance, and paid leaves, can add up significantly. Outsourcing allows you to acquire a team of experts with diverse skills. It will be more cost-effective than hiring an employee specialising in just one accounting aspect. According to a survey, outsourcing accounting functions can result in cost savings of up to 40% for businesses. 

  • Access to Expertise

Outsourcing provides you with access to a pool of accounting experts. Unless your core business is accounting, it's unlikely that you understand accounting principles and tax regulations deeply. By collaborating with a CPA specialist or an accounting team, you benefit from their professional expertise, ensuring accurate financial records, compliant payroll processing, and avoiding costly regulatory mistakes or penalties. A study found that 68% of businesses that outsourced their accounting functions reported increased accuracy and compliance. 

  • Time Savings

Outsourcing your accounting functions frees up valuable time you would otherwise spend overseeing financial operations and preparing financial statements. This time can be redirected towards focusing on your business's vision and core objectives. Many outsourced accounting firms also assist with reporting and board presentations, consolidating essential financial information in one accessible place. 

  • Improved Productivity

With a reliable finance team, you can rest assured that your accounting responsibilities are in capable hands. You'll also gain access to valuable financial reporting insights, enabling you to better understand your business's performance, cash flow, budgeting, and more. 

  • Scalability

For growing organisations, outsourced accounting services provide essential support. As your business expands, accounting operations can become increasingly complex. An experienced outsourcing firm can help you navigate this growth without getting overwhelmed, thanks to their prior experience handling such transitions. Global Industry Analysts, Inc. predicts that the global outsourced accounting services market will grow at a CAGR of 9.1% by 2028. 

  • Automation and Digitisation

Collaborating with an outsourced accounting team grants you access to cutting-edge accounting software and systems, such as Xero and other digital solutions. It facilitates streamlined processes and task automation and reduces environmental impact by moving towards a paperless, digital accounting system. Hence, it saves money and time associated with physical filing and storage. A survey found that 89% of businesses reported increased efficiency in accounting processes after implementing automation.

Accounting Tasks Perfected by Outsourced Experts

Outsourced accounting experts are the modern-day wizards of finance, handling many crucial tasks that keep businesses financially robust and operationally efficient. These virtual professionals are adept at various accounting responsibilities. Here are the accounting tasks performed by these outsourced wizards, highlighting their role in simplifying financial management. 

  • Expense Tracking Made Simple

These meticulous bookkeeping teams remove the headache from expense administration. They ensure accurate cost recording and organisation, providing businesses with a clear financial overview.

  • Effortless Data Entry

Delegate data entry to these virtual professionals who excel in organising and categorising financial transactions. They update records without manual intervention, freeing valuable time for core business activities.

  • Enhanced Payroll Management

Payroll can be complex and time-sensitive. Outsourced experts handle payroll activities with precision, ensuring smooth payroll management. They keep track of payroll accounts, process paychecks promptly, and guarantee accurate deductions and tax calculations.

  • Simplified Tax Preparation

Tackling intricate tax regulations becomes a breeze with outsourced accountants. They manage the entire tax preparation process, from collecting necessary documents to timely filing, all with the expertise needed to optimise tax benefits.

  • Prompt Payments

Timely payments are crucial for maintaining vendor relationships and financial stability. Outsourced experts ensure that all payments are made on time, keeping costs in check and offering thorough assistance.

  • Easy Invoicing

The invoicing process is efficiently controlled by outsourced teams, allowing businesses to concentrate on core activities. They generate professional invoices and track payments, ensuring a smooth cash flow.

Who Can Benefit from Outsourced Accounting?

The National Association of State Boards of Accountancy reports that 71% of businesses across various sectors have outsourced at least one accounting or financial function. Outsourced accounting services UK are no longer limited to large corporations. Thanks to advancements in technology and the acceptance of remote work, outsourcing is accessible to a broad spectrum of businesses and organisations, including:

  • Small Businesses: Small business owners who don't require a full-time accountant but need more expertise than their current staff can offer.
  • Companies Struggling to Hire: Organisations facing difficulty finding suitable and affordable full-time accounting employees.
  • Growing Companies: Businesses experiencing growth and requiring additional accounting or financial support.
  • Not-For-Profits & Charities: Not-for-profit organisations need specialised accounting services to manage donations, grants, and regulatory reporting.
  • Temporary Help: Businesses or individuals needing temporary accounting assistance, such as part-time replacements, audits, or year-end reporting.
  • Anyone: Essentially, outsourcing is a viable option for organisations of all sizes, as they all have compliance, payroll, and reporting requirements. The sooner you embrace outsourcing, the sooner you can reap the benefits.

Tips for Hiring an Outsourced Accountant

Outsourcing the accounting department can be a strategic move for small businesses looking to streamline operations, reduce costs, and focus on core functions. Follow these valuable tips to ensure a successful selection of accountancy services: 

  • Explore All-In-One Solutions

While some businesses prefer to keep their accounting and tax functions separate for additional checks and balances, consider the trade-offs. Managing two separate firms can be complex. Weigh the pros and cons, as consolidating these functions under one provider can streamline processes and reduce coordination efforts. A survey by Gartner found that about 84% of businesses using integrated software solutions reported increased efficiency in recent years. 

  • Minimise Turnover Costs

Employee turnover can be expensive, especially for small businesses, and the same applies when finding the right outsourcing partner. Carefully vet and choose an accounting firm that aligns with your business needs to avoid the hassle and expenses of switching providers later on. After all, building a lasting relationship can yield long-term benefits. The Society for Human Resource Management estimates that the cost of replacing an employee can range from 50% to 60% of their annual salary. 

  • Keep Treasury In-House

Distinguish between your accounting and treasury departments. Treasury handles cash and bank accounts and should be kept in-house to maintain absolute control. Trusted individuals within your organisation should oversee your treasury functions to prevent potential fraud, embezzlement, or financial errors. An Association for Financial Professionals survey noted that 82% of organisations keep treasury functions in-house. 

  • Retain Invoicing In-House

While invoicing is often considered an accounting task, cloud-based accounting systems have made it user-friendly for non-accounting personnel. Managing invoicing in-house can be more efficient, as it usually requires operational knowledge rather than specialised accounting skills. Keeping invoicing within your organisation can expedite the process and minimise the need to send data to an external accountant. 

  • Embrace the Cloud

Transitioning your financial management to a cloud-based accounting system offers a plethora of advantages, including enhanced accessibility, seamless collaboration, and robust data security. When combined with strategic outsourcing, cloud adoption can significantly streamline your operations. This not only enables remote access but also expands your hiring options, freeing you from geographical constraints and connecting you with a diverse talent pool.

Common Mistakes When Outsourcing Accounting

While outsourcing can be immensely beneficial, here are some common mistakes to avoid: 

  • Choosing a Firm with Unaligned Values

Partnering with a firm that shares your values and vision is crucial for an effective outsourcing system. A shared purpose ensures a more fruitful and harmonious collaboration. Companies like Breakthrough Accounting, for instance, prioritise making an impact alongside financial services. In fact, a recent study found that 89% of successful outsourcing partnerships are based on shared values and aligned goals. 

  • Selecting a Firm That Doesn't Understand Your Business

Ensure that your outsourced accounting team thoroughly understands your business. Miscommunication or misinterpretation of your needs can lead to inefficient outcomes. Choose a firm that invests in understanding your unique requirements. According to the Outsourcing Institute’s report, 67% of outsourcing failures are due to poor communication and a lack of understanding of the client's business.

Ready to Get Started?

If you want to save time, reduce costs, and grow your organisation through the best outsourced accounting services, consider partnering with Unicorn Ecommerce Accountants. Our team of CPA-qualified accountants can provide you with an all-in-one accounting solution, delivering convenience and reliability for your financial needs. Start your journey towards financial efficiency and growth today! Contact our friendly team, and we'll assist you in planning everything you need for a successful outsourcing experience.