One of the biggest questions that small business owners face is “Should I outsource my Accounting and Finance needs?” Of course the alternative is to keep it in house where it can be micro-managed to full capacity. For some businesses, it can be an extremely difficult decision to make. Below, we’ve provided information to help make your decision simpler.
There are pros and cons of either decision. It’s not a decision to make lightly unless three very clear scenarios exist. The first scenario is you’re an Expert in the area you’re contemplating outsourcing. Let’s use an example your Human Resources needs. If your background is Human Resources despite the fact you own and operate a construction company, you might do fine managing your company’s HR yourself. The second scenario that should exist is that you have the unmitigated desire to do the work.
If Human Resources runs in your blood and you could do all day long with no pay and still keep a smile on your face, then you’re in a good position. The third and likely most important scenario that should exist in addition to you being a Subject Matter Expert & enjoying the work is that you have the time to do the work yourself without it detracting from running your business. If your profits can survive you as the business owner being so deep in the trees of the administrative work, then by all means, you should go for it.
Most businesses don’t exist in a world as described above. Yet that still doesn’t make the decision much easier. We’ve provided a list of benefits that outsourcing these tasks provides:
Save Money
According to RHI, Inc, the 2012 median income for a Controller is $85,000, an Accountant $57,000, and a Bookkeeper $50,000. Add taxes and healthcare costs and your Accounting Department salary expense increases by another 25%. The cost to outsource just one of these functions is likely to be a mere fraction of these amounts. How much it increases, depends on the size of your company.
Expertise
Outsourced Accounting Firms are working within their core capabilities. We’ve typically been working in the field for a number of years. Accountants have spent years in college, often through a Master’s Degree to become experts. We are required to stay current with accounting and tax regulations. We have the experience that only having multiple clients in various industries can give.
Efficiency
Outsourcing allows you be more efficient at running your business. You’re now free to focus on the things that matter most, building relationships with your customers and servicing those customers. That keeps them happy and keeps your cash flowing. The outsourcing company too can operate much more efficiently that you could trying to handle the workflow on your own. Just like you do in your business, we focus on building relationships with our clients and servicing them.
Cash Flow Management
Because you now have someone focusing on your Accounting, the dreaded task of billing and invoicing is handled. If you’re not consistently billing your customers on a timely basis, you’re not managing your cash flow effectively. With someone else ensuring that all clients are billed timely and providing detailed reports of your Accounts Receivable status, you can deal with issues as they arise instead of finding out much too late that you have a problem.
Save money with IRS/Dept of Revenue
Nobody likes to see an envelope in the mailbox from the Internal Revenue Service unless you’re expecting a refund of some sort. Outsourcing your Accounting helps ensure that any required quarterly and annual tax filings are completed accurately and timely. This helps you save money in penalties and interest for late or incorrect filings.
Technology
Accounting firms stay up to date with the latest versions of most Accounting and Tax software packages. Typically, they are also certified to use software packages such as QuickBooks so they stay up to date on training and the newest versions. You can rest assured that you are getting the most current technology offerings when you’re using a capable outsourced company.
Stress Relief
When you choose to outsource your Accounting, you can breathe a sigh of relief that you’re in good hands and you can focus on what it is that you do best – running your business!
The list could go on and on. We’ve tried to include some of what we consider the most critical reasons to outsource. I would love to discuss your specific situation with you and help you evaluate if you’re at the point of outsourcing. If you would like to discuss how the The Profit Sherpa can help you meet your financial goals while saving you money as your business grows, please send me an email or schedule your complimentary Profit Map Strategy Call Session.
Be sure to visit our Blog often. Our next post will help you decide what level of Accounting services you should select. We’d love to hear your thoughts on why you made the decision to outsource. You can leave your comments below.
Kemberli Stephenson is The Profit Sherpa & works with rapid growth women entrepreneurs, speakers, coaches, authors, small business owners, entertainers, etc. She helps those who are looking to impact their bottom line, increase profit margins and grow a successful business. Kemberli helps entrepreneurs rapidly increase profits by helping individuals and companies chart a course to the summit, discover their danger zones and blind spots, and develop and implement profit strategies that will grow as your organization grows. Follow @Profit_Sherpa on Instagram for daily tips and motivation for entrepreneurs.