There are many reasons why business owners may consider outsourcing bookkeeping and accounting business processes.
Since launching Enkel Backoffice Solutions, I’ve had the opportunity to talk with business owners of varying sizes in a wide variety of industries. Ultimately, the pain points I encounter with business owners are pretty universal. We all want to save money and time and make better financial decisions.
However, the benefits of outsourcing your accounting and bookkeeping tasks go beyond the cost and time savings. Outsourcing your accounting back office gives you peace of mind, knowing that your books are taken care of while you focus on your core business functions.
Here are key reasons why you should outsource your accounting tasks.
1) You want to save money
There’s a common misconception that outsourcing non-core functions is more expensive than managing the processes internally. But for many small businesses, having an accounting department, full-time accountant, or bookkeeper on payroll isn't cost-effective. If you’re managing your books until tax season and then passing things off to an accountant, your year-end bills will likely be pretty high! By maintaining proper records year-round, you’ll save significantly when filing taxes.
2) You want to save time
As a small business owner, your core focus is what you do best. Whether you’re an expert at selling medical equipment or your true passion is crafting gluten-free baked goods, focusing your time and efforts on bookkeeping is taking time - and, as a consequence, money - away from what encouraged you to go into business in the first place. By outsourcing non-core functions, you’ll feel the weight lifted from your shoulders, both metaphorically and financially.
3) You want timely financial advice
If you leave most of your accounting functions to year-end tax season, you’re allowing a gap of 11 months without expert financial advice.
Outsourcing your accounting and bookkeeping will allow you to have a customized bookkeeping process that works for your business and a team of professional bookkeepers managing your day-to-day financials. You'll receive valuable, actionable financial data to make sound business decisions.
4) You want to understand your cash flow
Knowing when and where your money is coming from can help you make strategic business decisions for the long haul. For example, if your company operates within the wedding industry, you’ll know that the summer is your busiest season. But are you losing money on excess staff during your quieter months? A reliable bookkeeper can support you with cash flow statements, helping you understand where you’re losing money and where you should invest your efforts.
5) You're looking for tax-saving opportunities
A trusted bookkeeper will always be looking out for your best interests. As a small business owner, you may be unaware of the tax-saving opportunities available to you. Are you recovering all of the GST that you’re spending? Leave the number-crunching to the experts - we’ll get your back.
6) You want to keep your financials up to date
Keeping your financial information accurate and up to date reduces innumerable headaches. A good outsourced bookkeeping partner will ensure that the data in your accounting software is always accurate and kept up-to-date. You'll always have someone staying on top of your numbers and committed to delivering regular monthly financial statements.
7) You want to reduce audit panic
Being audited can happen to anyone, and it’s stressful even in the best-case scenarios. Knowing that your books are up to date and carefully documented can relieve almost all of the headaches associated with an unexpected audit. A good bookkeeping service will properly document and record your financial records, helping you move through the auditing process with ease.
8) You want to make life easier
You're busy enough when it comes to owning and operating your own business! Managing employees is time-consuming; an outsourced bookkeeping service provides a set-it-and-forget-it service. We’re here when you need us and working quietly in the background when you don’t.
And the number one reason why you may want to consider outsourcing your accounting functions?
9) You're always looking for a better way
You started a business because you saw a better way of doing things. I’m an entrepreneur myself. I started Enkel because I saw a better way of providing bookkeeping services to small—to medium-sized businesses. That shared entrepreneurial spirit drives us to always look for a faster, smarter, better way of doing things.
Making Outsourcing Work for You
Here are some common misconceptions about outsourcing services such as bookkeeping and accounting, followed by details about what to expect when outsourcing your bookkeeping functions.
Alignment of Expectations
When you outsource a business function, aligning expectations with your service provider is essential. Alignment allows both the service provider and the client to ensure that they can easily identify successes and failures. This is actually one of the biggest benefits of outsourcing—once your parameters are defined, you can simply focus on results.
At Enkel, we spend a lot of time discussing processes with our clients. We map out the details of what we need you to do in order for us to deliver your month-end reporting on time. Then, we’ll clearly outline our role so that our clients know exactly what services they can expect.
Value-Based Pricing
Cost is always a key influencer when businesses decide to outsource functions. Outsourcing allows an organization to lower administrative costs, improve balance sheets, and reduce business risk.
Value-based pricing refers to when providers set the price of a service based on the benefits it provides to their clients rather than the actual cost of the service. Instead of charging clients an hourly rate, many outsourced services will offer flat rate packages. Forget worrying about paying your bill whenever you need your service providers—simply select a package that works for your business.
Collaborative Workflow
Cloud-based software such as QuickBooks Online and Xero allows you to work from anywhere. You can access your data whether you’re at your office computer, home computer, or mobile device. This makes collaborating with an outsourced team easier than ever.
Ultimately, outsourcing your non-core functions allows you to free up time to focus on what you do best. However, you’ll need to know your involvement in the process to maximize your outsourced services. For example, at Enkel, we require our clients to send us their invoices in order for us to process payments. We can help you automate your invoices, making life far easier! But we can't complete your reconciliation if we don’t receive the invoice.
Process Buy-In
Process development takes considerable time on the part of the service provider, and as the client, you will benefit from in-depth discussions about processes. They will bring clarity to the whole picture.
Tasks You Should Outsource to Build a Better Business
Here are some factors you should consider when deciding which tasks you should outsource:
- Is the task’s value in line with the time it takes to complete?
- Is it taking time away from more impactful activities?
- Does it often get put off because it’s stressful or tedious?
- Is it too small to warrant hiring even a part-time employee?
- Does it require learning new skills that are limited to that task?
- Does it contribute directly to your revenue?
Analyzing a list of your employees, their roles, and the individual duties they perform can pinpoint procedural gaps or inefficiencies that might benefit from outsourcing.
Here is a summarized list of tasks you should outsource and a list of tasks you should keep in-house.
Tasks Every Business Should Outsource
The most commonly outsourced business services are routine, repeatable, time-consuming, or non-strategic. Let’s take a look at 5 of the key tasks you should outsource and why:
Administrative Tasks
With today’s technology capabilities and increased cloud usage, tasks like payment processing and data entry can easily be performed offsite. Eliminating full-time, in-house support roles that require little in the way of specialized skills or knowledge can dramatically reduce overhead costs.
Accounting Tasks
Tasks like bookkeeping, payroll, accounts payable, and accounts receivable are essential. However, they keep many businesses busy without contributing to their bottom line. Performing these tasks in-house may, in fact, cost you more than outsourcing them would, considering:
- the time required to keep accounts organized and up to date,
- the stress attached to year-end and tax season catch-up, and
- the fees and interest associated with bookkeeping oversights
With automation making the sharing of data and documents easy and secure, outsourcing to an accounting firm or bookkeeping service can help you save money, improve productivity and provide peace of mind.
Marketing Tasks
Does your business take advantage of social media marketing, content marketing, graphic design, or blog posts? Not only can outsourcing tasks like these help you achieve a wider range of digital marketing goals, you’ll also gain an external perspective your staff can’t provide.
Technology & IT Tasks
System glitches and network breaches can quickly bring business to a standstill and impact your business. Paying a web designer, web developer, or external IT expert to handle tasks like website maintenance and cybersecurity will often cost less in the long run than trying to manage them consistently yourself.
HR Tasks
Tasks like employee recruitment and benefits management frequently function better when outsourced. In addition to saving you time, dedicated HR service providers stay current on employment standards and legislation, preventing your business from mishandling complex situations like employment termination.
Tasks You Should Consider Keeping In-House
Although outsourcing is a great way to cut costs and save time, there will always be certain business activities that you should avoid farming out. Your core business functions, for example, should never be outsourced.
As the underlying process, knowledge, or skill that sets you apart from your competitors, your core competencies are essential to your success and should be protected accordingly.
For example, a company like Federal Express would never risk outsourcing the logistics that are integral to its success. So, you should determine what your company does really well, keep it in-house and focus your resources on maintaining and improving it.
Apart from your core competencies, here are some other areas you should weigh carefully before seeking outside help:
Employee Development
It usually makes more sense to leverage online learning and training courses to guide employee development than to outsource. After all, you know your team and where their future lies with your business better than anyone else.
Company Culture
The “character” of a business is always driven in part by the people who work there and the tone from the top. Since much of your company’s culture is destined to evolve organically, it’s not usually worth the cost (recruitment planning aside) of trying to control it externally beyond a certain point.
Customer Service
There are pros and cons when it comes to outsourcing your customer service function. Contracting out customer care can save time and money, but with clients so vital to your success, relying on an outside service to represent your brand means risking:
- uninformed representatives,
- unprofessional interactions, and
- unsatisfactory problem resolution
While outsourcing certain business tasks offers enormous benefits as a growth strategy, it’s important to do your due diligence. Security, accountability, and consistency should all be taken into account when vetting new service providers.
Final Thoughts
Outsourcing your non-core functions is a powerful way to begin improving and growing your business. Your time is valuable—learn how to focus more on what you do best! We’re happy to discuss your unique business goals and how outsourced financial services can empower you to grow.
If you are looking for an efficient and accurate way to get your books done, we can help! Get in touch with us today to learn more about our outsourced bookkeeping and accounting services.
