Most business owners tend to question the real impact that an outsourced bookkeeping service has on their business. What they often fail to take into consideration is the greater cost associated with NOT having professional accounting support.
When a business is young, income and expense streams may be relatively small. As a result, many owners do a fair job of managing their bookkeeping without help.
However, as your company grows, you will start having more staff, bigger clients, and more complicated business process. These variables can mean an increase in time-consuming (and costly) bookkeeping and accounting tasks. Fail to keep up, and you’re apt to discover that not only are incomplete, unreliable books expensive to fix, they can also contribute to late payment penalties, missed earnings, and stunted business growth.
How Does Using An Outsourced Bookkeeping Service Save Time and Money?
Using an outsourced bookkeeping service allows businesses to reduce their expenses and help prevent lost opportunity costs. Here are 6 ways that an outsourced bookkeeping service can save business owners headaches, heartache and money.
1. Making the Most of Your Time
Instead of spending valuable time struggling with non-revenue generating chores like bookkeeping, you could be expanding your business earnings by:
- Engaging with past, present, and prospective clients,
- Improving your products and services, or
- Putting a new marketing strategy in place
Hiring a part-time or full-time bookkeeper is an option for companies large and profitable enough to support one. But as your company grows, your in-house bookkeeper might not be equipped with the knowledge necessary to deal with the specific needs of your growing company.
Seeking accounting help on an as-needed basis is often the most profitable and practical solution for small business owners. Hiring a professional service firm with both experienced bookkeepers and CPAs lets you tap into their collective knowledge as and when issues arise. They can help ensure your complex accounting issues are addressed and fixed promptly.
When you outsource bookkeeping and payroll to a professional service, you can save on the significant expense of hiring and training someone in-house, and it won’t cut into your revenue-generating agenda.
2. Avoiding Unnecessary Fees
Most business owners lack the time, knowledge, or experience needed to keep their books intact and error-free in the long run. It might be even harder to ensure that your in-house bookkeeper is doing their job properly. In the long run, the mistakes and omissions in daily record-keeping can cost your company money.
With an outsourced bookkeeping team, you won't have to manage your books or your bookkeeper. Instead, you can focus on growing your business and receive accurate monthly financial reports on your business' performance.
Unlike business owners focusing on many different aspects of their business, an outsourced bookkeeping service provider focuses on providing great bookkeeping services. They are well aware of reporting deadlines and when remittances amounts related to income, payroll or sales tax should be made.
Using an outsourced bookkeeping service reduces the likelihood of your business missing out on any deadlines. They can also help ensure that your remittances and returns are made accurately and punctually, helping your business avoid any late fees and penalties.
There is an enormous cost-saving associated not having to pay an accounting professional to fix, unravel, or update your firm’s un-kept books when year-end and tax season roll around.
3. Effectively Managing Your Payables and Receivables
To begin with, not paying your bills and suppliers on time is apt to lead to:
- interest charges,
- service fees, and
- damaged vendor relations
Those damaged relationships, in turn, could cost your business money should a supplier decide to switch your account to cash-only or limit your order volumes. Having your supplies or services curtailed means you won’t be in a position to respond to your clients’ needs effectively, which can lead to lost sales.
Failing to collect from your customers in a timely manner, meanwhile, could leave your business without adequate cash to support operations. Not only will you miss out on the bank interest that cash could be generating, but you may also have to resort to credit to cover certain expenses.
Without the efficient cash flow that comes from an organized receivables process, your company runs the risk of incurring debt and paying bills late - prompting the vicious cycle to continue.
When you use an outsourced bookkeeping service to support your accounts receivables process, they can help ensure your invoices are sent out promptly and also follow up on any late payments. That way, you can rest easy knowing that your business has a predictable healthy cash flow.
Best Practice Handbook for Accounts Receivable
Download our AR handbook to explore our best practices for invoicing, payments and collections, and improve your accounts receivable turnover.Download the Handbook
An outsourced bookkeeping service can also effectively manage your accounts payable by keeping you up-to-date on your bills and helping you making the payments when you want them paid. This ensures your business doesn’t incur any additional interest charges or service fees while maintaining a cordial relationship with your vendors.
4. Dodging Unaffordable Debt
Outsourcing your bookkeeping to a professional back-office firm will provide you with monthly financial statements that you can use to plan your company’s growth and direction.
Monthly accounting reports are invaluable for understanding where your business stands financially. Without them, in fact, you may look at your income and think your organization is making more money than it is – or that it’s profitable when it really isn’t.
This kind of misinformation can lead to decisions (hiring more staff, investing in more equipment or inventory, expanding business premises) that put a company at risk of not being able to meet its debt obligations.
5. Staying Poised for Progress
No discussion about financial statements would be complete without acknowledging the very real cost attached to missing out on promising new business opportunities. Without access to current and correct accounting data, your organization can’t get any real clarity around its true financial position.
Harmful business decisions aside, this lack of financial knowledge leaves many companies unprepared to take advantage of lucrative purchases, partnerships, or growth investments that could ultimately increase their profitability. Seeking outside accounting services early on provides important tactical value.
6. Gaining Tax Benefits
Using an outsourced bookkeeping service also ensures that your company's monthly financial data will be compiled for year-end reporting purposes. Your year-end tax accountant can use that information to prepare an accurate, fully leveraged return on your organization's behalf.
If they have any questions, your bookkeeping service provider can also help to answer those questions and ensure your accountants have what they need.
Working with a proven back-office team ensures:
- your bookkeeping records are up-to-date,
- those records are compiled into complete and accurate financial statements, and
- those statements let your business take full advantage of relevant tax deductions and credits
At the end of the day, an outsourced bookkeeping service provider will help your business save money through tax savings and a reduction in unnecessary fees and expenses related to human capital.
If you're still considering which outsourced bookkeeping service provider you should use for your company, we can help! At Enkel, we provide business owners with an outsourced bookkeeping service that saves them money while ensuring their books are well managed. Regardless of where you are located, we can help you with your bookkeeping needs! Contact us today to learn more.