The pros and cons of outsourced accounting services

The pros and cons of outsourced accounting services

The pros and cons of outsourced accounting services

If you are already in the industry and running a business for years now, you must be knowing the importance of maintaining and handling books of accounts. However, if you are new to the business industry and are trying to figure out things that you need to take care of first, you must know that handling your finances and books of accounts should be one of the elements that will top your priority list. 

From a downtown bakery shop to a high-end real estate business, finance is going to be a huge need of business as it acts as the oxygen for your firm to survive. The biggest nightmare for any businessman is a decimating business due to failed handling of finances, and therefore to avoid such a situation, it’s best to invest in professionals, someone who takes care of your books and maintains transparency. 

Now, if you are a small or medium scaled business who cannot afford a full-fledged CFO or a team of accountants on your payroll, or if you are a large-scale, fully established company but want to save those extra bucks while not compromising on quality; an outsourced accounting service should be your first option. However, with every positive comes negative. So does outsourced accounting services; now it depends upon you to decide whether or not the pros outweigh the cons. 

Below we have mentioned a list of important pros and cons you must keep in mind before choosing outsourced accounting services:

Pros of outsourced accounting services

Cost and time-efficient

Outsourced accounting services are extremely cost-effective as you save on accountants’ monthly salary and save on other employee packages like health insurance, vacation benefits, or pension. Investing in outsourced accountants will also save you the cost of investing in software and other equipment essential for carrying out bookkeeping services. An outsourced accountant also saves time as now instead of handling the books, worrying about transparency and reliable results, you can now concentrate on other important tasks related to business like upgrading the quality of products and services, taking care of employee’s needs, or management of the staff.

Yielding valuable expertise and knowledge

If your in-house accountant is getting recruited through the recommendation of an executive-level employee or has entered as a fresher, you can’t be sure about the results and might not expect professional work. But when you outsource accounting services, you can rest assured that your books of accounts and finances are in safe hands. You can also learn valuable and expert knowledge and work under professional guidance when it comes to financial matters. Outsourced accountants have years of industry experience as they have worked with various industries and in different companies that let them have a versatile outlook towards an array of problems.

Reduced risk of frauds

Fraud is an unfortunate event that every CEO dreads but is prevalent in almost every small and medium-sized company. In fact, one can spot many frauds in large and famous companies as well. Mostly pecuniary in nature, frauds take place because the helm of accounts is in the hands of only one person. Mostly such frauds go unnoticed, but over the years, when one takes a close look, a large chunk of profit has already drained out, and there is nothing one can do to reverse this. Therefore, outsourcing accounts comes as a big savior as outsourced accountants mean multiple pairs of eyes analyzing your reports and transactions that increase internal control of your company and also a significant decrease in the frequency of frauds.

Cons of outsourced accounting services

Additional hidden costs

Paid services can lead to a point where one service snowballs into another as you enjoy and take benefits of the service. However, these services are not always free of cost, and you might not even realize when you have already extended services beyond your pack or plan. This can add additional charges, which you might initially forget about. But to avoid this, you can always make your monthly relationship clear by discussing the current plans and how much you must expect at the end of the month.

Reduced control

It’s natural when you outsource a service to a third party, the control of that particular sector gets reduced. One might not come down to your cabin every time they need to make a decision regarding a financial matter. However, you can always call for a weekly or monthly meeting to get updates and reports regarding your financial position. If you are willing to delegate that control, trust, and reduce the workload to an outsourced accountant while looking at the bright side, it shouldn’t be a problem.

Gap in communication

You can always walk into the cabin of your in-house accountant and ask about the current status of how the position of your finances is. You can see him working and communicate clearly whenever you feel like. However, when you outsource an accountant, you might not get the reply or answers as instantly. As they are not physically present at the office, there can be some limitations, mostly regarding communications. Therefore, to avoid a murky relationship with your accountant, make sure you plan schedules, divide responsibilities, and discuss your plans and goals with your accountant to bridge the communication gap.

Conclusion

Your outsourced accountant is engineered in a way where he can transform the financial functioning and augment your staff accordingly. He will create a customized management report and control services to provide a platform to drive profits and increase cash flow. While there are some cons related to outsourced accounting services, these can be overcome by taking the required measures and focussing on the bright side. Depending on your priorities, you must compare the pros and cons before making an informed decision.