Will Outsourced Bookkeeping Benefit Your Business?
Successful businesses of all sizes have one thing in common: they keep good records. Owners and investors look to financials to assess a company’s health; debtors and vendors review financial statements before entering into contract; and financial reports help make strategic decisions. They are so critical to a business’s success that choosing how to fill an accountant function is one of the most important decisions a business makes.
Many business owners choose to outsource the work by hiring an external accountant, and others choose to fill the role with an employee. Neither option is inherently the right choice—a business should consider the benefits of each option before making a decision.
Benefits of Hiring an Outsourced Accountant
As a business develops and expands, its first inclination may be to fill out the accounting department with bookkeepers, payroll staff, A/P personnel, and a CFO. In reality, an external bookkeeper, accountant, or CFO can perform all of the duties needed, and they can provide other value-added services that an employee cannot.
- An outsourced accountant will be honest about inefficiencies.
An accountant external to the organization will come in with a fresh set of eyes and suggest ways that the business can improve. They may notice that the chart of accounts could be reorganized to expedite tax return preparation, or that the fixed asset software being used is out of date. A highly-experienced external accountant will have the knowledge necessary to see these operational inefficiencies and offer suggestions to help improve business practices.
- An outsourced accountant will compare a business’s operations to others in its industry.
When selecting an accountant, proficiency in accountancy should not be the only criterion. One should also look at industry experience. Outsourced accountants have experience in all types of industries. Accounting guidelines change, best practices shift, and technologies impact the status quo. While there are some strategies that are universal, many industries have their own standards and regulations they are expected to follow. An external accountant will be familiar with these industry-specific standards and can help a business stay compliant.
- An outsourced accountant can be the unbiased voice that a business needs.
The separation of duties is especially important when the key employees of small- and medium-sized businesses fill more than one role. An external bookkeeper will ensure that a business’s practices are ethical and will reduce the risk of fraud, and stakeholders will have confidence that the business books are in order. Being isolated from a business will also help the accountant remain neutral when controversial decisions need to be made, staying out of company politics and presenting the facts so that the team can make better decisions.
Benefits of Hiring an Internal Accountant
Internal accountants have their benefits, as well. While employment can be more costly than outsourcing, the control a business gains with an employee may just outweigh those costs.
- Managers will have tighter control over an internal accountant.
When working with an accountant (or a team of accountants) external to the business, one has less control over the accounting function. An external accountant’s practice will work within certain confines, and the business will not have full control over every decision the accountant makes. It can be difficult for business owners to give up the ability to communicate instantly with their accountants. While client-vendor communication tools are improving, external accountants will never be quite as available as an employee who sits in the office next door.
- An internal accountant will have skin in the game.
Loyalty should not be overlooked. If the role is filled internally, the employee will have the time and drive to get to know the business inside and out in order to perform the job as well as possible. What an internal accountant may lack in industry expertise can be made up for in mastery of the systems.
- An internal accountant can respond quickly.
Employees can be there for the business at the moment they are needed. If a high-value client needs information turned around quickly, an internal accountant may be able to get that information more timely. A business can dictate to its employees which tasks are a higher priority; they will be there to serve the business’s needs and no one else’s.
When deciding to work with external accountants, it is vital to make sure that they are experienced, qualified to do their jobs, and willing to customize their offerings to meet the business’s needs.