The business landscape today is extremely competitive, and businesses are actively seeking ways to reduce costs, enhance efficiency, and streamline their operations to maximize profits. One of the more popular ways that businesses can achieve this is by outsourcing accounting services. This may seem counterintuitive on a surface level, but when we dig deeper into the reasons why more and more businesses are opting to go this route, we see that there are multiple ways outsourcing accounting services benefits businesses.

However, it’s not all rainbows and butterflies when it comes to outsourcing accounting services – it is not a cookie-cutter solution for every business out there, and there are certain pros to outsourcing accounting services that weigh heavily in a business’ decision-making process when considering whether to outsource accounting services or not.

Read on to find out if it’s always a good idea for businesses to outsource their accounting services, or to keep them in-house, and whether it is something that will be beneficial for your business or not.

Why and When Would A Business Outsource Its Accounting Services?

There is no one size that fits every business when it comes to making such an important decision. Outsourcing accounting has several pros and cons that a business must thoroughly consider, necessitating the involvement of several important company stakeholders, before a final verdict can be reached.

And even then, businesses that outsource accounting services often have a lot to compromise and settle with, even though the overall decision favors outsourcing their accounting services. For instance, a business that outsources its accounting services may value the cost and time saved in the face of a lack of control over the accounting services and processes previously handled in-house.

Safe to say, outsourcing accounting services comes with both pros and cons that a business must consider before making a choice either way. Let’s dive deeper into what these pros and cons are.

Pros of Businesses Outsourcing Their Accounting Services

1. Access to Specialized Expertise

A business outsourcing accounting services takes advantage of and enjoys the expertise of experienced professionals who have specialized in the finance and accounting field. This is especially true for the more complex financial and compliance issues that businesses are bound to face.

2. Advanced Technology

Since firms specializing in finance and accounting services are focused on a single niche, they are often the first ones to invest in and adopt the latest, and often very expensive, accounting software. Not every business has the financial bandwidth to keep investing in such resources frequently, which is why outsourcing accounting services is a sound choice for many businesses, especially small and medium-sized ones.

Access to the latest and advanced technology also allows businesses to benefit from increased and improved accuracy and efficiency of their financial functions and processes.

3. Cost Savings

On the face of it, hiring another firm to handle all your financial and accounting services seems counterintuitive. But in reality, firms providing specialized finance and accounting services enjoy economies of scale due to their focus on a single service field. They’re able to pass on the benefits of these economies to their clients. They also usually charge a fixed fee, making it easier for businesses to budget, manage, and predict expenses. Therefore, businesses that outsource their accounting services stand to gain cost savings as compared to if they were to source, hire, train, and retain specialized resources.

4. Flexibility

Outsourcing accounting services allows businesses to tailor the services to their specific business needs, as they have multiple services to pick and choose from. Firms providing accounting services are able to offer a custom-made package for their different clients. Whether it is something as simple as only book-keeping for a small-business owner, a mix of services for a medium-sized business, or more complex financial analysis for a large enterprise, outsourcing accounting services offers the benefit of flexibility to businesses of all sizes.

5. Focus on Core Competencies

When businesses outsource accounting services, they free up time and other valuable resources to focus on their core competencies and business operations.

6. Improved Reporting

Businesses that outsource accounting services also benefit from detailed financial reporting and analysis, which is more up-to-date, as well as more aligned with any compliance needs. This improved reporting also leads to better decision-making for the businesses that opt for outsourcing accounting services.

7. Reduced Risk

Accounting is an extremely regulated field, and any errors or misrepresentations, no matter how unintended, can result in heavy and harsh fines and penalties. When businesses outsource finance and accounting services, they also offload at least part of the risk of such errors and blunders. Reputable accounting services firms have greater scrutiny and stricter quality control measures surrounding their daily work, which leads to a reduced chance of errors or misrepresentations as well.

8. Scalability and Agility

When a business outsources its accounting services, it sets itself up for greater agility. This is because it can scale its accounting function up and down faster and with greater flexibility than it would have been able to with an in-house team.

Cons of Businesses Outsourcing Their Accounting Services

Now that we’ve covered some of the more promising pros of businesses outsourcing their accounting services, it is important to highlight some of the cons of the same, so that as a business, you know whether, and when, outsourcing would suit you best.

1. Challenges in Communication

As with any partnership between business entities, it is a given that processes and ways of doing things will likely have a huge gap, which naturally takes a while to bridge. Such challenges usually revolve mostly around communication, and thus business operations, especially in the case of language or time zone differences. The longer it takes to establish effective communication the longer it will prove to be a disadvantage of outsourcing. But, as is evident, the sooner you overcome these challenges and figure out a way that works for both, the faster you can turn it into a powerful advantage.

2. Concerns About Confidentiality

With outsourcing accounting services comes the need to share sensitive and private financial information with outsiders. While of course there are NDA’s and contracts that legally bind accounting firms to secrecy, concerns about confidentiality or the mishap of privacy breaches and information leaks are something that often keep business stakeholders up at night. That level of stress in itself is a con that you have to consider. Only you as a business can decide if you have that kind of risk appetite and bandwidth.

3. Hidden Costs

Unless you do your due diligence as a business outsourcing accounting services, you might find certain hidden fees to be a shock when they reveal themselves. But any business worth its salt knows that outsourcing does not simply mean blindly handing over. Rather, it is the strategic delegation of important tasks so that businesses choosing to outsource may focus their energies and resources on core operations.

4. Inconsistency in Quality

As with everything in life, not all accounting firms are equal, so a business looking to outsource its accounting services has to do its due diligence in finding a quality firm they can trust and count on. For companies switching their accounting firms, getting used to a difference in the quality of deliverables, or simply just the way things are done at a new firm, may take a while to get used to or compromise about.

5. Loss or Lack of Control

As a business when you outsource accounting services, you have to decide whether you’re comfortable with giving up some control surrounding your financial and accounting processes. Only you as a business can weigh the value of sharing that kind of control. Increasingly, though, businesses find that they’re better off making peace with this trade-off when they look to the benefits of outsourcing accounting services, especially if they’re smaller in size, have difficulty hiring the right resources, or find it difficult to play chase with accounting and tax processes rather than focus on their core business.

So, Then, Is It Really Worth It for Companies to Outsource Their Accounting Services?

Conclusively speaking, in this age of technology and fading digital borders, it is not impossible, or even very difficult, to turn any potential disadvantages into benefits, especially if you are an agile organization. As a business, if you know the value of your time, and know exactly what you want to spend your own time on, and what you must delegate and delegate, you’re ready to outsource your accounting services to an expert such as ourselves. At Account Staff, we provide exceptional resources to enable you to streamline your finance and accounting operations, drive synergies, and improve process control. If this sounds like something you’re looking for, let’s connect right away so we can be your partner in achieving your‘ exceptional’!

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