In 2022, the worldwide market for outsourcing finance and accounting business processes was valued at USD 56.42 billion. It is projected to grow at a steady compound annual growth rate (CAGR) of 9.1% from 2023 to 2030 [1 ].
In the world of business, staying competitive and efficient is vital for success. For small and medium-sized enterprises, one key aspect of this efficiency is managing finances effectively. Accurate bookkeeping and accounting are the cornerstones of sound financial management. However, as your business grows, managing these functions in-house can become increasingly challenging. This is where outsourcing your accounting and bookkeeping comes into play.
Outsourcing accounting and bookkeeping services are a strategic move that offers numerous benefits, including cost savings, access to expert knowledge, and enhanced focus on core business activities. But how do you know if it’s time for your business to make this transition? Here are 7 signs that indicate your business may need to outsource its accounting and bookkeeping functions.
7 Signs Your Business Needs Accounting Outsourcing Services
1. Overwhelmed by Complex Financial Tasks
As your business expands, financial tasks can become increasingly complex. Managing payroll, tax compliance, financial reporting, and tracking expenses can be overwhelming. If you find that these tasks are consuming too much of your time and energy, it’s a clear sign that outsourcing can help streamline these processes. Outsourced professionals are well-equipped to handle complex financial tasks efficiently, allowing you to focus on growing your business.
Keeping up with evolving financial regulations and compliance requirements can be a resource-intensive task. Falling short of complying with regulations ensues in hefty penalties and legal challenges. An outsourced accounting and bookkeeping partner is typically well-versed in local and international regulations, ensuring that your business remains compliant without the need for extensive in-house training and resources.
2. Critical Errors and Inaccuracies
Mistakes in financial records can be costly. If you notice a pattern of errors, inaccuracies, or inconsistencies in your financial documents, it’s a red flag. Outsourcing your accounting and bookkeeping ensures that experienced professionals who specialize in financial accuracy manage your records. This significantly reduces the risk of costly mistakes that could impact your business’s financial health.
As your business grows, your accounting and bookkeeping needs evolve. Managing this growth internally can be challenging, as it often requires significant investments in infrastructure, personnel, and technology. Outsourcing offers scalability by allowing you to access resources and expertise as needed, ensuring that your financial processes keep pace with your business’s expansion.
3. Access to Latest Technology and Cyber Security Solutions
The financial industry is witnessing rapid technological advancements, with the introduction of automation, AI, and cloud-based solutions. Staying at the forefront of these developments requires ongoing investment and training for your in-house team. Outsourcing firms typically leverage the latest technologies, ensuring that your business benefits from efficiency and accuracy without the burden of continuous technology upgrades.
With the increasing frequency of data breaches and cyber attacks, safeguarding financial data is paramount. To that point, Deloitte’s Global Outsourcing Survey 2022 reports that 48% of business owners already leverage accounting outsourcing services to support their cyber security function [2]. An experienced outsourcing partner often has robust cyber security measures and data protection protocols in place. This can mitigate the risks associated with handling sensitive financial information in-house.
Did You Know?
- Accounting is among the most popular processes outsourced for small businesses [Source: Clutch]
- About 30% of companies that outsource accounting have received advice from their chosen partner that has helped them increase profit [Source: Micro Sourcing]
- Businesses report saving up to 60% in overhead expenses by outsourcing accounting and bookkeeping services. [Whiz Consulting]
4. Limited Access to Financial Expertise
Nearly 50% of business executives agree that skilled talent acquisition is among the most challenging aspects of meeting their organization’s accounting and bookkeeping objectives [3]. Financial regulations and tax laws are complex and ever-changing. Staying up-to-date and compliant can be challenging for businesses without dedicated financial experts. Outsourcing provides you with access to a team of professionals who stay current with regulations and can provide expert guidance. This ensures your business operates within legal boundaries while optimizing tax benefits.
The increase in your business’ financial needs is relative to its growth. Handling increased transactions, payroll, and financial reporting requires more resources. If your in-house team is struggling to keep up with the demands of your expanding business, outsourcing can provide the scalability you need. You might find your business over-investing in areas that yield minimal returns while under-investing in critical areas. Outsourcing financial experts can provide insights into where resources should be allocated for maximum efficiency and profitability.
5. Declining Cost Efficiency
Running an in-house accounting department can be expensive. Costs include salaries, benefits, office space, software, and ongoing training. If these costs are steadily increasing and affecting your bottom line, outsourcing can offer significant cost savings. With outsourcing, you pay for the services you need, when you need them, without the overhead expenses associated with an in-house team. In fact, close to 24% of businesses in the UK outsource accounting services with the objective of reducing costs as a major motivator [4].
Accounting and bookkeeping often involve specialized areas, such as tax planning, forensic accounting, or international financial reporting standards. Maintaining a team with expertise in these areas can be expensive and may not be justified for day-to-day operations. Outsourcing provides access to professionals with specialized skills when needed, eliminating the need for continuous investment in training and development.
6. Lack of Strategic Financial Planning
Effective financial planning is essential for long-term business success. If your current financial processes lack strategic insights or the ability to provide accurate forecasts, it’s time to consider outsourcing. Outsourced professionals not only handle day-to-day tasks but also provide valuable financial insights, helping you make informed decisions for your business’s future.
Effective financial planning isn’t just about balancing the books; it’s about setting a course for growth. Without a well-defined financial strategy, you may overlook opportunities to expand, invest in new ventures, or enter emerging markets. Strategic financial planning helps you identify areas where your business can thrive and allocate resources accordingly.
7. Inconsistent Financial Reporting
Timely and accurate financial reporting is crucial for monitoring your business’s performance and making informed decisions. If you’re consistently struggling with delays or inconsistencies in financial reporting, it can hinder your ability to react swiftly to changing market conditions. Outsourcing ensures that your financial reports are generated promptly and accurately, giving you real-time insights into your business’s financial health.
Without a strategic financial plan, your business may be ill-prepared to weather economic downturns or unforeseen crises. Such events can disrupt cash flow, strain resources, and even threaten the survival of your business. Strategic planning includes creating contingency plans to mitigate risks and ensure your business remains financially stable during challenging times.
Conclusion
Outsourcing your accounting and bookkeeping functions can be a strategic move to enhance your business’s financial management, improve accuracy, and reduce costs. If you recognize any of these signs in your business, it may be time to explore the benefits of outsourcing. By doing so, you can refocus your efforts on core business activities, access expert financial knowledge, and position your business for sustainable growth in today’s competitive market.
Remember, outsourcing is not a one-size-fits-all solution. Carefully assess your business’s specific needs and goals before deciding to outsource. When you find the right outsourcing partner, you’ll unlock the full potential of your business while ensuring that your financial management remains in expert hands.
If you’re ready to explore outsourcing your accounting and bookkeeping functions, consider reaching out to Samera, a trusted partner in financial management solutions. Our team of experienced professionals can help you streamline your financial processes, enhance accuracy, and position your business for growth. Contact us today to learn more about how outsourcing can benefit your business.
Expert Opinion
“I won’t dwell on telling you to offshore your accountancy work, because if you have landed on this page you are already thinking about it. But i will tell what a game changer it can be for you. You will save time, make more money and simply enjoy running your firm much more – period. There are great people across the world, our job is finding them, and then getting them to help you run a better accountancy firm. If you want that, then give me a shout.”
Arun Mehra FCA
Samera Group CEO
Bibliography
Reviewed By:
Arun Mehra
Samera CEO
Arun, CEO of Samera, is an experienced accountant and dental practice owner. He specialises in accountancy, financial directorship, squat practices and practice management.
