Why Consider Outsourcing: Accounting and Bookkeeping?
Financial Executives International (FEI) at the beginning of 2024 reported a worrying trend: over 350,000 accountants and auditors had left their jobs in the past two years. This alarming statistic highlights the growing pressures faced by businesses of all sizes.
As the FEI succinctly put it, “How do you meet your financial obligations, ensure compliance, and drive growth when the expertise you need is in short supply?”
One effective solution is outsourcing.
What is Outsourcing in Accounting and Bookkeeping?
Outsourcing accounting and bookkeeping involve hiring external professionals or firms to manage these functions for your business. By delegating these critical financial tasks to specialists outside your organization, you can concentrate on core activities and strategic initiatives.
How Are Firms Coping with the Staffing Shortage?
According to a survey by CPA Trendlines, 42% of accountants are turning away work due to staff shortages. This growing gap in the workforce has led many businesses to consider outsourcing as a viable option.
The Popularity of Outsourcing Accounting and Bookkeeping
Outsourcing these services has gained significant traction over the past decade, particularly following the global financial crisis. With advancements in cloud computing, online video conferencing, and digital data management, outsourcing has become even more accessible and efficient. Notable trends include:
- The finance and accounting outsourcing market is projected to reach $51 billion by 2026.
- Accounting is the most commonly outsourced process among small businesses.
- 37% of small businesses outsource both accounting and IT services.
- Finance leaders believe that 89% of accounting activities are highly automatable.
Key Reasons to Outsource Accounting and Bookkeeping
- Cost Savings: Partnering with an offshore provider can save up to 70% on labor costs. Lower living costs and reduced infrastructure expenses allow businesses to reallocate funds to areas like product development, marketing, or increased production.
- Scalability: Outsourcing offers flexibility to scale staffing up or down based on business needs. This is especially valuable during peak periods, like tax season, allowing quick adjustments without lengthy recruitment processes or costly layoffs.
- Access to Expertise: Outsourcing provides access to highly skilled professionals at a fraction of the cost of in-house teams. Countries like the Philippines produce a significant number of qualified accountants annually, offering a rich talent pool.
- Technology: The shift to cloud-based accounting enables seamless access and sharing of financial data. This technological advancement supports enhanced efficiency and user experience, even when working with offshore talent.
- Improved Efficiencies: Specialist providers have streamlined processes that enhance efficiency. This allows businesses to focus on their core competencies while leaving accounting and bookkeeping to experts with proven systems.
- Staff Retention: Outsourcing can improve overall morale by allowing onshore teams to focus on growth-driving activities. This strategy has been shown to reduce staff turnover, saving time and money in recruitment and training.
- Accurate Financial Reports: High-quality outsourcing providers invest heavily in training and maintaining a high standard of work. This focus on quality ensures accurate, compliant, and productive financial reporting.
Signs You Should Consider Outsourcing Your Accounting and Bookkeeping
- Your bookkeeping tasks consume more time than you can afford.
- Financial records are frequently out of date.
- In-house accounting support is costing more than it should.
- Recruiting a full-time accountant or bookkeeper is challenging.
- Staff are unhappy with ad hoc bookkeeping responsibilities.
- Sales are up, but profits aren’t reflecting this growth.
- You’re not maximizing tax deductions.
- Compliance with regulatory requirements is a concern.
What Roles Can Be Outsourced?
Modern outsourcing goes beyond call centers and data entry. Today’s providers offer access to highly qualified professionals in roles such as:
- Accountant
- Bookkeeper
- Auditor
- Accounts Receivable/Payable Specialist
- Accounting Supervisor/Manager
- Billing Specialist
- Finance Specialist
- Financial Analyst
- Financial Advisor
- Investment Manager
- Taxation Specialist
Is Outsourcing Right for You?
While outsourcing offers many benefits, it’s essential to evaluate your specific needs and circumstances. Taking the time to assess your situation can help determine if partnering with an outsourcing provider is the right move for your business.
In conclusion, the accounting skills shortage presents a global challenge, but outsourcing provides a practical solution. By leveraging the expertise and efficiencies of external providers, businesses can overcome these hurdles and thrive.
Discover how Madhda’s Managed Services can transform your accounting and bookkeeping processes with our tailored solutions. Contact us today to learn more.
Reference:
- Navigating the Accounting Talent Shortage: Strategies for Business Growth and Efficiency – FEI (financialexecutives.org)
- The CPA Shortage (shrm.org)
- The Benefits Of Outsourcing Finance And Accounting (forbes.com)
- 50 Interesting Outsourcing Statistics [Updated for 2024] (weareamnet.com)
- 47 New Outsourcing Statistics (2023-2026) (explodingtopics.com)
- Finance and Accounting Outsourcing Trends to Watch in 2023 – Auxis
- Reduce operational costs with our outsourcing services (microsourcing.com)
- Differences Between Accountants in Different Countries – EIN Presswire (einnews.com)
