What Is Outsourced Bookkeeping?What Is Outsourced Bookkeeping?
Outsourced bookkeeping involves hiring an external service provider or a business process outsourcing (BPO) company to handle the daily recording of financial activities and transactions for a company.
When you choose to outsource your bookkeeping as a small business owner, you collaborate with an external service provider who can take care of your daily tasks in order to maintain a clean financial records.
This type of alliance provides small business owner access to experienced and certified professionals who can efficiently manage your day-to-day financial tasks. This delegation frees up your time from time-consuming bookkeeping responsibilities.
Outsourced accountants manage all aspects of a company’s accounting needs, including:
- Financial reporting.
- Tax preparation.
- Accounts payable & receivable
What Outsourced Bookkeeper does for your Business?
When you outsource bookkeeping for your small business, the certified bookkeepers are responsible for managing your books day in, and day out. Generally, they oversee all data entry activities into accounting software or ledgers. Their main tasks revolve around maintaining your business’ financial transaction records by tracking transactions and generating financial reports. Other tasks these professionals carry out when you outsource bookkeeping and data entry services include:
- Data Entry: Inputting transactions into accounting software or ledgers.
- Invoicing: Creating and sending invoices to customers.
- Vendor and Client Maintenance: Managing accounts payable and receivable.
- Collections: Collecting overdue accounts receivable.
- Bill Management: Coding, entering, and paying bills.
- Reconciliation: Reconciling credit card and bank accounts.
- Support for Audits: Preparing documents and work papers for audit and month-end closing.
- Document Management: Scanning and attaching documents for audit and tax purposes.
Benefits of Bookkeeping Outsourcing
Cost Efficiency
Hiring and training an in-house accountant or bookkeeper can be expensive, especially for a small business with limited financial resources. Outsourcing allows you to access professional expertise without the overhead costs of salaries, benefits, and training.
Expertise and Accuracy
Professional accounting firms specialize in handling financial tasks. They bring expertise in tax regulations, financial reporting, and bookkeeping best practices. This expertise reduces the likelihood of errors and ensures compliance with regulations, minimizing potential fines or penalties.
Focus on Core Activities
Bookkeeping and accounting are essential but time-consuming tasks. By outsourcing these functions, business owners and staff can focus more on core business activities such as operations, sales, and customer service. This improves overall efficiency and productivity.
Access to Advanced Technology
Accounting firms often invest in state-of-the-art accounting software and technologies. By outsourcing, small businesses can benefit from access to these tools without having to purchase them independently, which can be costly.
Scalability
As your business grows, so do your accounting needs. Outsourcing allows you to scale services up or down based on your current business size and financial requirements. This flexibility is crucial for managing growth effectively.
Reduced Risk
Outsourcing your bookkeeping and accounting tasks can mitigate the risk of fraud or embezzlement. Professional firms adhere to strict ethical standards and implement robust security measures to protect your financial data.
Timeliness and Consistency
Outsourced firms operate on timelines and schedules to deliver financial reports, tax filings, and other documents promptly. This ensures that you have access to accurate financial information when needed, improving decision-making processes.
Strategic Insights
Experienced accounting professionals can provide valuable insights into your business’s financial health. They can analyse financial statements, identify trends, and offer strategic advice to help you make informed decisions for future growth.
Overall, outsourcing bookkeeping and accounting allows small businesses to leverage specialized expertise, reduce costs, improve accuracy and efficiency, and focus on core business activities, ultimately contributing to long-term success and sustainability.
Questions for vetting your Prospective Bookkeeping Agency
As a business leader seeking an outsourcing partner, it’s crucial to ensure they align with your needs and expectations. Look for partners who offer transparency in their processes and are responsive to your queries and concerns. It’s also beneficial to assess their technology infrastructure and their flexibility in adapting to your company’s unique requirements and their ability to scale their services as your business grows. By asking detailed questions about their approach, service levels, and client references, you can make a well-informed decision that supports your company’s financial management goals effectively.
To choose the right bookkeeping partner, ask the following questions:
- Experience and Expertise: What is their experience with accounting standards and U.S. tax legislation?
- Quality Standards: What quality standards do they meet?
- Software Compatibility: What type of software do they use? Are they comfortable using your company’s software?
- Data Security: How do they keep client data safe? What are their security measures?
- Turnaround Times: What are their turnaround times?
- Collaboration: How will they keep track of your bookkeeping work?
- Engagement Models: What engagement models do they have?
- Staff Selection: Can you choose the staff you want to work with?
The answer to the following questions will give you enough confidence in choosing the right vendor for this business function. Their answers will show the ability of their back-office outsourcing services to meet your requirements and needs.
