FAQs of Outsourced Accounting Firms

Outsourcing is becoming increasingly popular in the business world, and accounting is no exception to this trend. Outsourcing your accounting to outsourced accounting firms means you pay an external organization to handle all of your financial department needs. When companies outsource their accounting team, they no longer have to worry about managing internal employees, which helps them focus on their companies bottom line.

This article discusses the outsourced accounting FAQs. You can use it as a guide to help determine whether outsourced accounting is the right decision for you. Continue reading to have all of your outsourced accounting questions answered.

What Are the Top Reasons for Small Companies to Outsource Accounting?

There are numerous reasons to outsource your accounting, but the most apparent benefits deal with the savings they provide.

Cost-Effective Solution- Companies save money with outsourced accounting services because they don’t have to pay for employee benefits, taxes, or PTO. They also don’t lose time to the hiring, onboarding, and training processes. Additionally, you don’t have to spend on equipment and software expenses involved in hiring an accountant.

Scalability- Outsourced accountants allow you to scale the services to fit your operation. If your company already has a CFO and only needs a quality controller once a week for financial reports, you only pay for the quality controller.

Industry-Specific Experts- Outsourced accounting firms use fractionalized teams of experts who have experience in various industries. These teams understand which software makes sense for your company.

Focus on Your Bottom Line- Besides the capital outsourced accounting firms save you, it also frees time to focus on your bottom line. When you unload some of your financial responsibilities, you can focus on expanding your business sustainably and maximizing your profits.

Do Outsourced Accounting Services Specialize in Specific Industries?

The majority of outsourced accounting firms have the skills to handle multiple industries. They understand industry regulations and trends and give you a specialized approach to your accounting needs. It doesn’t matter whether your company is a start-up with little to no resources or whether you already have an established accounting department. Outsourced accounting firms will be able to provide you with the tools that fit your business the best.

What Software Do Outsourced Accounting Services Use?

Quickbooks is the most common accounting software companies use. However, most outsourced accounting firms understand how to use more complex systems such as an ERP system. The best outsourced accounting firms understand which software to pair with your account.

How Much Do Outsourced Accounting Services Cost?

Costs for an outsourced accounting firm depend on a couple of factors. First, different companies charge different hourly rates. Additionally, the final price depends on the specificity of the accounting tasks performed. For example, a firm might employ an entire accounting team, made up of a bookkeeper, staff accountant, accounting manager, and controller/CFO to work on your account.

You don’t charge an hourly rate in these cases but rather a flat rate or a subscription fee. Plenty of companies take advantage of outsourced accounting firms because they realize they don’t have the infrastructure to utilize their in-house accountant to their maximum potential. In turn, these companies know they’re overpaying their in-house accountant.

Do Outsourced Accounting Services Help Companies Outside Their Region?

Whether an outsourced accounting firm takes clients outside their region depends on the company. Many outsourced accounting firms aid companies all over the United States. However, you should consider whether your firm understands all the local, state, and federal regulations before making your final decision. You should also think about whether your firm understands your target markets to make informed financial decisions down the road.

How Do You Know Your Information Is Secure?

Reputable outsourced accounting firms put a premium on their client’s information. They store their client’s information in a data center that contains multiple security levels only accessible by employees with security clearance. Typically, there is a two-factor authentication process to safeguard accounts and information at all times.

Do I Need a Fractional CFO?

You should examine the differences between a CFO and controller-level services before making your final decision on outsourced accounting services. You don’t want to overpay for a fractionalized CFO if you only need controller-level services, and you don’t want to underpay for controller-level services when you need something more hands-on.

How Do I Transition From an In-House Accountant to Outsourced Accounting?

Transitions are always tricky, and you should handle them with care. However, with the right financial partner, the change will be quick and painless. Plan ahead, budget accordingly, set goals, and be honest about potential hiccups and you won’t be stressed when you make the move.

How Can You Tell When You’ve Outgrown Your Current Accounting Firm?

As your business grows, your accounting needs change. There are three signs it’s time for you to change your accounting services. First, your accountant can’t help your business obtain capital and other loans necessary for your business’s expansion. Second, your accountant can’t give you actionable advice based on your financial goals. Lastly, they cost you money because they file something incorrectly.

Conclusion- FAQs of Outsourced Accounting Firms

Deciding whether to outsource your accounting needs requires some deliberation. Choosing to do so might not be the best option for your company if you aren’t in a growth phase yet. However, if you’re rapidly expanding your business, you should seriously consider consulting with outsourced accountants at the very least.

One of the most important aspects of choosing an outsourced accounting firm is deciding whether they communicate well with you. Some firms aren’t transparent about their fees and cause significant issues down the road. The last thing you want hanging over your head is a contract with a company that scams you out of crucial capital.

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