Marketing your company. Increasing sales. Maintaining inventory. Improving customer service. Growing headcount. Attending meetings to coordinate it all.
The daily checklist of things you have to take care of as a business owner is a long one. On top of it all sits managing your finances. Without well-balanced books and a detailed strategy for growth, you can’t expect your business to succeed long-term.
But it’s difficult to find the time to sit down and focus on your accounting functions when you have a million other things on your plate.
You could attempt to do your best, but if you make a few mistakes in your math, you’ll get slapped with expenses you were absolutely not prepared for. Even if you bring in an accountant, all the finances for a fast-growing business are still a lot for one person to handle. That’s when you should look into getting outside help through outsourced accounting.
Here’s everything you need to know about what outsourced accounting services are, when you need them, and how you can find the firm that fits your business.
What is outsourced accounting?
When you outsource your accounting, you rely on a third party to provide finance and accounting services to your business.
Just like if you had someone in-house, outsourced accounting services can cover:
- Bookkeeping
- Accounts payable management
- Financial reporting & analysis
- HR & payroll services
- Spend management
- Tax services
- CFO advisory services
But unlike having an in-house team, there are certain perks you only get when you outsource.
7 benefits of outsourcing your accounting functions
Outsourcing finance and accounting services offers a host of benefits that aren’t always a reality with in-house teams. These are just a few.
1. Limit time spent on your books
While it’s absolutely necessary, bookkeeping is tedious and time-consuming, depriving your finance or executive team of time that could be spent elsewhere within your business.
Outsourcing your accounting services ensures these tasks get accurately completed while freeing up time for your internal employees.
2. Save money on full-time staff
Internal finance positions, especially Chief Financial Officers, cost a pretty penny to fill.
Outsourcing gives you all the services you need to effectively manage your finances without the high price tag of an in-house, full-time team.
3. Get much-needed expertise
Financial management is complicated, and going it alone can be confusing at best and detrimental to your business at worst.
An outsourced accountant can use their years of experience to come in and make sure your books are balanced, your expenses are covered, and you have a solid growth plan for the future.
4. Become proactive about your finances
When you’re wearing so many other hats as a business owner, finances can sometimes get pushed to the corner.
Outsourcing lets you put your financial management in the front seat by giving you the flexibility to get help with specific services or place your entire financial function in the hands of a trusted external team.
5. Accurately report your financial activity
Financial reporting is not the most straightforward task, but it’s essential for figuring out your current financial stability and planning for the future.
Outsourced accountants and fractional CFOs can expertly prepare financial reports that give you the insights you need to make strategic decisions for your business.
6. Automate your accounting functions
Doing all your accounting and bookkeeping by hand is inefficient, exhausting, and leaves way too much room for mistakes.
Outsourcing your accounting services means you get access to their technology stack to automate your financial management tasks, save time, and reduce the risk of error.
7. Easily scale your business
You can’t be stuck with rigid, inflexible accounting and financial operations as you grow.
Outsourcing your accounting services ensures that you can easily adjust your operations to match the speed and capacity you need to scale.
The benefits are great, but deciding when to make the jump from in-house to outsourced can be tricky.
7 times you should outsource accounting
If you’re deciding when to outsource, there are several scenarios where bringing in outside help is a wise call.
1. You want the best talent
Let’s say you’ve yet to find the right person to fill an in-house role or can’t afford to hire someone full-time.
Outsourcing for virtual accounting services lets you work with highly skilled financial experts that you would otherwise not have access to.
2. You’re going through a growth period
You need to handle growth periods for your startup very carefully, and that includes how you manage your money.
An outsourced accountant can ensure your financial activities and operations scale with your business—without the need for extra full-time help.
3. You want the latest technology
As a small business, you don’t always have the funds to upgrade to the latest tech solutions—or the time to research them in the first place.
Outsourced accounting firms need to maintain the highest level of technology capabilities to remain competitive. That means you can leverage their solutions to efficiently support your accounting and financial operations functions.
4. You’re prepping for a funding round
When you’re approaching investors or banks for additional funding, every financial report you show them needs to be complete and accurate—and there are a lot of figures they’ll want to see.
You can rely on an outsourced or fractional CFO to put together the reports, forecasts, and financial plans you need to remain compliant with accounting principles and optimize your chances of getting the funding you need.
5. You’re trying to manage internal costs
Keeping a full-time accounting team is expensive. You’re paying hundreds of thousands of dollars in combined salaries—before insurance and benefits. That accounts for a huge chunk of your expenses.
You can free up your money to be used elsewhere (without sacrificing service or skills) by outsourcing accounting teams at a fraction of that cost.
6. You’re struggling to manage accounting on your own
Trying to manage your books, account for payroll, fulfill supplier invoices, and plan for your financial future can be extremely overwhelming.
Outsourcing gives you some much-needed assistance in managing your finances and helps you remain compliant with every task.
7. You’re losing money
If you’re hemorrhaging cash and can't figure out where you’re going wrong, it might be time for an objective opinion of your financial activities and operations.
Outsourced accountants come into your business with fresh eyes to examine your books, find problem areas, and offer strategies to save your business.
Let's say one of those situations applies to your business. The next thing you’ll want to do is get a clear understanding of how the outsourcing process might go.
How does outsourced accounting work?
The process you’ll go through when hiring an external accounting firm can vary based on your needs—but you can expect a few things when you find the right team.
The ideal outsourced accounting firm will:
- Perform a full assessment of your business needs and current functions — Everything is out in the open for a complete analysis.
- Partner with you to talk through your goals — Your goals inform every decision and strategy your outsourced team suggests.
- Set up necessary technology tools — Back office software, automations, and workflows support your financial plan.
- Offer ongoing support and touch-bases — Communication remains strong throughout your entire relationship.
- Deliver the value you’re looking for — The results you planned on seeing from your paced strategy actually happen.
Comfortable with the baseline of what you should expect from an outsourced accounting firm? Great! Now, it's time to sort through your options.
What are the types of outsourced accounting services?
When searching for the right team and offerings, you’ll find there are a few types of accounting firms to choose from, each with its own pros and cons.
VC-backed SaaS firms
SaaS firms backed by venture capital tend to be growth-oriented and driven by technology, giving you new solution options that were not previously on the market. They also can attract strong talent who want to be a part of that journey and deliver for their clients.
However, they typically follow a service-heavy model, denying you the flexibility you could be looking for in the first place.
Licensed firms
Firms that employ only CPAs and other licensed professionals offer the expertise you need to manage your finances.
Unfortunately, they’re also heavily controlled by government regulations and tend to be slow to adopt new technology, so your accounting activities are done as slowly as they would be in-house.
Non-traditional firms
Non-traditional accounting firms typically offer more personalized services and flexibility in how they operate.
Unfortunately, they don’t always have the capacity to take on high volumes of work. Plus, their limited access to capital can leave you with a firm today that’s out of business tomorrow.
Outsourced financial operations
Firms that offer outsourced financial operations take a technology-driven approach and encompass the entire range of financial services you could need to run your business.
From daily activities like bookkeeping and accounting services to forward-thinking planning and strategy, these firms deliver the flexibility and scalability small businesses need to succeed.
How do you know which type of firm to choose to support your small business? Well, there are a few factors to keep in mind.
Which outsourced accounting firm is best for me?
When searching for outsourced accounting services, consider a firm’s:
- Service offerings — Point blank, do they offer the services you’re looking for?
- Technology offerings — How do their technology stack and capabilities compare to other firms you’re looking at?
- Communication level — Do you have a team you can reach out to at any time who gives you prompt answers?
- Process approach — How do they align with you on your goals and develop a plan that fits your business needs?
- Security and accreditations — What steps do they take to ensure your financial data is safe and secure?
You should also look to avoid common mistakes in choosing a firm:
- Only outsourcing locally — The accounting space is filled with talent. Don’t limit yourself to only the firms in your neighborhood.
- Choosing solely based on price — The cheapest firm is not necessarily the best. It’s worth investing in a firm that actually provides you with the level of service you deserve.
- Not researching enough — Don’t always go with the first choice you see on a web search. Take the time to explore all your options.
- Not finding the right culture fit — Only partner with a firm whose values and culture are similar to your business’s.
So, what’s it going to be?
Reimagine your financial ecosystem with Hiline
Partnering with an external firm to manage your financial and accounting functions can be a bit scary. After all, you’ve built your business from the ground up on your own, so it’s fair that you’d be hesitant to bring another team on board.
Hiline isn’t your average firm. We began with the goal of pushing the boundaries of what an accounting firm can be.
With us, you don’t just get someone to manage your finances. You get a partner committed to helping you grow your small business using tech-enabled accounting, strategic finance, and personalized service.
Let’s build a plan that lets you focus on what you do best and unlock your business’s potential.
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