Outsourcing Financial Operations

Five Topics to Consider when Outsourcing Financial Operations

By: kfinberg
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As you may have heard by now, the demand for outsourced accounting services has been rapidly increasing over time. Businesses of all sorts are beginning to recognize that outsourcing their accounting tasks to certified professionals extremely beneficial. They can now spend more time helping grow their business grow and pursue more important objectives.

Choosing whether to outsource your accounting duties is something that is very personal. However, as is the case with seemingly all financial decisions that your business will be asked to make. While making this important decision may clearly benefit some businesses, others may still prefer to keep performing these duties in-house.

There are many different variables that need to be considered when deciding where to allocate your most important accounting functions. In this article, we will discuss five of the things that you should consider when contemplating outsourcing your accounting tasks and how to determine which outsourced accounting service is right for you.

 

1. What is the current size of your business?

Naturally, the size of your business has a tremendous impact on which sorts of financial services are actually necessary. As businesses grow and evolve, they will face new sets of challenges and may be subject to additional legal requirements.

There are many different ways that you can determine the “size” of your business. Some of them including your current number of employees, number of operating locations, and annual revenue streams. A few major “milestones” will change your accounting needs. They include hiring your first employee, opening a new location, adding an additional source of revenue, and various others.

 

2. What bottlenecks are your business currently facing?

In order to become an effective business owner, it will be important to identify the “bottlenecks” that are currently preventing your business from realizing its full potential. If your business is failing to meet certain output goals or is using its capital (including time and effort) in an inefficient way, then it may be time for your business to make at least some sort of structural change.

One annual bottleneck that many business owners find themselves confronting is the amount of time it takes to manage their books and do their taxes. If spending time focusing on these essential tasks prevents you from increasing the value of your business through other means, then it may certainly be time to outsource these tasks away. Depending on the nature of your business, there are likely many outsourced accounting firms whose use—at least from an opportunity cost perspective—can easily be financially justified.

 

3. Do you operate in an eCommerce or physical commercial space?

When comparing different outsourcing firms, whether your business operates primarily online or in a physical location makes a major difference. Though the accounting obligations faced by these business are usually quite comparable, there are still a number of unique challenges and operational nuances that will need to be addressed.

For example, an eCommerce business may have a much more difficult time declaring its actual “operating location”, which can create a variety of different tax complications. Other issues that may call for the need of an eCommerce accounting specialist include operating as an international business, employing freelancers (rather than full-time employees), account receivable disputes, identity issues, and various others.

 

4. What are your long-term financial objectives?

Naturally, when your business makes the bold decision to outsource its financial tasks to a specialist, you must be persnickety. You will want to find someone that will actually help you achieve your long-term financial objectives. Though some businesses are simply looking for someone who will make sure that, financially speaking, everything that they’re doing is legally compliant, other businesses may find themselves searching for something more.

A good accountant is someone who can organize past financial statements from the past and update present financial reports. You want an accountant who is also able to help you look towards the future. Certain topics can require continuous input from someone who has a firm understanding of these processes. Things such as expansions, mergers and acquisitions, increases in employment, and various growth efforts very rarely happen overnight.

 

5. What are you looking for in an outsourced accounting partner?

Lastly, it is important to recognize that the accounting process is very personal. When comparing different outsourced accounting partners, you’ll need to look for somebody who isn’t just good, but good for you.

In order to help narrow down your search—which is likely rather extensive—it will certainly be helpful to do your research. It is important to visit the websites of accountants you are considering and read reviews. You should also ask for references from your business partners. But even furthermore, it will be incredibly beneficial to speak to each prospective accounting firm directly. You need to investigate whether or not they are compatible with the unique dynamics of your business. Though making an effort to research various accounting options may seem rather tedious at times, you won’t regret it. Once you’ve found a fit that you are compatible with, you’ll be certainly glad you did.

 

Conclusion

If your business is considering outsourcing its accounting services or any other similar tasks, you are certainly not without options. However, before you make this important decision, there are obviously a wide variety of relevant variables you need to consider. By using this list as a starting point—and considering any other variables that may be relevant to your business—you will be one step closer to finding an outsourced accounting partner that can benefit your business.

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