A version of this article appeared in the Dallas Business Journal on July 15, 2024.
Outsourced accounting is becoming a go-to solution for many businesses challenged by the ongoing talent shortage. When implemented thoughtfully and strategically, it can be a catalyst for organizational growth, offering enhanced efficiency and a focused commitment to core competencies.
Developing an in-depth understanding of the benefits, the importance of timing, and the range of available coverage can help organizations make informed decisions and achieve goals.
Explore the advantages of outsourced accounting—and why timing is important—to help your business fully leverage this opportunity.
Advantages of Outsourced Accounting
Outsourced accounting isn’t simply about keeping your accounting current. It’s a strategic decision driven by several compelling reasons.
Power of Team
Opting to outsource accounting allows you to leverage the collective expertise and diverse skill set of a specialized team. This approach can help overcome the challenges associated with one-person or a small team of full-time employees.
Involving an outsourced provider frees up employees’ time allowing them to focus on tasks that are more strategic and valuable to the organization's core mission. Collaborating internal and external teams can enhance the organization’s overall productivity and effectiveness.
Task Diversity
Outsourced accounting can help organizations bridge gaps created by tasks that don’t fit neatly into specific job descriptions.
It allows these tasks to be distributed between part-time roles or specialists who can handle specific responsibilities efficiently, optimizing the workload and ensuring high-quality outcomes.
Industry Best Practices
Outsourced accounting professionals understand industry practices, helping your organization stay up to date and using innovative approaches and technologies that drive efficiency and competitiveness.
Keep Pace with Change
Technological advancements and regulatory requirements change rapidly. Outsourcing is an agile solution that allows organizations to pivot effectively without the need for extensive internal retraining or restructuring.
Outsourced partners stay abreast of trends and can implement adjustments quickly, ensuring that your organization remains compliant and competitive.
Outsourced accounting services often include access to the latest financial tools and technologies. This integration can lead to significant improvements in financial management and real-time financial reporting.
Lower Training Costs
Training new employees is both costly and time-consuming. This burden shifts to the outsourcing partner, who is responsible for keeping their team up-to-date and skilled. This is particularly beneficial in fields requiring specialized knowledge, where training costs can be exorbitant.
Scalability and Flexibility
Outsourcing accounting delivers the scalability and flexibility businesses experiencing growth or changes need. Easily adjust the level of support needed to adapt to growth or downsizing.
Avoid Outsourced Accounting Pitfalls
Successful outsourced accounting is a partnership between the organization and provider, emphasizing trust, regular communication, and a mutual understanding of goals. Establishing a transparent relationship to align business objectives includes setting clear evaluation metrics measuring partnership effectiveness and fostering a pricing model that benefits both parties. This approach shifts outsourcing from merely a contract to a strategic alliance, contributing to organizational success.
Being aware of the potential pitfalls associated with standardized outsourcing—and how to mitigate them—can help optimize the opportunity and results.
Controlling Cost Effectiveness
Outsourcing isn’t a one-size-fits-all solution for cost savings. A decision to outsource should include consideration of the specific roles or tasks to be done, as this significantly impacts cost-effectiveness.
For example, outsourcing full-time positions may present challenges due to their comprehensive demands. When applied to tasks designed for multiple part-time roles or specialized expertise not available in-house, outsourcing can be a perfect fit.
Additionally, the value brought by a specialized external team can complement an in-house team’s skills and experience, creating a balanced approach to achieving efficiency and quality. In some cases, blending external expertise with internal knowledge can provide solutions that are both cost-effective and aligned with the company's strategic goals.
Ensuring Efficient Communication
Outsourced teams are a shared resource which can impact response times. However, efficient communication is typically prioritized to ensure client needs are addressed promptly and effectively.
Existing Procedures and Systems May Change
Preferred technology suites typically include standardized approaches that your organization may not be currently using. The outsource team might have experience with these new practices and have practices and processes around them that enhance efficiency.
Overcoming Team-Building Challenges
Outsourced teams bring specialized expertise and services to your landscape, complementing your personnel who have direct access to management and strong internal ties.
While in-house employees bring immediate responsiveness and a deep understanding of daily operations, outsourcing partners contribute valuable external perspectives and efficiencies. Together, they form a dynamic team, each offering distinct advantages that, when combined, enhance the organization's capabilities and strategic execution.
Although the outsourced team should be viewed as an extension of your in-house team, the absence of a consistent internal presence can create challenges for a third-party in managing and overseeing internal personnel.
Know When to Leverage Outsourced Accounting
The timing of leveraging an outsourced accounting team is important because it can have a significant impact on a business's financial health and overall success. If an organization waits too long to engage with an outsourced provider, they may find themselves struggling to keep up with their accounting responsibilities, which can lead to errors, missed deadlines, and financial inefficiencies. If they outsource too early, they can waste resources on services not yet needed, which can impact the bottom line.
Carefully evaluating accounting needs and choosing the appropriate time to outsource can help businesses optimize their outsourcing investment. Timing also contributes to a smooth transition with minimize disruptions to business operations by allowing for coordinated set-up and system integration.
Ultimately, the timing of leveraging an outsourced accounting team should be based on the business's needs and goals to facilitate the best possible outcome.
Recommended Practices for Finding an Outsourced Provider
Find the outsourced accounting provider that’s right for your organization by evaluating the following criteria.
People
Identify where there are gaps in your accounting team. Carefully assess your in-house expertise and what roles are being fulfilled. Work with your provider to identify how the outsourced team and skillset can help meet those needs.
Process
Assess what accounting responsibilities and related processes require attention. Collaborate with your provider to determine if the outsourcing approach aligns with your organizational goals and procedures.
Technology
Identify what technology is being used and how. Work with your provider to learn how the outsourced team can implement latest technologies to enhanced efficiency and improve accuracy.
Management Decisions
Establish how management will make key decisions in the outsourcing situation.
Internal Points of Contact
Designate internal contacts to facilitate smooth communication between the organization and the outsourcing provider.
Proper Controls and Segregation
Implement appropriate controls and segregation of duties to maintain data integrity and security.
Common Outsourced Accounting Roles
Outsourcing accounting covers a wide range of tasks, from transaction processing and the related accounting to financial reporting, and advisory services. The tables below provide a more comprehensive view of what these tasks could possibly entail.
Outsourced Finance and Accounting Services
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If you’d like to learn how outsourced accounting services can benefit your organization, contact your Moss Adams professional.