Advantages and Drawbacks of Outsourcing Your Accounting

While caught up in the daily grind, the last thing you want to deal with is keeping the books. It is one of the least glamorous aspects of being an entrepreneur and it can be rather time-consuming. To make it worse, having in-house accountants on the payroll is also expensive. These are the reasons why many organizations across industry sectors employ outsourcing. It is a sound strategy, but not a one-size-fits-all solution. There are some pros and cons you need to weigh before taking the plunge. So, it is time to develop a deeper understanding of what outsourcing entails and evaluate whether it is the right fit for your company.

Saving time and money

The main advantage of outsourcing is linked to money and time savings. You can minimize the costs associated with handling the books yourself or with the help of the in-house staff. Namely, there is no need to hire full-time. You pay only for the amount of service you require, which ends up being extremely cost-effective. Besides, you avoid covering employee expenses such as insurance, payroll taxes, unemployment taxes, benefits, paid time off, etc.

On top of that, you get the chance to reduce the overheads linked to office space, utilities, and equipment. And when it comes to time savings, they stem from the fact that you are not required to hire, recruit, retain, and manage accountants. Simply put, outsourcing alleviates this need and allows you to focus on more important tasks that add value to the organization. It also helps that tackling contracts and agreements with outsourcing providers tends to play out nice and easy.

Quality not guaranteed?

On the flip side, outsourcing is not as simple as carrying out a 5-minute research and then sitting back while others do all the heavy lifting. To get the most bang for your buck, you have to take your time finding the most suitable provider. Moreover, if you want top-notch quality, you also have to pay more. There is no shortage of shady organizations, while reputable services constantly fine-tune their offers and hone their skills.

So, provided that you can afford it, you should do the research. Opt for third-party services specialized for industry sectors, such as hospitality accounting. They have trained and highly competent staff ready to face any accounting challenge. Also, bear in mind that they face higher liability, which reduces the risk for your business. It is in the best interest of both parties to complete tasks to mutual and utmost satisfaction.

Cons of outsourcing

Despite clear benefits, some companies prefer to keep the records close and exert direct oversight. That is to say that outsourcing forces business owners and managers to relinquish control over day-to-day workflow. This does not have to be a bad thing, but some people dread the feeling of being at the mercy of someone else. It all depends on your leadership and management style.

Furthermore, note that although technology is advancing by leaps and bounds, it still cannot be a substitute for being physically present in the office. Outsourcing can become even more of a drag when you work with providers across time zones or need to overcome language barriers. Your questions remain unanswered and problems unsolved, which induces frustration and headaches.

Another sensitive subject is the matter of security risks. Giving financial information to an outsider always heightens the likelihood of that information ending up in the wrong hands. So, are you prepared to face this prospect? In case the answer is yes, you might want to ensure that the provider has impeccable security credentials. Data breach is a legitimate concern, a problem that makes headlines almost daily.

On top of the numbers game

Done right, outsourcing is a highly-effective tool for getting the accounting work done. It frees you from the tedious obligation and gives you time to manage other priorities. Just do not expect outsourcing to be a silver bullet. Yes, you can save a significant amount of time and money, but there is always a tradeoff and things can get lost in translation. The million dollar question is whether the pros outweigh the cons. In any event, if you choose to go down the outsourcing road, do your homework and find a highly-qualified bookkeeping service.