In starting a new business, or even continuing leadership of a long-standing one, you are constantly pulled in numerous different directions. Particularly as a start-up, the different needs of your business call for your attention simultaneously, whether product development or staff payroll.
Indeed, with regard to the latter point, accounting tasks are amongst the most important for a growing business – and also require a great deal of attention. Managing accounting tasks effectively is crucial for any business, but this isn’t always possible in-house; here, the decision to outsource these responsibilities can be a game-changer. But is outsourcing the right path to take?
Understanding Outsourcing Accounting
What does it mean to outsource your business’ accounting? Outsourcing, in general, involves the hiring of external third-party firms or individuals to handle specific tasks on behalf of a business. This is common practice and commonplace amongst a vast majority of businesses; consider the role of third-party cleaning organisations in cleaning offices and communal areas, for example.
But when it comes to accounting, specialist firms take on a number of crucial tasks for a business – including bookkeeping, tax preparation, payroll processing, and financial reporting, as well as advice and counsel on future financial movements. By outsourcing these fun ctions, businesses can leverage specialised expertise, improve efficiency, and focus on their core operations.
The Merits of Outsourcing Accounting
Outsourcing a business’ accounting affords numerous benefits to them, that can positively impact their overall financial management as well as their business trajectory. Here are some of the key merits:
Expertise and Accuracy
Outsourcing allows access to experienced professionals with unique industry knowledge, and the ability to apply it efficiently in practice. This means any financial reporting produced is likely to be extremely accurate and of extremely high quality – ensuring the business is continuing on the right track.
Outsourcing accounting tasks can also save money in the medium to long term, as doing so eliminates the need for hiring and training in-house accounting staff. This keeps costs associated with employing staff down, which can be vital for cashflow as well as equitable growth.
Scalability and Flexibility
Indeed, outsourcing is a helpful option in terms of growth; outsourced accounting services can be tailored to the specific needs and growth trajectory of a given business with consummate ease. This flexibility – to scale services up or down as required – allows businesses to adapt in a shifting financial landscape.
Potential Demerits to Outsourcing
Communication and Control
But outsourcing also introduces different risks and potential difficulties, including the devolution of control. Outsourcing involves relinquishing direct control over financial processes, opening a business up to negligent practice. This, in turn, requires clear communication and trust between the business and the outsourced provider.
Data Security and Confidentiality
One of the major concerns with regard to entrusting external businesses with accounting tasks is the safety of any data or information shared with that business. Protecting sensitive financial information is essential, not only to the operation of the business but also in terms of legal compliance with GDPR law. When outsourcing, businesses should ensure that the business chosen has robust data security measures in place, and adheres to confidentiality protocols.