Bookkeeping is simply a record of maintaining the financial data of a company in a properly classified and orderly manner. It is an essential process of accounting and you can choose from two accounting methods: cash-based accounting and accrual-based accounting.
Outsourcing the bookkeeping activity of an organization will include handling day-to-day transactions, accounts receivable, accounts payable, payroll, financial analysis, cash flow budgeting, and other services.
Outsourcing bookkeeping can benefit a business in a variety of ways, including being a cost-effective option, lowering the risk of internal fraud, ensuring higher quality work, providing access to experts, saving time, and thus maximizing profits.
To know the signs to outsource bookkeeping, it is important to analyze the factors which will improve the overall efficiency of the business process.
The finance and accounting outsourcing market research report 2022-2027, reveals that the global finance and accounting outsourcing market size was valued at $40.70 billion in 2021 and is expected to grow at a CAGR of 5.9% during the forecast period, reaching $57.39 billion by 2027.
The market size of global finance and accounting outsourcing is expected to grow at a CAGR of 5.9%.
1.Outdated Records and Books
When to outsource bookkeeping is clearly indicated by the financial records. If your books of accounts are not regularly updated and are lagging behind, you should consider outsourcing the bookkeeping activities of your company.
The issue with outdated financial records is that you are unable to manage your finances and conduct a financial analysis of your business. You are not able to check the financial health of your company in real-time.
It can often lead to problems with cash management. A benefit of outsourcing your bookkeeping is that even in the absence of you or your accountant, your books are still consistently maintained.
2.Lack of time
Another major sign of when to outsource bookkeeping is that you don’t have enough time to manage your daily books of accounts.
A growing business means handling more clients, high volumes of data, and more paperwork. A study indicates that a growing business is more likely to outsource than a small business. 29% of businesses with fewer than 50 employees will outsource less, compared to 66% of businesses with 50 or more employees.
3.Updating the books only at the end of the financial year
Are you the type of person who only updates your financial records at the end of the financial year in order to file your tax liability?
If yes, then it’s clearly a sign to outsource bookkeeping. Then you won’t be able to remember all the details to tell your accountant to fill in the blanks but an outsource bookkeeping service provider will clearly assist you by providing regular updates on your finances and tax liabilities.
4.Missing out on tax deductions
If you are not able to take advantage of the tax deductions provided by the government each year, then your tax liabilities will be higher than they should be. If the accounts are not updated with all the details, then you are not able to analyze which deductions you can get each year.
This clearly can be solved by having an outsourced bookkeeper, as they will record transactions and assign the right expense categories to reduce your total tax. They’ll identify and keep you informed about the business expenses you didn’t know were tax deductible.
5.Multitasking is making it difficult to focus on all the business processes
Are you the owner who focuses on all the activities of the business by yourself such as accounting, bookkeeping, production, distribution, marketing, and selling?
Then it can hamper the growth of your business. According to a study by the American Psychological Association, the mental blocks that result from repeatedly shifting between tasks can cost upwards of 40% of a person’s productive time.
If you spend more time handling your financial records, payroll, and other related accounting services than you do working on other activities of a business then it’s the right time to outsource bookkeeping so you can focus on other activities.
6. Unpredictable cash inflows and cash outflows
Have you ever been in a situation where you were unable to cover your expenses and make timely payments to your suppliers at the end of a month due to a lack of cash?
This cash flow problem can arise because of various factors such as unforeseen expenses, late payments from clients, and much more. You should keep a close eye on these cash flow activities which an outsourced bookkeeper can do for you because they provide a clear image of your accounts receivable and payable in a weekly, monthly and quarterly manner.
7.Lack of knowledge in bookkeeping
Did you know that about 60% of small-business owners aren’t confident in their bookkeeping and accounting skills?
If you are one of them, then doing it by yourself is not a good idea because it needs accepted principles and rules to even record a single financial transaction which only a qualified accountant can do properly for you.
Then there are the signs to outsource the bookkeeping work of your business and you should focus on other activities in which you are best.
8. Want to focus on more competitive areas
If you want to focus more on analyzing the competition in the market, your product or service range in the market, or your marketing tactics, then this time-consuming bookkeeping work can make you lag in these core areas.
Then, think about these crucial business areas and hire an outsourced bookkeeping service provider.
9. Paying a high salary to an in-house accountant
An accountant is one of the most promising jobs on the market and as the owner of the company, you must be thinking of the high cost of having an in-house accountant.
Then, the right solution for this problem is to outsource your bookkeeping which not only does the work of your accountant but also comes at a much lower cost.
10. Employee fraud
Employee fraud and data breaches are the major concerns in this tech world.
According to the 2016 Report to the Nations on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners, 76% of reported fraud cases were committed by employees of the organization in accounting, sales, upper management, customer services, and purchasing.
The best way to deal with this fraud is to not have internal controls based solely on trust. By hiring outsourced bookkeeping services, you will have a team of people who are unbiased and will ensure that your business’s finances are accurately reported.
The additional pairs of eyes checking for anomalies will provide an extra layer of protection not only trying to prevent any fraud but also increasing your financial accuracy.
Benefits of outsourcing bookkeeping
When you outsource your bookkeeping services, you’re paying someone else to do the work for you. Depending on the company you choose, this person may be a qualified accountant or an experienced bookkeeper. This type of outsourcing can be a cheaper option than hiring an in-house accountant if you don’t need all of the services that an in-house accountant provides.
1. Expert advice
By hiring an outsourcing bookkeeping firm for your business, you can easily get expert advice from qualified and certified bookkeepers, chartered accountants, CFAs, CMAs, and CFO assistance with the knowledge of the latest technological software because they undergo proper training.
Also, the use of cloud technology allows businesses to get access to real-time information anywhere and anytime to make any key business decisions.
2.More profits
An outsourcing bookkeeping service provider can increase your profit margins by paying the correct tax liabilities and also taking advantage of tax deductions through their updated knowledge of professionals.
Furthermore, because it provides a clear picture of your company’s financial health you can make decisions based on it resulting in higher profits.
3. Achieve work-life balance
As the CEO of a business, you can easily lessen the burden on yourself or your staff by outsourcing a bookkeeping firm. You can also focus more on other core business processes such as production, distribution, marketing, and selling.
4. Boost efficiency
When it comes to outsourcing bookkeeping services, there is a division of duties. In outsourcing firms, multiple professionals are assigned to keep track of the accounts ensuring that the records are thoroughly reviewed and maintained without any discrepancies.
You can simply boost the efficiency of the bookkeeping and get the work done on time without compromising the quality of the work.
Six Benefits of Outsourcing Bookkeeping Work for Your Business
5. Flexible resources
You can easily cope during peaks and troughs. You can scale up or scale down your business with the right investment guide from your bookkeeper. With the proper financial analysis available at the right time, you can make your investment and financing decisions with the utmost accuracy and leverage the resources available to you.
6. Saves time and costs
Save time and money on training your staff and delivering compliance jobs. You can save on overhead costs such as sick leave, paid leaves, holidays, paternity or maternity breaks, training costs, pensions, and payroll taxes. You only pay for the services that are required for your business needs. Therefore, IBN Tech outsourcing bookkeeping services can be cost-effective and time-saving at the same time.
Outsource bookkeeping to the right accounting partner
When you know that it’s not your cup of tea to handle bookkeeping in-house, it’s time to outsource bookkeeping. It outperforms the in-house department in terms of efficiency and dependability.
Now, you have enough time to focus on other core operations. It is critical to focus on attracting new clients, meeting your client’s needs, and delegating responsibility for your client’s business finances to an outsourced bookkeeping service.
They can also provide financial advice to assist you in making sound business decisions.
