When a company first launches, its founders and core team typically take on all the work themselves and will often find themselves multi-tasking as they try to keep their expenses low and operations manageable. With many startups, bookkeeping and accounting are likely handled by one key person or a very small team of people.
And with little funding, business owners may have no choice but to use outdated accounting systems that require them to track all financial records and perform transactional processes manually. However, as their operations expand, businesses realize they begin to get bogged down with cumbersome, manual work that won’t allow them to grow as they should. They need to start exploring cost-effective yet effective strategies like hiring an outsourced team that will allow them to stay competitive.
Contracting to a third party to work on your company’s business processes is not a new concept. However, as technology evolves and improves, organizations have turned to outsourcing more, particularly when they find themselves spending too much time and money on tedious, manual tasks and neglecting aspects of their business that demand their attention. In this guide, we will talk about the benefits of outsourcing and why you should leverage third-party service providers to fill the gaps in your finance and accounting.
Helps Companies Save Time and Money
Hiring in-house salaried finance and accounting departments can be expensive. Beyond fulfilling payroll, you need a budget for their medical insurance and taxes. You also need to factor in the costs of benefits, such as vacation, sick leave, and contributions to their retirement plans.
Maintaining an in-house team also means your human resource and hiring department will need to spend on recruitment. They will need to use some of the company’s marketing budget to attract candidates by placing job ads on recruitment sites and other job boards. Time and money will be spent reviewing applications, screening resumes, and interviewing shortlisted candidates. And once someone has been hired, they have to onboarded and trained, which costs more money.
When you outsource accounting operations, you only need to pay for what you need. You get professional-grade accounting without needing to employ full-time accountants. There’s also minimal to no productivity loss because your in-house team doesn’t have to train the service provider.
Outsourcing also saves organizations time and money because it relieves them of tedious, manual accounting tasks. CFOs, senior management, and other team members are freed from the drudgery of mundane work and can focus on high-value work. This not only saves your company money and frees up your valuable time, but it increases morale and productivity.
Access to the Advanced Software and Systems
Advanced accounting software that is AI-powered and cloud-based can be costly to own. And for a startup or small company, the costs are beyond what their budgets will allow. Beyond the high price of advanced accounting technology and software, there are also the costs of maintaining the hardware in-house, which typically means hiring for IT support.
When you turn to outsourcing with a Finance as a Service (FaaS) company, you benefit from advanced technology and tools without having to purchase or maintain them. The best FaaS service provider can offer you peace of mind by demonstrating secure and robust IT architecture that ensures the security and confidentiality of your financial data.
When you work with a dedicated and experienced third-party service provider, you can expect streamlined processes and communication. The right outsourced finance service provider will have industry-leading technology that is accessible through the cloud and provides you with immediate access to your financial data whenever you need it. With real-time, automated reporting, you can monitor developments as they happen, which will lead to better decision-making.
Tap into a Global Talent Pool
Outsourcing allows you to access the best minds in the finance and accounting industry. The problem with hiring an inhouse finance team is that you’re limited to highly skilled applicants who are from your area or are willing to relocate to your office. With outsourcing, you can strategically design a team made up of financial experts that are proficient in their specific fields.
When you outsource, you tap into a massive talent pool of financing professionals who may exist anywhere in the world. Technologies like accounting software and cloud computing allow you to work seamlessly with your outsourced service provider. Not only can you enjoy full transparency with the ability to see all changes in real-time, but communication is easy, which makes decision-making more informed.
Fill Your Financial and Accounting Gaps
One of the key reasons to outsource your finance and accounting department is to have financial experts cover the core functions that you may not have. For example, not all companies are fortunate enough to have a C-level executive leading their finance department. Through outsourcing, you can leverage CFO consulting services that can provide a fractional CFO with extensive expertise and knowledge to help your company meet its organizational needs.
And, if your company already has an inhouse CFO but lacks an experienced team to support them, an outsourced accounting service provider can help the CFO with a proficient team that is equipped to provide a full range of finance and accounting functions, such as bookkeeping and back-office support. You can also outsource controller services if you lack controllers that can provide accurate audit reports, financial analysis, and compliance management.
As industry experts, third-party accounting and finance service providers stay on top of trends and changes in tax and regulatory laws. Not only will they complete your finance and accounting operations, but they will ensure you stay compliant.
Reduce Year-End Work and Minimize Audit Fees
While bookkeeping and other transactional processes are ongoing, all companies agree that year-end work, such as financial reports and tax preparation, can be tedious work. When you outsource your accounting team, you can relieve yourself from the drudgery of compiling financial statements and financial reports. Because you have outsourced to an experienced third-party Finance as a Service provider, you can expect faster turnaround time in the preparation of accounting documents, as finance experts help ensure your books are audit ready.
Outsourcing your organization’s finance and accounting function to a third-party Finance as a Service provider comes with many benefits. Not only is outsourcing cost-effective, but it also gives you access to top talent and advanced technology. A well-established supplier of finance and accounting services keeps you competitive, compliant, and on the path towards business growth.