When growing your accounting practice, accurate financial records cannot be understated. Proper financial records give a good impact on businesses, otherwise, the business may collapse.
Many firms hire in-house accountants to maintain proper financial records and simultaneously pursue their company goals. But employing in-house accountants cannot be the best answer to the problem. If you are looking for the best accounting services consider outsourcing to an experienced and reputable accounting company.
Outsourced bookkeeping services can help in saving money. As in house bookkeeping service could be expensive for your practice. You can save on the extra office space, training and hiring professionals. You are sure that your bookkeeping is in the hands of skilled and reliable professionals when you choose to outsource bookkeeping services.
In addition, outsourcing firms provide financial advice to help you make sound business decisions. We get enough time to focus on other core operations of the practice. If you are an accountant tied with a lot of tasks consider your option to outsource bookkeeping services to a reputable and compatible professional.
What is Bookkeeping?
Bookkeeping refers to systematically recording and classification of financial data of an organization in an orderly manner. It is a record-keeping function to assist in accounting activities. The most common methods of bookkeeping are a single entry and double-entry system.
The main objective of bookkeeping is to maintain complete and accurate data of all the financial transactions in a systematic manner.
What is Outsourced Bookkeeping?
Outsourced bookkeeping is a service that handles day-to-day transactions, accounts payable, accounts receivables, managing financial reporting, payroll, and many other services virtually. Accounting Outsourcing Companies have highly skilled professionals who offer experienced teams of experts at a lower cost.
Why should you outsource your Bookkeeping services?
Following are the benefits of outsourcing Bookkeeping:
Expert advice and knowledge of a qualified bookkeeper:
Whether you hire an in-house professionals team or outsource to an outside firm, the quality of professionals is the top priority. Keeping bookkeeping in-house certainly has its own limitations- could potentially lead to knowledge gaps, which could lead to issues in the long run thus requiring external help. On the contrary, outsourcing firms have experts who are always under training and are closer to evolving technology.
For startups, cost becomes a significant factor. Outsourcing bookkeeping services can be cost-effective. There is no hassle of hiring and training a bookkeeper and paying a salary. In-house bookkeeping makes it mandatory to look after all these expenses. But with outsourcing, you only pay for the services that are required by you.
As a business owner, it frees up your time and looks for the opportunity to grow. And also allows you to spend time with your family members or doing what you enjoy the most!
When you outsource bookkeeping, you get access to the latest technology along with expertise inputs. The use of cloud technology allows businesses to get access to real-time information anywhere and anytime to make any key business decisions. The use of technology has the added benefit of setting meetings virtually between the client and a bookkeeper.
Financial reporting is distinct for each business and it depends on many factors such as monthly transactions, industry considerations, and much more. Working with an in-house bookkeeping department might be a little problematic as they do not have the right skill set required for a month-end report that is accurate and error-free.
While outsourcing these services can be fruitful, as they help in avoiding late or inaccurate financial reporting. They make the procedures streamlined for businesses. Financial reporting can be accurate and delivered on time with outsourced accounting companies as they have a team of experts and trained professionals.
This is another important factor to consider when choosing in-house or accounting outsourcing services. When you choose in-house bookkeeping, there are chances of fraudulent activities. Sometimes, there is a discrepancy of records which when comes to notice of the business owner, it’s too late.
When it comes to outsourcing accounting services, there is a division of duties. In outsourcing firms, there are two or more professionals assigned to keep a track record of the accounts and this ensures the records are reviewed and maintained thoroughly without any discrepancies.
Getting the work done timely, doesn’t mean compromising on the quality of work. An outsourcing firm has qualified and trained professionals in its team. They believe in building long-term relationships by delivering the highest quality of work delivered is their primary goal.
Outsourcing bookkeeping can help you in the following ways:
- It reduces the risk of fraud
- It’s the most affordable choice
- Outsourced accounting services provide a higher quality of work and access to expertise.
- It helps save you time and maximize your profits
How do outsourcing bookkeeping services work?
Bookkeeping can be a tedious and stressful task. This includes accounts payable, accounts receivables, logging expenditures and receipts, and tracking profits and loss.
You can either hire an in-house bookkeeper to perform the task which can be relatively an expensive affair. Or you may outsource bookkeeping services in the hands of the expert who will perform the tasks by telecommuting electronically.
Once you have finalized a reputed outsourced company you wish to outsource to, you must communicate with them online. A dedicated account manager will then deliver your accounting documents and reports to you electronically spending on the specified contract.
First and foremost, you need to grant access to your client’s financial information such as bank and credit card statements, payroll, tax documents, online bill pay, receipts, and everything related to your business finances.
Next, you need to set mutual expectations such as what you want him to work on every day? What information do you want when the month ends? How often you want to communicate and other such important questions to ensure both of you are on the same page.
Lastly, communication is key. So you need to communicate your goals and how you want them to process the bookkeeping function. In what form you need financial reporting, what software are they going to use?
Outsourcing services can be the best-suited option for your practice. It is more efficient and reliable than the in-house department. Some still prefer to have a dedicated in-house bookkeeper who sits and goes through everything on a daily basis. But at the end of the day, it’s your call on how you want to run your practice.
It is essential to put your focus on growing your practice and attracting new clients, meeting the needs of your clients and maintaining good relationships, and leaving the burden of dealing with your client’s business finances to an outsourced bookkeeping service.
The current pandemic situation has made a shift to working paradigms, automation of processes, and acceleration of digital transformation. A lot of businesses and accounting practices have adapted to this paperless practice while remotely working from home.This advancement in accounting technologies has made processes more systematic and transparent.
More and more companies are looking for cost-efficient ways to manage certain business processes externally. This gives the rise to accounting outsourcing companies. By outsourcing, businesses can free up their time to focus on core competencies of the business that will eventually help them run their business efficiently. Outsourced bookkeeping is a great source to reduce overhead costs for your business.
Accounting Outsourcing trends- Some facts and figures
- 29% of businesses with 50 or fewer employees are less likely to outsource compared to 66% of businesses with more than 50 employees.
- The top challenge faced by small businesses when outsourcing is lack of cash flow or capital followed by difficulty in marketing and advertising.
- Around 78% of businesses are feeling positive about their outsourcing relationships.
- The use of advanced technologies to automate tedious business processes.
- Use of cloud computing software to access secure, real-time information.
- Acquisition to new skill sets to complement existing ones.
Accounting Outsourcing trends:
Here are three trends that are shaping the world of Outsourcing:
Accounting practices will be regulated and monitored to ensure adequate protection of clients’ data. Accounting organisations will be required to take preemptive measures to safeguard against data thefts, hacks, and violations of data privacy. Data security laws are set to be tightened, and organisations should take strict action against sources that breach valuable data.
The main task for most accountants is to prioritise data security while dealing with clients. Accountants will need to take more important steps, such as becoming Australian privacy Principles Compliant and achieving Cyber Essentials accreditation, to preserve and protect clients’ data. Accountants will need to ensure compliance with the Privacy Act 1988, which is Australia’s principal law to protect the personally identifiable information (PII) of individuals.
Cloud accounting has integrated itself into most of the commonly used accounting practices. Cloud enhances the user experience in the accounting world. It will not only encourage mobility and simplify remote work, but also offer a wide range of benefits, including enhanced security and advanced data recovery options.
The simplicity of use and ready accessibility make it even more enticing for accountants and firms. It will help establish smooth relations with clients by enabling collaborations and facilitating transparent operations.
With the help of cloud accounting, there is a significant rise in outsourcing accounting services at a low cost. Cloud accounting provides an easy way to access financial records in real-time and provides bookkeeping services at a cheaper rate.
Automation has replaced a majority of manual processes in the accounting industry. It is a very efficient method but elevates the need for better compliance mechanisms. Accountants using this new method must ensure that they conform to the regulations prescribed by the Australian Accounting Standards Board (AASB).
Top reasons for outsourced accounting services:
- More than 50% cut costs
- 47% solve capacity issues
- 28% gain access to talent capital
- 57% focus on core functions
- 31% enhance the quality of services
- 28% answer a critical business need
- 17% manage the business environment
- 17% expand and speed up organizational transformation
Choose high-value accounting services:
Outsourcing is not just about using an external service provider to complete repetitive, time-intensive duties such as payroll and bookkeeping. The new breed of outsourced accounting services- access to more advanced specialist skill sets. This makes practices stand out from the competition and accentuate their core services.
Businesses and practices choose outsourced bookkeeping services for tons of benefits. But the major benefit is cost-efficiency.
Outsourcing payroll is a preferred choice amongst many businesses irrespective of big or small. This is because of the advantages and convenience third-party payroll solutions give to the general operations of the business. According to a report by the Australian Payroll Association, it is estimated that 24.7% of all Australian businesses and 37.08% of Australian SMEs with less than 200 employees are now operating under an outsourced payroll model. The biggest advantage of payroll outsourcing is that it maximizes ROI, lowers risk, and is immensely easy and quick to implement.
Symptoms of poor payroll practices:
There are typically three major things that contribute to errors in the payroll process:
Highly skilled payroll professionals are in great demand in Australia but are very hard to retain and attract at the same time. Most payroll processes contain errors because the person processing the payroll function lacks knowledge, skills, and training.
Following are the symptoms of poor payroll process and systems that need improvement:
- There is a significant amount of manual work involved.
- Managers and Employees complain of errors and delays.
- Frequent off-cycle payments are being made to fix errors.
- Information is not easily available and reporting doesn’t provide any valuable insights.
If your payroll is related to any of these above symptoms then it’s time to think about outsourcing your payroll to a third-party provider.
1. Pay compliance
Australia is a very complex myriad of laws governing employment at both State and Federal level that covers workers compensation, superannuation, and taxation (including fringe benefits), jury duty, minimum pay rates, termination of employment, minimum terms and conditions, record keeping, public holidays, leave entitlements, privacy and the payroll function plays a key role in keeping abreast with ever-changing laws and regulations in ensuring compliance in all these areas.
The Fair Work Act is the primary piece of legislation governing employment in Australia, with Modern Awards stipulating a safety net of pay and conditions in different occupations and industries and the enforcement of obligations under the act and Modern awards is with the Fair Work Ombudsman.
The Fair Work Ombudsman is now targeting directors, franchisors, HR professionals, accountants, and payroll officers to make them potentially liable to prosecution in the event of any contraventions of the Fair Work Act by their franchise or business. To ensure payroll compliance, businesses and franchises now have to prevent damaging compliance arising issues such as workplace advice and provisioning payroll or partnering with payroll service providers.
It is best suited to outsource your payroll to third-party providers so that you get access to specialized expertise to solve pay compliance queries and to get the best advice on practice approaches in managing payroll.
2. Risk management
In addition to managing pay compliance, other risks that need to be managed are errors, fraud, security, and key person loss. Payroll fraud can cost businesses a lot of money and can rise in a number of ways such as inflating time or rates, ghosting, and redirecting funds. It can commonly occur where there has been a lack of control in places such as when there is more than one person involved in auditing and payroll processing. Small businesses usually do not have resources for both controls.
To overcome these risks, businesses are partnering with payroll outsourcing firms.
3. Save time:
Payroll is a tedious and complex task. If one person is managing the payroll process it can be a huge burden on the individual or team who have their hands full. This makes it best to outsource payroll processes in the hands of the experts while the team focuses on the core activities of the business. When you outsource payroll services to a third-party provider, you can focus more on other responsibilities that come along in running and growing your business.
4. Save money
Other than just being the costs of in-house payroll staff, you also have to cover other overhead costs such as financing in-house payroll resources (salaries and on-costs), administrative overheads, ongoing training, and recruitment costs. Businesses can save significant payroll processing costs, up to 50% of the costs when they outsource payroll services.
5. Better utilization of technology
Many businesses now outsource technology so that they don’t have to invest in new technology for in-house purposes, especially when that technology isn’t related to their core business activities. Cloud-based systems have added the cost of maintaining in-house systems much less. New features in the payroll system now include time and attendance with real-time costing against pay conditions including awards, smart rostering tools, self-service for employers and managers.
6. Focus on your core business
Instead of focusing on payroll processing, businesses can shift their focus on the growth of their business by outsourcing payroll processes. Outsourcing payroll providers are well equipped with expert professionals who handle the payroll function efficiently.
7. Improves security
Outsourced payroll service providers are equipped with the latest technology to handle payroll functions. Because of which the hurdle of security is eliminated. To become managing pay compliance, finding a good payroll service provider is the key where your data is secured and there is no loss of theft
8. Simplifies reporting and reduces redundancy
Payroll Outsourcing services offer complete transparency and accurate information at the time of reporting. In addition to this, they also reduce redundancy by improving the efficiency and quality of work delivered. Therefore, outsourcing payroll offers greater benefits and is the most preferred choice compared to the in-house payroll function.
Outsourcing payroll services to third-party providers will ensure compliance and give you peace of mind at less cost compared to in-house staff.