Beyond the Obvious: 3 Unexpected Accounting Outsourcing Benefits

June 21, 2024 Mimi Torrington

accounting team looking at the benefits of using outsourcing services on their computers

Beyond the potential cost savings, many businesses are discovering the benefits of outsourcing accounting services. It is often seen as a way to save money and sometimes seen as something only smaller companies or those struggling need to do. In fact, outsourcing can help manage costs during both stable and growth periods. An in-house accountant can easily cost over $80k, and that's assuming you aren't in a high cost of living area.

But you might not be aware of the other benefits of outsourcing, some of which are highly counterintuitive. You might also have internal stakeholders who are not sold on outsourcing. For example, they may believe that outsourcing weakens your cybersecurity. Knowing other benefits can help you make a better decision, and potentially sell that decision to others.

Introduction to Finance & Accounting Outsourcing Services

business team studying on finance & accounting outsourcing material

Most small businesses outsource accounting. They hire a CPA to do their bookkeeping and taxes. The traditional path to growth is to graduate to having an in-house accounting team, but many businesses continue to outsource. This means partnering with a specialist to handle some or all of your accounting. Often, but not always, the tasks being outsourced are tedious things such as invoicing, or tricky issues such as handling collections at a bit of a distance. However, you might also use outsourcing to obtain specialist knowledge you don't have in-house.

Cost Savings & More Benefits: The Full Picture of Accounting Outsourcing Services

 CEO looking at cost savings if she were to outsource accounting

Part of this is the traditional path mentioned. Having an in-house finance team is almost seen as prestigious, a sign that your company has grown to a certain point. Outsourcing ends up being seen as something you do when you can't afford the staff.

The other part is that the common language about outsourcing almost always revolves around reduced costs. Many outsourcing providers sell themselves by giving figures on how much their customers typically save.

It's also a lot easier to sell something to internal stakeholders by hitting the bottom line. Everyone wants to make a profit, and outsourcing does offer an opportunity to reduce costs and increase the amount of money available to spend on other things, or provide in dividends. Cost is always dominating the conversation, about outsourcing and so much else. And, yes, it's something you should think about.

But There Are So Many More Reasons to Outsource

Finance executive team comparing old performance data vs new accounting outsourcing data

  1. Save Your Team's Time

    Among the primary benefits of outsourcing accounting services, saving time stands out. Outsourcing partners can provide staff who are very good at handling tedious tasks that involve more accounting knowledge than specific expertise on your business. These staff can then handle all of the tedious stuff, everything from payment processing to credit checks.

    This means your finance team is less busy, less burned out, and have the time to do other stuff. If you have team members who feel as if they are doing the work of two or three people, then you probably need to take something off their plate. Outsourcing can easily do that. Reducing overtime potentially also reduces costs and certainly improves morale and overall productivity.

    Your accounting team should never have to feel as if they can't take time off because there's too much to do. This leads to burnout and higher turnover. Also, your team will not be spending time on training up new hires; any new people will be trained by the outsourcing provider and will be able to hit the ground running. You will only need to add in house team members if you have to replace somebody or if you have a genuine need that can't be filled any other way.

    This also means that your team can stay focused, which brings us to our next point.

  2. Focus on Strategic Core Business

    Much of what an outsourcing partner does is transactional. For example, they may handle ensuring invoices from vendors are paid by the required date. While these transactions are vital to your business - a vendor who is paid late is not going to be happy and may even end their relationship with you - they are not strategic or core to your plans.

    When outsourcing partners take all of the transactional tasks over, your in-house team can do what they do best - use their knowledge of your company, industry, customers, and vendors to develop a strategy that maximizes revenue while keeping everyone happy. They can work with your production team to make sure pricing is always right, and with marketing on the revenue implications of promotions.

    In smaller businesses, the owner may take on a lot of these routine bookkeeping tasks, and the benefit of freeing them from that is immeasurable. Too many times, these tasks stay with people who have more important things to do out of inertia or, perhaps, an incorrect feeling that it is the cheaper option. In fact, it is never cheaper to have people stray outside of their core functions.

    Outsourcing helps keep everyone focused on the task at hand while providing the specialist expertise needed to ensure accuracy and efficiency, which in turn also saves cost by ensuring that things don't have to be redone.

  3. Expensive to Recruit, Save HR Time and Money by Outsourcing

    There is currently a severe shortage of accountants in the U.S. Fewer young people are choosing to become CPAs, with a 33% drop in new students in 2021 alone. This makes hiring in-house staff expensive and challenging. Positions are likely to remain unfilled for extended periods of time. There is less of a problem with other types of finance professionals, but many companies are finding it particularly difficult to find bookkeepers and accountants.

    The reasons for the shortage range from accounting being seen as boring, to lower compensation, to higher costs of education. Regardless of the reason, the average company may take months to fill a position, and may not be able to find the best candidate.

    Outsourcing pushes this problem onto the provider, but they have some advantages. Their people aren't necessarily working full time with one company, allowing a valuable professional to be shared. As specialists, they also know all of the ins and outs of hiring and training suitable people. This makes it a lot easier for them to find good candidates. They also have a vested interest in hiring the best they can find and providing you with professionals who can grow with your company.

    Meanwhile, by outsourcing, you take a burden off of HR. Your HR team can focus on other things, on finding candidates for positions that do need to be in house and, of course, on improving your company culture, raising morale, and helping your existing personnel.

    When it takes an extended time to fill a position, too, the costs start to mount up. Running ads for months is not cheap, and the time wasted on interviewing unsuitable candidates is another expense. By letting your outsourcing provider handle this, you save time and money and reduce strain on your HR people.

Misconceptions About Outsourcing Accounting Services

CFO and bookkeper looking at performance report in hallway

There are a few other things a lot of companies don't think about when it comes to outsourcing:

  • Automation does not replace professionals. AI may excel in repetitive tasks and provide unmatched speed and accuracy, but by definition it lacks the human element. No algorithm understands what it is doing and no algorithm posses in-depth or, for that matter, any knowledge of accounting processes.

  • A lot of people think that if they offshore accounting processes to another country in another timezone, this will mean that all communication will be asynchronous. In fact, offshoring providers can have people work on your timezone, allowing for the same real time communication as if they were in house. With modern telecommunications, this means you have full access to your team at all times, with video conferencing allowing for almost the same collaboration as if they were in the office.

  • You don't have to outsource the entire team. You can outsource just one or two team members, or just one or two tasks. You can, thus, outsource tasks that your in house team find particularly annoying, or bring in specific expertise. For example, you might choose to keep accounting in house, but outsource financial planning and analysis so you don't have to hire a high end professional you may not need full time.

  • You also don't have to integrate with the outsourcing partner's software, unless you want to. Team members can use your software, meaning everyone is using the same platform. The outsourcing provider will make sure the people working with you are trained on the software, with no need for you to spend a lot of time on it.

Outsourcing can help companies of all sizes save money, and can also save a lot of time for your in-house finance team, improve their focus on core strategy, and help you navigate the shortage of accountants. These are just some of the many benefits offered by accounting outsourcing services.

It's easy to get started with Personiv. We work with you to create a custom action plan, hire and train skilled professionals, and produce high-quality work to meet your standards. Contact us today to find out more or to get a quote for custom accounting and finance outsourcing for your company.

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