Outsourced accounting firms provide companies with financial insight that can greatly improve their bottom line. However, this process comes with its drawbacks.
And you should consider the pros and cons before jumping into an agreement with eCommerce accountants or outsourced accounting firms.
One of the most obvious drawbacks to outsourced accounting is the lack of oversight you have over individual employees. Though reputable outsourced accounting firms will provide you with real-time updates on your company’s financial health, you still can’t manage these employees directly to ensure quality standards.
If you are considering outsourcing your financial processes, you must ensure you have all of the fine details agreed upon before signing a contract.
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Outsourced accounting describes services that provide full-scale accounting services to businesses of all sizes. The industry has been continuously growing over the last couple years and these firms can handle everything from day-to-day transaction coding, accounts receivable, accounts payable, payroll, taxation, and managing financial reporting.
When you outsource any duty to external agencies, you lose control of monitoring tasks. When you hire in-house accountants you can monitor them more closely. However, with in-house teams comes the challenges of hiring and onboarding, which can be expensive and it can be difficult to ensure you find the right candidate.
Outsourcing accounting is generally more cost effective than hiring in-house accountants but you have to be cautious of getting charged excessive fees. These types of companies might ask smaller companies to sign lengthy contractual agreements that include extensive fine print. If you neglect to read the fine print, you can get hit with unexpected costs.
Your company data is constantly under threat in today’s day and age. When you entrust an outside organization, you put it at risk. However, even if you keep your accounting internal, your organization runs the risk of compromised security. Outsourced accounting firms are aware of these risks and understand how to respond to them. They have ample experience with accounting software and understand how to protect your sensitive information.
You can’t keep as close of tabs on outsourced accounting firms. You also can’t be sure of their motivation. Some firms might be motivated by profit rather than being of service to your company. These companies also likely don’t have as much commitment to seeing your business succeed as you.
The work you send them might come back quickly but it can lack the standard quality customers expect from your product or services.
It can be risky to tie your financial operations to another company because you won’t understand their financial status. How can you tell whether the outsourced accounting firm you use is in financial dire straits or sustainable? The last thing you need is to tie yourself to a sinking ship.
When you have an in-house team, you can control workflow and ensure your team works on your clock. When you use freelancers or outsourced work, you put your workflow in the hands of an outside organization. It will likely be challenging to coordinate schedules and ensure your projects are the top priority.
Outsourcing firms can service multiple clients at a time, meaning the work you’re sending may not receive the focus it deserves. You depend on the other company’s processes when you outsource your financial operations so it’s critical that you choose a company you trust and iron out the details before signing.
Whether you’re using an overseas or local outsourced accounting firm, you must understand that you’re handing out remote work and instructions can get lost in translation. When you have an in-house team, you can closely monitor all they do in the confines of an office. However, you must also consider the time it takes to train an in-house accounting team.
The time you lose to remote work might be made up with the time it would take to train an in-house accountant. Outsourced accounting firms have experience accounting for companies like yourself so the time it takes to bring them up to speed will be much less than the time it takes to train multiple full-time employees.
Outsourced accounting firms must have the requisite expertise necessary to respond to industry-specific financial challenges. When choosing an outsourced accounting firm, they should have a proven track record of working with companies like yours. Choosing a firm that does not have industry-specific accounting expertise will result in various unintended consequences that can cost your company considerable amounts of money.
The most reputable outsourced accounting firms understand how to use various software correctly. Using state-of-the-art technology can improve your business model greatly, letting you access insights and actionable deliverables that improve your bottom line.
Reputable outsourced accounting firms enjoy a healthy relationship with their clients. Their partnership ensures you will be able to take advantage of what they provide. They won’t foist hidden fees on you and they hold true to their word.
The drawbacks of hiring an outsourced accounting firm can easily become strengths when you hire the right fit. The objective of hiring an outsourced accounting firm is to take the burden of hiring an in-house accountant and having to train them on the inner workings of your company.
If you interview a company that fits your needs, outsourced accounting can be one of the most advantageous decisions your company makes.