4 Reasons A Company Should Outsource Its Accounting
As a business grows, most business owners and executives find that their time becomes better spent on building the core business rather than overseeing day-to-day accounting. Finding a new accounting solution typically becomes top of mind when a business faces one or various milestones, including:
- Increased revenue
- Owner or CEO cannot be involved in every aspect of the company
- A team’s time needs to be freed up
- A company is preparing for an acquisition
- A company is preparing for a sale
- Lack of back-office support
The following are examples of benefits companies received when outsourcing accounting in the face of some of these milestones.
1. You need to free up your team’s time. A private equity firm recently decided to outsource its monthly accounting, reporting and check writing. The outsourced accounting staff was able to take over the job functions of five of the private equity firm’s personnel who could not keep up with the demanding growth the organization was experiencing. The private equity firm now has the ability to utilize its internal accounting staff to troubleshoot larger issues. The CFO can also focus on analyzing accurate data rather than preparing it, allowing for more informed decision making.
2. You’re selling your company. The owner of a large multi-national auto repair business and his investment banker recently decided to outsource some of their accounting functions while going through a sale. Through the assistance of outsourced bookkeeping, the company also benefitted from having foreign subsidiaries set up properly in its general ledger system.
3. Your company is growing. A specialty healthcare retailer with large private equity ownership recently invested in a sophisticated and aggressive roll-up acquisition strategy, acquiring more than 100 stores in less than 12 months. By outsourcing the day-to-day bookkeeping, including payables and bank reconciliations, the retailer was able to more easily transition the newly acquired stores until it appropriately built up its infrastructure to keep up with the quick growth.
4. You don’t have back-office support. Startup founders often struggle to wear many hats and spread themselves too thin. In the absence of back-office support staff, accounting is often a necessary evil that is handled by the person that should instead be spending his or her time on developing the business’ products or services, earning revenue and creating partnerships. By outsourcing day-to-day accounting and bookkeeping, a startup founder will have support in managing cash, accounts receivable and payable, regulatory compliance and taxes.
Even if a company does not face one of these milestones and relies on an internal bookkeeper or accounting professional, that person will take a vacation or potentially have an unplanned hiatus. In the absence of a cross-trained team member, an outsourced accounting resource provides a reliable, cost-effective solution that gives an outside perspective to a company’s internal controls, safeguards and processes.
Click here to learn about the additional benefits of outsourced accounting services.