Outsourcing is the process of enlisting an external company or individual to carry out a task or service that would usually be handled internally. In the realm of bookkeeping, this refers to hiring a professional, external bookkeeping firm to handle financial record-keeping, billing, and other related financial management tasks.
There are numerous advantages for companies of any size when it comes to outsourcing bookkeeping services. In this post, we'll explore the top benefits of outsourcing bookkeeping and how it can help your business save time, money, and improve efficiency and accuracy.
We will also look at the differences between outsourcing using offshore resources and outsourcing using local resources - this is especially important for government/NFP/NDIS organisations which have data sovereignty mandates that prevent information from leaving the country.
Time and Cost Savings
One of the greatest advantages of outsourcing bookkeeping is the time and cost savings it can provide. When you hire an in-house bookkeeper, you have to factor in the cost of their salary, holidays, benefits and any other overhead costs; all of which can add up quickly. By outsourcing your bookkeeping needs, you can access professional services without having to invest in recruiting or training an entire team. With outsourced bookkeeping, you can ensure that your business continuity is not affected by personnel absences and you won't have to worry about recruiting and training new staff when someone leaves.
For solo business owners, why spend your valuable time on bookkeeping when you should be focusing on growing your business? Outsourcing allows you to devote more time to developing strategies and implementing plans for future success without worrying about keeping the books up-to-date. Additionally, by outsourcing bookkeeping tasks, entrepreneurs are able to keep evenings and weekends free for personal pursuits or spending time with family and friends.
Access to Expertise
Another benefit of outsourcing bookkeeping is the opportunity to access highly trained and experienced professionals. When you outsource bookkeeping, you can choose a firm with a team of experts who have a wealth of knowledge and experience in financial management, including the latest ATO/Government requirements, incentives, grants and STP (single touch payroll). This level of expertise can be difficult to find in an in-house bookkeeper, especially if your business is small and doesn't have the resources to attract top talent.
Having a team of experts handling your bookkeeping tasks can also provide peace of mind. You can trust that your financial records are in good hands and that any issues will be promptly addressed. This level of professionalism can be especially important if you're running a business in a highly regulated industry.
Some outsourced bookkeeping providers like Numeric Eight, will guarantee that there are always at least two team members assigned to your accounts, year-round. This ensures that no matter the time of year, you can count on having continuity in your financial records and personnel. Having two knowledgeable members actively working on your books not only provides you with peace of mind knowing that someone is always available to answer any questions or address any issues that may arise, but also allows for an exchange of knowledge and a deeper understanding of your financial history.
By having an exchange of knowledge between two knowledgeable personnel, they can pinpoint any potential errors or inconsistencies in the financial records which enables them to provide more in-depth insight into the current state of your finances. Additionally, with this comprehensive understanding you are able to make more informed decisions regarding your business operations going forward.
Bookkeeping companies that offer account support all year round via phone and email provide advantages over those who come onsite only once or twice a month. With round-the-clock access to experienced personnel, businesses can ensure accuracy and seek immediate answers to any question or issue related to their finances. This gives them greater insight that would take longer to gain if someone was only coming onsite once or twice a month.
Improved Accuracy and Efficiency
Outsourcing bookkeeping can also lead to improved accuracy in financial record-keeping. When you have a team of experienced and qualified professionals handling your bookkeeping, you can trust that all work undergoes rigorous and thorough methodology checks for accuracy before being submitted. This level of accuracy is important for a number of reasons, including tax compliance and the ability to make informed business decisions.
In addition to improved accuracy, outsourcing bookkeeping can also increase efficiency in financial management. With a team of experts handling your bookkeeping, you can trust that tasks are being completed efficiently and that any issues are being promptly addressed. This level of efficiency can save you time and help you stay on top of your financial management.
Flexibility and Scalability
Outsourcing bookkeeping not only offers businesses flexibility in terms of the level of service they need, but also scalability as their needs change. If businesses only require occasional support and assistance with bookkeeping tasks such as bank reconciliations or BAS prep and submissions, then they can opt for a pay-as-you-go service. On the other hand, if businesses need more frequent support with bookkeeping tasks, then they can choose a more comprehensive retainer-based package.
This level of scalability is invaluable when businesses experience rapid growth as it allows them to access additional resources to cope with the increased workload. Furthermore, if necessary, services can expand to include payroll services, reporting services, accounts receivable services and more. This way, businesses have complete control over the scope of their financial management needs.
Comparing Offshore vs Local Resources
Generally, outsourcing with offshore resources can help organisations to save time and money due to lower costs, however the quality can often be compromised. Alternatively, outsourcing to a local provider offers greater security and control over the services provided, as well as better data protection since the information is not transferred abroad.
Pros and Cons of Offshore Outsourcing
The primary benefit of offshoring is cost savings, giving companies access to cheaper labour costs in other countries around the world. However, there are also several challenges associated with this approach such as time differences, language barriers, communication issues, cultural differences, and managing long-distance teams.
Advantages of Local Outsourcing
The main advantage of using local resources for bookkeeping or accounting services is that they are familiar with local laws and regulations regarding financial matters so compliance is greatly improved when compared to overseas counterparts. In addition, communication is usually simpler when working with a local provider and access to real-time support should any issues arise is more convenient than speaking with an overseas team via phone or email.
Practices for Ensuring Data Sovereignty when Outsourcing
When considering outsourcing options for bookkeeping, it’s highly recommended to select a local provider that does not outsource any of its operations or services overseas. This will minimise the risk of data loss or leakage and ensure compliance with any data sovereignty mandates in place. Moreover, a local provider may have better understanding of the legal implications of handling sensitive information, as well as more comprehensive support services if problems arise.
You should also ensure that all processes related to handling sensitive data are secure and compliant. This can be accomplished by signing non-disclosure agreements, encrypting sensitive data before transmission, having an onsite representative monitor operations at all times, and ensuring that the personnel involved have undergone rigorous background checks.
By using a locally based company which does not offshore their services, organisations gain greater control over their data security measures and ensure compliance with applicable laws.
In conclusion, outsourcing bookkeeping can offer a number of benefits for small and medium-sized businesses. By outsourcing bookkeeping, businesses can save time and money, access expertise, improve accuracy and efficiency, and gain flexibility and scalability. If you're considering outsourcing your bookkeeping, it's important to do your research and choose a reputable firm that can meet your specific needs.
Outsourcing bookkeeping can be a smart financial decision for businesses of all sizes and industries. Whether you're a small startup or a well-established company, outsourcing bookkeeping can help you focus on what you do best – running and growing your business. So if you're considering outsourcing your bookkeeping, don't hesitate to take the first step and explore the many benefits it can offer.