5 Benefits of Outsourcing Your Bookkeeping With GoStravo

 

Introduction

Bookkeeping is a task that seems simple enough, and with the passing of time, the expenses mount up. The hundreds of receipts from different clients, the reconciled balance of the bank account, the bills you need to pay, and the accounts to be reconciled will tie you down and tie you in knots before you know it. This removes hours of your business owner's time that could've been spent managing the core operations of the business.

For instance, if you are a small business owner, you need to take out some time to ensure that your revenue is properly handled. In addition to other duties like working with customers, sales, and employees, these extra tasks could be a strain on an already busy schedule.

The reasons for avoiding external bookkeeping assistance are as valid as those for considering outsourcing. While the idea that it would be cheaper to do it yourself crosses the mind of many business owners, many others fear the idea of sharing their financial information with outsiders. Nevertheless, keeping bookkeeping in-house might not be the best option.

Outsourcing means delegating specific tasks relating to accounting and financial record-keeping tasks to other parties. It entails hiring a third party to handle any or all of a company's accounting and bookkeeping duties depending on the requirements of the service contract. Some examples of these duties are invoice preparation and processing, recording and analyzing financial data, bookkeeping, and report generation.

However, outsourcing bookkeeping duties can benefit companies beyond providing well-maintained financial records. It can provide advantages such as time-saving, cost-saving, higher accuracy and efficiency, access to experts, and scalability.

Therefore, it is no surprise why many businesses are embracing the aforementioned idea. In the following five points, you'll find some of the benefits of outsourcing your bookkeeping.

1. You Can Save Time and Focus On Running Your Business

Time is the most valuable asset of any small business. That is why any hour that is not spent working on the development of your venture is an hour that you lose. You might need that additional time to talk with some customers, make more sales, develop your current goods or services, or even create a plan for the future development of your business.

The fact that bookkeeping needs to be done does not necessarily mean that you have to do it yourself. By delegating this task to another person or organization, you will save a considerable amount of time that you would spend on it anyway.

It might not seem like much, but in the end, if you calculate how many hours per month or even per year you spend on bookkeeping, you will realize that it is quite a considerable amount.

For example, if you spend about four hours per week on bookkeeping, it means that every month you will have 16 hours of additional time and over 200 hours at the end of the year. These are all hours that you can spend on something significantly more important and profitable than on the bookkeeping tasks. It is important to note that in the report from BILL the time-saving aspect is also mentioned as one of the main advantages of outsourcing accounting.

As stated in the article, by using external professionals, such processes as reconciliations and other recurring tasks can be transferred to them, which will give you more time for your own work and development of the business.

However, it should also be noted that while delegating your bookkeeping tasks to others you are not entirely freeing yourself from responsibility for your finances. You should always have a general understanding of your numbers and know what amounts of money are involved in your business on a regular basis.

The only difference is that you will not spend hours and hours a week or even a month entering your data into journals or programs.

2. Outsourced Bookkeeping Helps Reduce Business Expenses

Many small business owners think that getting bookkeeping assistance from outsourcing will incur higher business expenses. What these people fail to realize is that the opposite is true in many cases. Think of the expenses that will come with hiring someone internally. Besides the person's salary, there are recruitment, onboarding, benefits, payroll, software, equipment, training, office space, management, and other costs. And do not forget the need itself for someone to start with.

If you are an expanding company that often needs bookkeeping assistance but does not have enough work for a full-time employee, you can use outsourcing to buy the particular degree of assistance you need. Centri Consulting underscores cost efficiency as one of the prime reasons businesses choose to outsource their accounting needs. It mentions companies can save by avoiding the costs of unutilized headcount and enjoy the benefits of the technology stack that an external provider has already implemented.

BILL further suggests considering costs when deciding whether to use an external bookkeeper. In the guide, it notes an in-house accounting employee would bring additional benefits, such as salary, paid time off, onboarding, and training, on top of the direct costs. Of course, when it comes to expenses, outsourcing is not always a cheaper option. Still, it will require you to thoroughly research the market and compare prices.

When doing so, it is important to reframe the question.

"How much will it cost to hire an outsourced bookkeeper?"

"How much will it cost me to maintain bookkeeping services in-house?"

This will give you a more realistic idea of the price you are paying.

For instance, if you have accounting software that requires training, employee time to input information, and the possibility of errors that need correcting by an accountant, these costs combined together may well be steeper than simply hiring an external agency. In this instance, an outside provider would offer bundled solutions that make bookkeeping more predictable and, therefore, more cost-efficient. This will free up funds for other priorities, such as marketing, employee training, technology, and growth initiatives.

3. You gain access to bookkeeping experience. You gain better accuracy.

Bookkeeping is not simply punching numbers into a system. A bookkeeper must understand how transactions should be organized, which accounts need reconciling, which discrepancies need addressing, how financial records should be organized and maintained, and how to ensure that information is updated.

When you do it yourself, errors are possible. You may accidentally record a transaction twice, you may record an expense incorrectly, and you may forget to record an invoice. You may fail to reconcile a bank account. These mistakes are not necessarily catastrophic. They can add up and affect the accuracy of reports and in turn the accuracy of financial information. Outsourcing provides you with the expertise of people who do bookkeeping for a living.

Centri highlights access to accounting expertise as one of the advantages of outsourcing bookkeeping tasks. The article mentions that external accountants and bookkeepers deal with financial challenges and accounting software on a regular basis, providing them with a level of experience that solo entrepreneurs may lack due to the volume of books handled alone.

It is important to have a double check of your finances, making sure there are no errors. Experienced eyes may spot an inconsistency that you may have failed to notice ballooning into an issue. For instance, bookkeepers can detect payments, reconciled balances that failed to update, and incorrect transaction entries. Having financial reports makes other aspects of running your business easier.

You will be able to make decisions with confidence when you know that the figures used to inform them are precise to the cent. You will also have an idea of whether expenses are sustainable, how much cash is on hand at any given moment, and whether clients are paying on time. It will also be easier to provide financial information to your accountant or tax preparer without having to double‑check everything.

While accurate bookkeeping is not foolproof, it can give you confidence and peace of mind before making any financial decisions.

4. You gain organization and financial visibility.

A typical bookkeeping error is often not an incorrect entry. Sometimes it is an entry. Say, for instance, that your books are three months behind. You may eventually catch up. Your reports will show you little about your current financial situation.
This can prove challenging when making decisions, as you may think that you have more cash on hand than you do, you may have outstanding receivables that you are not aware of or you may have incurred more expenses of a certain kind than you had budgeted for.
With bookkeeping you eliminate that risk. An outside bookkeeper often works on a schedule that may include weekly entries, monthly reconciliation or review, or regular reporting. A systematic approach often makes it easier to maintain books.
Basis 365 considers organization one of the key benefits of outsourced bookkeeping. Their discussion is insightful, as it notes how difficult it can be for business owners to keep up with bookkeeping if they are juggling tasks.
BDO takes a step back. Links good organization to financial information. Their outsourcing guide explains how modern bookkeeping services often target information that helps businesses make financial decisions. That is the role of bookkeeping in my opinion.
It should not be about recording. Rather about analyzing what has happened in order to identify financial trends. Organized books can help you answer questions such as the following:

Are your monthly expenses rising?

Is your cash flow shrinking?

Who among your customers still owes you money?

Are your operating costs rising faster than your revenues?

Do you have cash on hand to buy something large?

And are there any weaknesses in your spending pattern?

Using data, you can easily respond to those questions and bring greater financial visibility to your business. This, in turn, should help you make financial decisions.

5. Outsourced Bookkeeping Can Grow With Your Business

A small business does not stay the same forever. At the beginning, you may only have a transaction each week.

• Then the business starts growing. 
• You gain customers.
• You make sales.
• You work with suppliers.
• You hire employees.
• Perhaps you add a location or start selling online.
• Every step of growth adds financial activity.
• The bookkeeping workload grows too.

If you manage everything yourself, you may eventually reach a point where the work becomes difficult to keep up with. You could hire another employee. However, that creates another fixed cost. Outsourced bookkeeping can offer a flexible option.

You might begin with transaction recording and reconciliation. Later you could need accounts support, accounts receivable support, reporting, payroll coordination, or more frequent financial reviews.

A provider may be able to increase the level of support as your business changes. Centri describes scalability as one of the advantages of accounting because external teams can adjust as financial workloads grow.

BDO makes the point. It notes that bookkeeping requirements often increase as businesses grow and that an outsourced service can scale alongside those changing needs. This can make growth easier to manage. Of rebuilding your bookkeeping process every time the business reaches a new stage, you can expand an existing system.

That may also help during periods. For example, an e-commerce company might process more transactions around the holidays than during quieter months. A flexible bookkeeping arrangement can help the business deal with those changes without maintaining an internal team all year.

Read our full blog: Outsourced Bookkeeping Services for Business | GoStravo

Outsourcing Can Also Create Another Layer of Financial Oversight

Another advantage to consider is the potential for additional review. In some very small businesses, there's only one employee who has any financial acumen at all, so they may handle everything from paying bills and invoicing to entering transactions and bank reconciliations.

Adding additional people who can review what someone else does creates another layer of checks and balances. For outsourced accounting services, Centri points out that one of the advantages of working with an external accounting team is that another set of eyes can spot any irregularities.

This isn't total insurance against fraudulent activities, but there are more eyes on the transactions, which means it may be easier to identify concerns. However, even with additional review capabilities, you don't want to provide someone with unfettered access to any and all financial accounts.

Make sure there are appropriate restrictions and approve any transactions or reports on a regular basis. Another consideration is permissions; if there's another layer of accounting oversight, it's probably important from a security perspective that everyone has their own unique login credentials rather than shared access to systems.

What Bookkeeping Tasks Can You Outsource?

You do not have to outsource everything at once. In fact, starting with routine tasks can be a practical approach. Common bookkeeping activities that businesses may outsource include:

• Recording transactions
• Bank and credit card reconciliation
• Accounts payable tracking
• Accounts receivable tracking
• Invoice recording
• Expense categorization
• Monthly financial reports
• Cash flow reporting
• Payroll record support
• Catch-up bookkeeping
• Financial data cleanup

The right combination depends on your business. A freelancer may only need reconciliation and reporting. A retail company may need more frequent bookkeeping because it handles a high number of transactions.

An e-commerce company may need help organizing payments from platforms. The best approach is to identify where you are losing time or where bookkeeping problems appear most often.

Start there.

When Should You Consider Outsourcing Your Bookkeeping? Essay

There is no ideal time for every organization. However, there are several indicators that show that it is time to consider hiring external services. If the process of bookkeeping is constantly late, you should think about getting expert help.

Another signal to look out for is if you regularly find yourself working late hours to catch up on bookkeeping, then outsourcing this service is definitely recommended. Furthermore, if it is difficult for you to understand your own financial situation, it becomes necessary for you to hire bookkeepers.

You should also think about outsourcing if your business grows. In the opinion of Centri, the need for bookkeeping outsourcing arises due to the fact that during the period of significant growth or transformation in the life cycle of a company, the accounting process can become exceptionally complex.

Moreover, it is necessary to seek external help when the process of bookkeeping consumes too much time and effort.

You do not have more time than you already have at the moment. So, if you are finding yourself in a situation where you cannot refuse clients because you need time to catch up on the accounting process, you should certainly think about hiring external services. Also, companies are forced to turn to external bookkeepers in case one of their employees has no experience in the field of bookkeeping. In this case, you should not try to economize at the expense of the inexperienced employee since such a decision will bring you more harm than good.

How to Choose the Right Outsourced Bookkeeping Service

The advantages of outsourcing largely depend on the organization that provides these services. Therefore, it is critical to pick the right company that offers bookkeeping services.

• First and foremost, inquire about the provider’s experience.
• Ask which organizations they typically work with.
• Request to discuss your own bookkeeping software.

If your organization utilizes a particular platform for accounting, the provider should be experienced with it. Next, ask about the communication policy.

More specifically, inquire how often you can expect to receive reports and who you can contact if any questions arise. In addition, clarify the provider’s policies in regard to sensitive financial information. Ask about the access rights and permissions and data storage options to ensure that all of your personal information is secure.

Finally, make sure that the provider’s services are scalable.

In other words, choose a company that will be able to accommodate your growing business needs in the future.

Read Our Related Blog—

How Small Businesses Can Cut Costs Through Outsourcing

5 Signs Your Business Needs Outsourced Bookkeeping

Outsourced Bookkeeping Services for Business | GoStravo

Is Outsourced Bookkeeping Right for Every Business?

No. Some businesses already have an internal bookkeeping team that works well. Other businesses may have financial tasks that require daily in‑house work.

In those cases, outsourced bookkeeping may give benefits. Also, not every external provider will improve outsourced bookkeeping. BILL says that the quality of the partner matters. Outdated technology, weak security, or poor service can reduce the benefits of outsourced bookkeeping.

That is why business owners should treat outsourced bookkeeping as a business decision of a quick cost‑cutting move.

• Compare the cost of outsourced bookkeeping.
• Check the provider's experience with outsourced bookkeeping.
• Think about communication and security in outsourced bookkeeping.
• Importantly decide what outcome you want from outsourced bookkeeping.

Final Notes

Bookkeeping is vital for any business but should not absorb all of the company’s efforts. If internal accounting becomes challenging and stressful, outsourcing some of the tasks to a third party can be beneficial.

The five benefits listed above will show why it can be a valuable opportunity.

An individual can reclaim the lost hours,

cut costs in the accounting department,

gain access to qualified personnel,

obtain well-organized financial records, and

Receive professional support that can scale along with the company.

However, the actual benefits that could entice someone toward choosing an outsourced service might be right under their nose.

By having a reliable and efficient outsourced bookkeeper, a business owner or manager does not have to think about “Did I update the accounts this month?” and can concentrate on more pressing matters, such as customers and sales.

One should also consider that well-maintained and organized bookkeeping can generate more control over the financial situation rather than remove it, simply because there is relevant data at one’s fingertips.

Therefore, if it appears that a person’s internal accounting processes are always a couple of steps behind, and the in-house team struggles to maintain records, it might be time to investigate how outsourcing could benefit the company. By calculating the value of the hours that are spent on the bookkeeping tasks, analyzing the costs of the in-house accounting software, and comparing the figures to the rates proposed by an outsourcing agency, an individual will be able to determine if it makes sense in their case. In the end, the outsourced accounting should make the process simpler and less time-consuming and, ultimately, help run the business better rather than hinder it.