Why Outsourcing Your Accounting & Finance Functions Provides Value for a Small Business

By Kira Wissman, Controller, KWC CPAs

The accounting & finance functions are often undervalued and overlooked in start-ups or small businesses.  The costs can be prohibitive and business owners might not think they have the funds or resources to allocate to a dedicated accounting department.  If any of this speaks to you, read on!

The financial health and maintenance of any business is critical to its ultimate success.  The peace of mind provided by having a qualified professional team reviewing potential transactions, providing guidance on banking and credit decisions, and setting up a solid accounting software with best practices in place is second to none.  The cost of these services is likely more attainable than you might think.

Technology today can make it even more confusion to organize your finance function.  One must not only be knowledgeable in the nuances of accounting rules but must also be proficient in the technology that makes applying these nuances efficient and scalable. A solid finance team provides not only solid historical data, but also helps drive innovation and contributes to operational growth.

Why Outsource?

  1. Cost Efficiency: Outsourcing often reduces costs compared to maintaining an in-house finance department. This is particularly true for small and medium-sized businesses that may not have the resources to afford a full-time finance team. You will save employer payroll taxes, benefit costs, bonus exposure, and avoid the opportunity cost of turnover should employees become unhappy and leave.
  2. Access to Expertise: Outsourcing allows access to specialized expertise that may not be available in-house. Finance outsourcing firms typically have a team of professionals with diverse skills and experience. If your dedicated, outsourced accounting team does not have the answer to a technical issue, they will be able to obtain one by reaching out to the firm’s other resources at no or low additional cost to you.
  3. Focus on Core Competencies: By outsourcing non-core functions like finance, businesses can focus on their core competencies and strategic objectives. This can lead to improved productivity and efficiency. You, as a business owner, will not be splitting your time between worrying about the receipts (so to speak!) and growing your business.
  4. Scalability: Outsourcing finance functions provides scalability, allowing businesses to easily adjust the level of support needed as their operations grow or change. Should you grow quickly, it is easier for an outsourced team to add to the roster to support you.  Should you experience a downturn, the outsourced team can scale back its services to accommodate.
  5. Risk Mitigation: Outsourcing finance functions can help mitigate risks associated with compliance, regulatory changes, and financial reporting errors. Outsourcing firms often have robust processes and systems in place to ensure compliance with relevant laws and regulations. Similar to point #2 above, an outsourced team has access to a depth of resources that help ensure compliance with the ever changing federal, state, & local rules that might apply to your business.
  6. Technology Advantages: Finance outsourcing firms typically invest in state-of-the-art technology and software, providing access to advanced tools and systems without the need for significant investment from the business. Accounting technology can get expensive quickly. An outsourced accounting team often have contracts with some of the major providers in the industry, offering a discounted/bundle price on the latest technologies that can streamline your business processes.  Knowing what technology would work best with your business is another advantage of using an outsourced team.  Chances are that the firm you work with has clients in similar industries that have had similar challenges.  Drawing on this combined experience can help position you well in the technology arena.
  7. Global Reach: For businesses operating internationally, outsourcing finance functions can provide access to global expertise and resources, helping navigate the complexities of international finance and compliance. KWC is a BDO Alliance member, providing us with access to national and international resources to address nearly any issue that might arise.

When to Consider Outsourcing

Understanding when to outsource first involves identifying which non-core activities within your organization are absorbing too much of your time and energy. A non-core activity is anything that does not directly focus on your business’s mission.  This includes tasks such as payroll processing, bill paying, credit card organization & maintenance (this can be quite time-consuming), and general bookkeeping.

Payroll is an area that can absorb a lot of resources and be quite costly to maintain in-house. The payroll regulations vary greatly by location and change often. An outsourced firm can help mitigate these costs by assessing the many payroll providers, provide recommendations and help maintain the relationship with the chosen payroll processor.

It is daunting to consider such details, but the benefits of tackling this process early are many. All business owners intend to grow and be profitable.  Investing in a solid outsourced team as early as possible in your business cycle will reap huge rewards in the future.

In conclusion, making sure your business has solid financial footing is imperative to its long-term success.  If you don’t feel you have the resources to add an internal accounting department, reaching to a firm, like KWC, that offers outsourced accounting services is a great idea!  It never hurts to talk to a professional, make a connection, and explore your options.  The solution might be much more affordable than you thought!