The Role of Outsourced Accounting in Business Strategy

You may need help to keep up with all your accounting responsibilities as your company grows. It involves payroll, tax filing, etc. There is one standard solution is to outsource your accounting. But what exactly does that involve? Who is responsible for what? Is it the right approach for your business?

This article deals with what outsourced accounting is. It also focuses on what outsourced finance covers and how it can help your company. We'll also give you some essential insights to find a provider and ensure the process goes smoothly.

Let's jump in straight.

Outsourced Accounting

Outsourced accounting is the practice of using external professionals to handle all your accounting responsibilities. It involves:

• Payroll processing
• Tax Preparation
• Bank reconciliation
• Bookkeeping

One alternative is to employ an in-house accountant. But, this might not be cost-effective. It might need to be more scalable as your company grows. You may also be tempted to manage your books to keep costs down. But, it's easy to make a potentially costly mistake with accounting experience.

That’s why many businesses opt to outsource instead.

Outsourced Finance: Advantages

If you’re unsure of the benefits of outsourcing your accounting, consider the following:

It reduces overhead costs

As certified professionals, accountants are costly. The amount of work you have available may not justify hiring one in-house, even part-time.

It grants access to specialized expertise.

When you outsource, you tap into decades of experience and expertise across multiple facets of accounting. It ensures you get the best support and advice on various financial matters, from tax planning to economic forecasting and budgeting.

It ensures you comply with local legal requirements

If hiring across borders, you'll have to recruit in-house accountants in all the countries you're onboarding. It can be costly and complex, especially if you need legal entities in those countries.

It frees up resources.

If you're a small business managing its own books, you could spend your time and resources elsewhere. After all, there are only so many hours in a day.

Outsourced Finance Providers: Types

There are many finance providers for business. Some of the standard services involve:

Accounts receivable and accounts payable management

Accounts receivable (AR) and accounts payable (AP) are essential accounting functions. They ensure the timely collection of payments from your customers. It is for services sold (AR) and management of the money you owe to vendors (AP).

AR tasks you can outsource include:

• Issuing invoices to customers
• Tracking and recording payments received
• Conducting credit checks on new customers

AP tasks you can outsource include:

• Reviewing and approving supplier invoices
• Reconciling supplier statements with company records

Payroll management

Payroll management is ensuring employees are paid on time. It involves calculating wages, withholding taxes, etc.

By adopting this approach for payroll, you can ensure that:

• All your team members get paid the right amount in the right timeframe
• All your data is streamlined and manageable in one place, as opposed to spread across multiple tools and sources
• You’re fully compliant with all employment and payroll tax laws in all the countries and individual states you have people in
• You're kept up to date — and able to comply with — any changes to those laws.

Tax Preparation

Many companies outsource their tasks to a certified tax professional. It would help if you also managed the relevant tax obligations for your employees and (in some cases) independent contractors. It must be clarified if you have team members working abroad. Again, Fino Partners can help ensure that you withhold (and contribute) the correct tax amounts for your employees, regardless of where they are based. We can also help ensure you file the proper tax and contractor paperwork.

It also helps you comply with all relevant laws, ensuring you are fully prepared if your company gets audited.

How to outsource your accounting

Here's how to start if you'd like to outsource some or all of your accounting obligations.

1. Determine which accounting functions to outsource

First, analyze your accounting operations. Then, determine which functions you want to outsource. Consider factors such as time spent on specific tasks. It involves the level of expertise required and the costs of performing these tasks in-house.

The goal here is to identify:

• What can be handled more efficiently by an external provider
• If it will free up your internal team to focus on other essential tasks

2. Research service providers

Once you’ve established what you want to outsource, the next step is identifying who you will outsource it to.

As a general rule, look for a provider that can work as an extension of your company and scale alongside yours. They should have:

• Relevant experience in your industry
• Expertise in the areas you need help with
• A proven track record of delivering results
• Strong communication skills
• Security measures for data protection

Directly engage with potential providers and request a meeting to discuss your needs. Please obtain references from past or existing clients, too. Compare your options and choose a provider that meets your requirements and, of course, your budget.

3. Establish a service-level agreement

Establishing service-level agreements (SLAs) is important. They help when working with any service provider. These agreements lay out the specifics of the services provided It also keeps both parties on the same page.

In your SLA, ensure you clarify:

• What services (and level of service) is being provided
• What the delivery timelines are
• What metrics are being used to measure performance
• What is the pricing structure for their services is

You should also specify what happens if the provider fails to meet these expectations. In more extreme cases, this could be anything from a partial refund for late delivery to contract termination.

4. Ensure your data is protected

Once you've signed an agreement, your service provider will need access to your data. Set up restricted user accounts and provide access only to the systems and data needed for the provider to perform its tasks.

Also, all relevant steps must be taken to protect sensitive financial and employee information during data transfers. It will minimize the potential for data misuse, keep your data secure, and ensure you comply with relevant data protection laws in your region.

Challenges

Some common challenges of outsourced accounting include:

Loss of control over accounting processes

The apparent downside of outsourcing is that you cede control over the process. However, business owners can mitigate this by choosing the right accounting partner and building a positive relationship.

Moving some or all of your accounting processes in-house may be more beneficial. However, most companies want to meet their obligations with minimal fuss and entrust the heavy lifting to trained experts. If you're communicating clearly with a trustworthy partner, this doesn't need to be a negative.

Data security concerns

Data security is a serious concern for any business. Its breaches can lead to financial losses, legal issues, etc. After all, relevant precautions when sharing sensitive data with your provider are essential.

You can also mitigate this concern by assessing your potential provider's security measures. For example, Fino Partners’ payroll services are protected by the latest ISO-standard security protections, with a 24/7 on-call security team. These kinds of steps can give you peace of mind and help ensure you avoid any costly slip-ups.

Outsource your payroll management with Fino Partners

If you’re thinking of outsourcing your payroll management, Fino Partners can help. Precisely, we can:

• Consolidate your payroll processing
• Minimize administrative tasks
• Ensure compliance with local labour and payroll tax laws
• Reduce your payroll costs
• Make international payments and capital cash transfers
• Handle tax deductions and tax returns

End Note

Outsourced accounting providers help businesses in many ways. They comply with tax laws, provide access to specialized expertise, and employ professionals who stay informed about changing tax laws. This reduces the risk of mistakes. After all, these services implement robust accounting practices, which involve conducting regular audits and ensuring compliance.

Businesses should establish clear expectations to ensure effective communication with accounting providers. This includes defining roles, responsibilities, etc. Regular check-ins and scheduled meetings help address parties' concerns and keep both parties aligned on compliance goals.

Fino Partners will do all the heavy lifting for you. It gives you peace of mind. It allows you to focus your time, money, etc. After all, it ensures the growth of your business.