Handling the increasing number of clients may put some strain on the CPA firms due to the concurrent nature of the deadlines for bookkeeping, payroll, financial reporting and tax preparation. The costs of hiring more employees whenever there is a rise in the level of workload can increase the cost of operations and also tie down the practice. With white label accounting services, firms can subcontract certain accounting processes to an outside firm but deliver the processed products under their company brand.
In this blog, we will help you understand the concept of white label accounting and bookkeeping, the advantages that CPA firms of the USA can gain from the same and the financial processes that can be outsourced.
What Are White Label Accounting and Bookkeeping Services?
The concept of white labeling accounting services involves the use of the services of an external service provider to undertake certain accounting activities on behalf of other accounting firms. The CPA firm takes the responsibility of handling the main client relationship while offering the services using its own branding.
Understanding the White Label Accounting Model
In white labeling, the tasks that the CPA firm has chosen to outsource to the outside group can include general ledger maintenance, preparation of the financial statements, accounts payable and receivable, and help in tax preparation.
CPA firms are still in charge of overseeing the process, reviewing work, and conducting communication with the clients. Outsource does not necessarily mean transferring responsibility to the outsourcer. There are also various concerns about confidentiality, independence, licensing, and client disclosures that need to be considered by the CPA firms.
How White Label Bookkeeping Works
White label bookkeeping services center mainly on entering and sorting through clients' financial data. Outsourced bookkeepers can sort the expenses, reconcile bank accounts, maintain accounting records, handle the invoices, and produce the monthly financial reports, which will be reviewed by the CPA before being handed over to the client.
For instance, a CPA firm handling 40 small business clients can assign monthly tasks of sorting the transactions and reconciling bank accounts to its outsourcing partner. In-house accountants can then specialize in analyzing the financial statements, dealing with strange transactions, advising on tax matters, and communicating with the client about their financial performance.
White Label Accounting vs. Traditional Outsourcing
There are many parallels between traditional accounting outsourcing and white label accounting. Both methods imply the delegation of financial tasks to an external partner, which uses cloud accounting software and standard work procedures. The main difference is the way the service is branded and how the interaction takes place.
In white label accounting, the brand name of the CPA firm is usually the central brand identity. An external partner does not have direct interactions with a customer; he operates in the background. Of course, the brand agreements do not contradict any professional disclosure obligations and the responsibilities need to be clarified upfront.
Benefits and Services of White Label Accounting for CPA Firms
The use of white label outsourcing will enable the accounting firms to handle their recurring work, meet the demands in case of seasonality, and increase their service offerings. However, the success of white label outsourcing will be determined by the following factors.
Scalability and Operational Cost Management
Another reason for (Certified Public Accountant) CPAs to look into white label accounting services is the ability to expand their accounting capabilities without necessarily hiring any more full-time staff. The potential advantage of outsourcing would allow them to deal with new customers, perform regular bookkeeping tasks, and cope with the seasonal rise in the number of assignments.
Whether or not it will save money will ultimately depend on the price the company charges for its services, how complicated the accounts of the customers are, and how much management from within the firm would be involved in the process.
Bookkeeping, Payroll, and Back-Office Support
Various functions can be performed by white label vendors based on their capabilities and contractual obligations. Such functions assist organizations in setting up consistent processes for many accounts while maintaining internal efforts for technical review and client engagements.
Common white label accounting services
|
Service |
Typical responsibilities |
|
Bookkeeping |
Transaction categorization, general ledger maintenance, bank reconciliation |
|
Accounts payable |
Invoice processing, payment scheduling, vendor records |
|
Accounts receivable |
Customer invoicing, payment tracking, aging reports |
|
Payroll support |
Payroll calculations, records, reporting assistance |
|
Tax preparation support |
Document organization, workpapers, draft return preparation |
|
Financial reporting |
Monthly statements, management reports, account analysis |
|
Back-office accounting |
Data entry, reconciliations, closing support |
CPA firms need to define boundaries between activities done by the outsourcing team and those carried out in-house. For instance, the outsourcing company can develop the work papers for the tax return, but the tax professional of the firm would complete the process by signing off on it.
Supporting Advisory Services and Specialized Industries
By having someone else handle routine tasks, one can develop the capacity to do more tax planning, financial analysis, budgeting, and advice work. Instead of working on transactions, one can use one's experience to review the financial data and make business decisions with clients.
Certain white-label arrangements can be tailored to fit the specific accounting needs of certain industries. E-commerce firms need reconciliation and inventory accounting, non-profits may need fund accounting and grant management. Real estate businesses, healthcare facilities, and professional service firms may also need certain special reporting that needs to align with their experience.
How to Choose the Right White Label Accounting Partner
Outsourcing vendors need to be chosen on the basis of criteria that extend beyond the price of their services. It is imperative that CPA firms consider experience, information security, software capacity, communications, and report timelines.
Evaluate Expertise, Technology, and Software Integration
The proposed outsourcing partner must possess experience with the accounting process and industries of clients that you want to outsource. Get more information on quality controls, training for employees, escalation process, and experience with difficult transactions from the outsourcing partner. Find out what reports, reconciliations, and working papers does the outsourcing partner produce.
Compatibility of the technology is crucial. The providers may use QuickBooks Online, Xero, NetSuite, Sage, and other accounting systems. But it needs to be confirmed that they are proficient in using a particular system. Accounting systems are not the white label products; the white label product will use an existing accounting system of the CPA firm.
Prioritize Data Security and Professional Oversight
In terms of outsourcing accounting functions, the process includes the disclosure of sensitive data about the clients, hence the need to be concerned about security of the data. Some of the important things that the CPA firm needs to review from the prospective outsourcer include access controls, encryption capabilities, confidentiality agreements with employees, incident response procedures, and document transfer techniques.
With regard to outsourcing tax preparations, it is important to pay attention to the relevant IRS regulations. IRS stresses the importance of having a Written Information Security Plan and to determine if the service provider has appropriate safeguards for safeguarding taxpayer information.
Compare Pricing, Communication, and Scalability
The white label accounting service providers could have flat monthly charges, hourly rate structures, transaction fee structures, or customized pricing depending on their offerings. The firm must seek proposals which clearly indicate the services offered, time frames, frequency of reporting, other charges, and error handling responsibility.
Also, communication plans need to be made prior to the arrangement’s deployment. This includes identifying who will be in charge of the arrangement, the escalation process for any queries raised, deliverable submission timeline, and how performance will be evaluated. One way to evaluate the performance is by using a pilot project involving chosen clients.
The white labeling approach of accounting services helps CPA firms grow their operation capacity without jeopardizing their existing clients and image. The use of the appropriate functions of outsourcing helps CPAs to utilize their time on reviewing, communicating, and consulting activities.
However, outsourcing of some processes requires defined roles, appropriate accounting software, safe information management, and proper quality control measures. It is essential to analyze the needs of the firm and create a review process of the work being outsourced.
The Fino Partners provides outsourced bookkeeping, accounting, tax preparation support, payroll, and financial reporting services for U.S. CPA and accounting firms. Our team can work within your established accounting processes to support recurring client assignments and seasonal workloads.
