Pros and Cons of Outsourcing Your Accounting Needs
Whether you deal in plastics manufacturing, sheet metal fabrication or commercial cleaning, your B2B company has to find a way to manage its books. For some businesses, this means an in-house accountant or accounting department, depending on the company size. For others, it means finding a qualified bookkeeping service to which it can outsource its financial record management. Where do you land on the to-use-or-not-to-use spectrum? Does you business outsource its accounting needs? Have you thought about it? Whether you’re on the fence or fully settled, it’s good to have a solid understanding of what outsourcing means.
So with that in mind, let’s take a look at some of the advantages and drawbacks of hiring an outside company to manage your accounting needs!
Advantages of Outsourcing
For the companies who outsource their books, the decision means saving time and money, getting access to high-quality bookkeeping services and, in many ways, minimizing the risks typically involved with relying on in-house staff. Does outsourcing make sense for you? Here’s a closer look at the specific advantages it may offer:
It’s no surprise that outsourcing work to an outside provider, versus hiring a full-time employee, saves you money. When you outsource, not only can you match the work hours/amount of projects to your needs, but also you can avoid typical employee expenses like benefits, insurance, payroll taxes, unemployment taxes, paid time-off, etc. You don’t have to provide work space, office furniture, computers or software, either. Even with the costs involved in farming out work, the financial savings are still significant.
Think of the weekly hours it will take to manage in-house bookkeeping staff—taking away from the time you can spend on business- and relationship-building activities more directly aligned with your company’s mission. Outsourcing alleviates this need. You don’t have to deal with the typical headaches involved with recruiting, hiring, retaining and overseeing staff because that’s what the service provider will handle. That means you’re free to focus resources on what matters most.
Third-party service providers specialize in the work they do, so they’re the perfect resource for getting projects done. What’s more, service providers have to constantly hone their skills to keep up with the competition, ever increasing the quality of their work. This means when you go to a bookkeeping service, you can trust that your accounting will be handled well.
Service providers face higher liability than in-house staff, which makes them less of a risk for your business—they’re more likely to follow through on their obligations because they have more to lose if they don’t. Furthermore, dealing with the contracts or agreements of outside providers can be much easier than dealing with the hiring negotiations, employee management and other human resources issues involved with employees.
Drawbacks of Outsourcing
Even with all the benefits of outsourcing, some companies still prefer to keep things in-house, and they’d say with good reasons. Here are some of the reasons why B2B brands opt out of outsourcing, keeping all their financial records close. Take a look at the drawbacks of outsourcing:
Distance and Time
No matter how good a service provider is, there’s no substitute for being physically present in your office. You will need to communicate your needs and challenges across distance, maybe even across time zones. There may be times when your questions don’t get answered right away because of the lags involved.
Everyone’s aware of the language barriers associated with call centers, where you call a customer service line and talk to someone across the globe. But language barriers don’t end there—even when you work with an accounting firm, different languages can make it hard to explain your company processes or structure.
When you manage employees in-house, you have more control over how things are run, from training to day-to-day processes. While ideally a service provider would train its staff thoroughly and according to your preferences, there’s always the possibility that something gets lost. For some companies, feeling at the mercy of a service provider is not an enticing substitute for managing its own staff.
Your business accounting Is, by nature, a more sensitive subject. When you send all your financial information and records to an outside provider, you let loose insider knowledge on one of the most valuable parts of your company.
In Conclusion | What Do You Think?
Looking at the pros and cons of outsourcing your accounting functions, which way do you lean for your B2B firm? Do the savings and services of outsourcing work outweigh the potential issues? Could hiring an accounting company free you up to put more energies into pursuing your business goals? What do you think?