Outsourced accounting is a fast growing trend, and maybe your company has considered the strategy of outsourcing all, or a portion of this function. There are certainly benefits to moving this function out of your organization, and cost savings on benefits, freeing up your finance staff for more strategic pursuits, taking advantage of the expertise of an outside organization that is solely focused on accounting services, are among the many.
Here are some common mistakes to consider when looking at outsourced accounting:
1. Making price the most important criteria
It is important to understand exactly what you are getting from your vendor. Are they comfortable with your preferred accounting technology? Do they have CPA’s on staff, or at least people with accounting degrees? There is a huge difference between basic bookkeeping services, and true outsourced accounting, and the level of education of the person assigned to your account can make all the difference on the level of service, and also the price. If a company is selling you services performed by junior staff, you may end up managing their staff which might be less expensive, but much less satisfactory. The capabilities of outsourced services can vary wildly, so do your homework and understand what you are truly paying for. Cheaper is not always better.
2. Not understanding the services you’ll need
If you don’t take the time to define the scope of what services you need with your provider, you will likely end up with partial solutions that take time to integrate and complete.
Make sure that you outsource a complete process.
For example, for accounts payable management, you may feel that you just need invoice scanning and data entry with software for routing. But it pays to think through how your team’s time is spent throughout the entire process.
Most businesses find that the biggest benefits come from a complete outsourced accounts payable management solution that includes automated routing for approval, vendor setup, exception management, and vendor support as well as vendor payments.
A complete accounts receivable management solution would include customer billing, cash application and cash application exceptions (such as dispute management and credit card expirations), and customer late payment reminders.
An integrated end-to-end accounting process should be customized to your needs based on your business rules for a successful accounting outsourcing solution.
3. Working with a company that won’t re-engineer your processes first
A true outsourced accounting program should offer to take a look at your processes first, and re-engineer them to use your service providers’ time efficiently, and take repetitive and mundane tasks off your internal staff. Moving bad accounting practices from one place to another doesn’t help anyone, and certainly won’t help you maintain a cost-efficient outsourced program, in fact the inefficiencies could likely cost you more.
Working with an organization that specializes in process, and can re-engineer your current program while onboarding, is worth the investment in the long run.
4. Hiring a firm without the necessary experience
There are many small bookkeeping firms that can handle basic transactions but aren’t going to be able to revamp your processes, give you financial insights, and help advise you in your business decisions. If this higher level of support is what you need, be sure to explore the experience levels of the organization you are hiring. It is also important to check references, and ask pointed questions around the type of service you are expecting. It is important to right size the services you are purchasing, you might not need a CPA firm, but it might be nice to work with a firm that has at least one or two CPA level people on staff.
At the end of the day, outsourcing accounting services can be an excellent way to focus on what your organization excels at, and only spend the amount necessary on transactional accounting services that don’t need to be done in-house.
The professionals at Michaud Accounting Solutions have extensive experience with outsourced accounting within many different modern cloud based applications, and can help you streamline your processes at the same time.