Does your small business have the time to spend 15 hours a month doing bookkeeping when that time can be used to drive your business?
Almost 62% of small companies report that they intend to add bookkeeping services to their outsourcing lists next year, which is indicative of a significant change in the financial management of SMEs.
The market of the bookkeeping services is incredibly dynamic, and cloud-based and outsourced solutions are spread like wildfire due to the combination of cost-saving, accuracy, and scalability.
As per current reports, outsourced bookkeeping enables companies to save up to 30% of their operational expenses and properly arranged financial management can prevent expensive mistakes that cost small companies of average 3000 dollars annually as a result of improper records.
In the meantime, the classical bookkeeping is still time-consuming. Despite the presence of digital tools, a large proportion of the month (15 hours or more) of many SMEs continue to be devoted to books, account reconciliation and expense tracking. This does not only pull owners out of strategic priorities but it also escalates the chances of inaccuracy that may cascade in cash flow forecasting, compliance, and growth planning.
The alternative to outsourced bookkeeping is very strong: it provides professional financial control, the use of the latest cloud and automation, and it also recovers the most valuable asset of business owners that is time. In the case of SMEs that are operating on slimmer margins and in competitive markets, this movement is what can spell out stagnation or a sustainable growth.
In this article, we consider why outsourced bookkeeping has become a strategic requirement to small businesses, the benefits it provides, and how business owners can capitalize on this highly popular method .
Scalability and Flexibility
A good bookkeeping provider can offer flexible solutions that adapt to different situations. Your business might experience rapid growth, economic uncertainty, and increased demand for products.
Hire a bookkeeping provider that can handle these challenges to ensure smooth business processes. Ensure you read the service pricing, as some bookkeeping providers may charge extra for additional tasks. Consider discussing scalability options for adjustments in service levels with your bookkeeping provider to avoid future setbacks.
Low Costs Are Not Always A Good Thing
Outsourcing firms offering bookkeeping services at significantly lower costs is attractive. But they might not provide you the same quality of service that as a reliable outsourcing bookkeeping firm would. This is highly important if you want to drive sustainable financial growth for your firm.
Choosing low-quality bookkeeping services can leave your firm vulnerable to financial errors, leading to poor economic performance. This kind of financial setback can put your company’s survival at risk.
Thus, it is recommended that business owners should compromise on the cost but not on the quality of outsourced bookkeeping services. This compromise can serve as a financial win in the long term.
Evaluate your Bookkeeping Needs
For any business to have a rewarding outsourcing experience, it should partner with an outsourcing firm that best meets its needs. Therefore, business owners must evaluate their outsourcing needs before hiring an outsourcing firm.
You can do this by assessing your current bookkeeping processes, identifying pain points, and determining thethe external support you need. Whether managing accounts receivable, reconciling accounts, or generating financial reports, a thorough understanding of your business needs will guide you in selecting the right outsourcing partner.
Consider Reliable Bookkeeping Providers
Business owners should hire a reliable bookkeeping outsourcing firm with many positive reviews and client testimonials to minimize data security risks and ensure high-quality bookkeeping.
You can do this by looking for bookkeeping outsourcing firms that have a proven track record in bookkeeping services. This can include certifications such as Certified Public Accountants (CPA) and several years of working experience in the same industry.
Some bookkeeping outsourcing start-ups also offer free consultations to clients to build customer relationships and trust. This way, you can assess an outsourcing firm before hiring them.
Clear Expectations
You should establish clear communication channels with your outsourcing partner to drive financial growth. This can include setting clear, smart expectations and objectives for your bookkeeping provider. Regular and transparent communication can help resolve bookkeeping issues effectively and streamline bookkeeping processes.
Moreover, setting clear goals and expectations can help you achieve them efficiently and measure your success rate. For instance, if a certain bookkeeping goal is not being met, you can always consult your bookkeeping provider and find out what prevents you from achieving your goals.
Data Security
While hiring an external bookkeeping provider, you will be asked to share your sensitive financial information with them. To ensure that your bookkeeping provider has reliable data management practices, which can include secure servers, encryption protocols, and confidentiality agreements.
Verify their compliance with industry security standards such as GDPR (General Data Protection Regulation) or HIPAA (Health Insurance Portability and Accountability Act), depending on your business’s location and sector.
Although these are not all must-have prerequisites for bookkeeping, by adhering to these, you can experience successful outsourcing of bookkeeping that can help your brand gain a competitive edge in the industry. Remember to regularly evaluate your bookkeeping processes to ensure they align with your business objectives.
Best Practices and Industry-Tested Secrets to Successful Outsourced Bookkeeping:
Bookkeeping outsourcing has ceased to be only an operational choice, but it is a strategic option predetermined by the inflation rates, skills shortage, and the active digitalization. In the automobile industry, CPG, e-commerce, construction, SaaS, and professional services, companies are reconsidering the manner in which financial work is accomplished.
The most effective SMEs do not just outsource to save money; they also outsource to acquire speed, precise and financial visibility.
There is however industry data of the previous year which demonstrates that the success of outsourcing does not hinge on whom you hire but on how one manages the relationship. These are ten tips and trends tested in the industry that help distinguish between high-performing and weak SMEs in the regard of outsourced bookkeeping.
1.Treat Your Bookkeeper Like a Financial Partner, not a Vendor:
Trend: SMEs are raising their expectations by demanding, rather than simply data.
Example: A lot of brands of CPGs are now relying on contracted bookkeepers to raise red flags on erosion in margins due to freight inflation or rise in costs of packaging.
Hint: Ask your provider to point out trends, anomalies, and risks- not to close the books.
2.Industry Specialization is a Prerequisite:
Trend: The generalist bookkeeping is decreasing; specific competencies are increasing.
Example: Construction companies would need job-cost tracking, whereas e-commerce companies would need SKU-level inventory accounting.
Hint: Select a bookkeeping service that has worked in your particular industry so that you do not spend a lot of money learning the ropes.
3.Align Bookkeeping and Strategy of Cash Flow:
Trend: Cash flow visibility has come at the top of the SME concerns as compared to profitability.
Example: Bookkeeping is being outsourced by service-based firms to check receivables aging on weekly basis rather than monthly.
Hint: Have your bookkeeper focus on reporting cash flow not only P&Ls.
4.Ensuring Real-Time Decision-Making with the Help of Outsourcing:
Trend: Trend: Monthly reporting is going to be outmoded.
Example: DTC brands that grow fast require weekly financial snapshots to optimize ad spending and inventory.
Hint: Expect near-real-time reporting on cloud accounting tools.
5.Standardize Before Outsourcing:
Trend: The poor data hygiene is among the largest areas of outsourcing failures.
Example: SME whose expenses are not constant are prone to errors in reporting even when using skilled providers.
Hint: Before onboarding, standardize the charts of accounts, vendor names, and documentation forms.
6.Combine Bookkeeping, Inventory and Operations:
Trend: Finance and operations are becoming a merge.
Example: CPG firms are now moving towards the direction of having bookkeeping and inventory systems integrated in order to prevent the write-offs of stock and exaggerated assets.
Hint: Make sure that your supplier knows the connection between bookkeeping and supply chain and fulfillment information.
7.Take Advantage of Time Zone Benefits:
Trend: The operations of follow-the-sun finance are increasing.
Example: US SMEs subcontract their book keeping services to Asian teams who will balance books at night.
Hint: Rely on time differences to speed up the turnaround of month-end close and reporting.
8.Not Results but Documentation of Demand:
Trend: Audit preparedness is even turning to be critical on SMEs.
Example: Companies that are currently in need of funding demand clean audit trails by the outsourced teams.
Hint: Be sure that your bookkeeper records processes, assumptions and adjustments in a manner that can be easily understood.
Integrate Robotization with Human control.
9.Combine Automation With Human Oversight:
Trend: Automation is no longer trusted.
Example: AI will be able to classify costs, but human bookkeepers will be required to identify errors in classification and fraud potentials.
Hint: Select providers that manage the balance between automation and a manual process.
10.Prepare to Scale, Not to Stabilize, with Outsourcing:
Trend: Outsourced finance teams are being applied as scale enablers.
Example: Startups that are getting ready to fundraise outsource their books early to be investor-ready.
Hint: Make sure to request your provider to assist with not only the daily activities of your child but also with growth milestones.
Why Outsource Your Bookkeeping?
Many business owners wonder why they should outsource their bookkeeping when they can simply do it themselves. The reason to outsource your SME bookkeeping is that you may not have enough time and energy left from attending all the meetings and developing business strategies to focus on your books.
Bookkeeping requires attention to detail to organize financial records. Moreover, by outsourcing your bookkeeping, you can access expert bookkeeping resources whose valuable insight can help you drive economic growth.
Outsourcing your bookkeeping also means you do not have to worry about hiring and training costs. Imagine spending hours training an employee, only for them to decide to leave during the probation period.
This will waste your time, energy, and money, leaving your financial records unattended and outdated. With outsourced bookkeeping, you are not dependent on a single resource but on the outsourcing firm that handles all hiring and training costs, giving you enough time and energy to develop business strategies.
Expertise Accelerated: Your Gateway to Quality Bookkeeping Resources
Business owners can rely on Expertise Accelerated for high-quality bookkeeping outsourcing. Expertise Accelerated can provide business owners with expert accounting resources to streamline accounting processes.
This way, they have enough time and investment to make informed decisions, drive sustainable financial growth, and build customer relationships. Further, with their expert insight, business owners can stop worrying about the economic risks that their firm might be vulnerable to. Their valuable insight can help them mitigate financial risks.
EA CEO Haroon Jafree feels the impact of US inflation and is dedicated to providing US CPG business owners with access to highly skilled outsourced resources, all at a fraction of US costs. In turn, CPG firms can focus on key areas to help their company gain a competitive foothold in the corporate world.
Conclusion:
Smart Outsourcing Makes Bookkeeping a Competitive Advantage!
The bookkeeping that is outsourced has come a long way beyond mere record keeping. It has a direct contribution to cash flow management, efficiency, investor preparedness, and strategic responsiveness in the current market. Companies that put such suggestions to practice not only do not have to work more, but they also achieve more financial sanity and stability.
The direction is quite evident SMEs who succeed in outsourcing consider bookkeeping as the next level of business expansion, accompanied by industry knowledge base, latest technologies, and active intuition. In the right hands, outsourced bookkeeping will not be an issue of saving money, but rather, enabling smarter, faster growth.
