Advantages and Disadvantages of Outsourced Accounting

Accounting is a crucial function for any business, but it is time and resource sensitive. Businesses can often face financial challenges related to accounting such as poor cash flow management, keeping up to date with regulations, filing taxes, making errors in financial records, and more. Due to this, some organisations choose to outsource their accounting responsibilities to a third-party in order to free up resources, while ensuring accuracy. Outsourced accounting is a desirable option for many; however, it can come with both advantages and disadvantages.

Advantages of Outsourced Accounting

Cost-effective

Choosing to outsource your accounting functions can be a more cost-effective option for your business. You can save money that would otherwise be spent on the recruitment, training and salary of a new staff member. Additionally, outsourcing your accounting means you have the flexibility to only pay for the services you require.

Access to Expertise

When you outsource your accounting, you get access to a range of experts who have industry experience within your sector. These individuals have a better understanding of your specific accounting needs and can provide useful knowledge, especially if your industry is particularly niche.

In addition to industry expertise, accountants also have advanced knowledge of accounting software which can save the time and effort needed to train a staff member.

Improved Accuracy

An outsourced accounting company can reduce the risk of potential errors in financial affairs, as well as ensure your accounting is up to date with ever-changing regulations and laws. This can give you peace of mind that your business is remaining compliant through all financial processes, and everything is handled on time.

Saving Time

Overall, accounting responsibilities can be extremely time-consuming for your business. Outsourcing this function can therefore free up valuable time for other business opportunities such as recruitment, making sales and other growth tactics.

Disadvantages of Outsourced Accounting

Reliance on a Firm

Relying on others to handle all or some of your accounting functions can be daunting. Trusting an accounting service provider is paramount when choosing to outsource, so ensure you find a company that values communication and transparency at every stage.

Lack of Control

As a business, you may feel as though outsourcing means a loss of control over your finances, however, with the right accounting company, this shouldn’t be the case. You should remain in control of financial decisions, payments and other important business-related accounting matters.

Hidden Costs

A common objection to outsourced accounting is potential hidden fees. To avoid this, ensure that the company you choose to outsource with is transparent about their costs.

At Ratiobox, you only pay for the services you require. Whether that’s bookkeeping, payroll, our financial director services or a combination of these, we remain flexible and scalable to your changing needs.

We understand that communication and trust is key when dealing with your business’ finances. With this knowledge and our experience, we’ve helped hundreds of businesses benefit from outsourcing their accounting functions since 2016. If you’re interested in outsourcing your accounting, but unsure on how to get started, talk to our team today.