January 11, 2022 | 3-minute read (434 words)
Early-stage startup founders wear several hats, from inventor to recruiter, leaving them little time to keep track of the books. But handling the books is vital to keeping the company afloat.
While hiring an in-house accountant or CFO is always an option, outsourcing all finance-related activities to a firm that specializes in accounting, bookkeeping, financial benchmarking and reporting can provide several advantages — including peace of mind.
Here are 10 ways your startup will gain by switching to outsourcing.
1. Considerable cost savings
Outsourcing the finance team provides access to skilled CPAs, accountants and chartered accountants at a lower cost but without sacrificing quality. It also helps businesses reduce their employment taxes and save money on infrastructure and overhead.
2. Better data security
As outsourced finance firms invest in expensive and impregnable security systems, they can put measures in place to address data security concerns. This reduces the likelihood of security and data breaches.
3. Scalability and flexibility
An outsourcing firm specializing in finance services can provide solutions tailored to an organization’s unique needs. Entrepreneurs can also scale up or down financial procedures according to their needs.
4. Keep up with policy changes
A specialized outsourcing firm will be up to speed on the latest financial and compliance standards, and other accounting rules.
5. Access to the latest technology
To be competitive, a financial outsourcing company will invest in advanced software and technology. Startup entrepreneurs that work with an outsourced financial services partner can take advantage of access to these cutting-edge technologies.
6. Reduced incidence of fraud
While fraud can never be eliminated, a dedicated outsourced staff with expertise in finance best practices is better equipped to identify an abnormal transaction than someone whose primary focus is on increasing sales and expanding the business.
7. 24/7 service
When a firm outsources its financial services to a third party, it can operate around the clock with a time-zone advantage, ensuring that key activities are completed as scheduled.
8. Protection during difficult economic times
As economic conditions change, businesses tend to change their workforce, which can be time-consuming and resource-intensive. But since the outsourcing firm is responsible for managing the talent assigned to its projects, some of that responsibility is lifted from your shoulders.
9. Confidentiality and security
Since finance is their core offering, a finance outsourcing services partner ensures that all information is kept confidential and safe. For their own peace of mind, entrepreneurs can request that the outsourcing business sign a nondisclosure agreement.
10. Ability to concentrate on core activities
Finally, with proper back-office help, startup founders may concentrate on value-added, revenue-generating tasks.