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The benefits and drawbacks of outsourced bookkeeping

Posted by Shivali Anand

December 24, 2021    |     4-minute read (704 words)

You've got a lot on your plate as a business owner. The last thing you want to do is spend time reconciling bank ledgers, paying bills and sending out invoices. One approach to crossing such tasks off your list is outsourcing to a bookkeeping service. This keeps you from needing to hire someone in-house to fill the role while still taking bookkeeping off your plate.  

To simplify the decision, we've listed the benefits and drawbacks of outsourcing bookkeeping services.

Benefits of outsourcing bookkeeping services

  1. Ensures your records are up to date
An outsourced bookkeeper can double-check the accuracy of your data, giving your books an extra degree of precision. They can keep your books up-to-date and correct at all times. They can also provide you with all needed financial documents monthly or quarterly, including profit and loss reports, cash flow statements and a balance sheet.

  1. Makes it simpler to track bills and income
Outsourcing bookkeeping can help you keep track of all of your financial information by maintaining it in a single location, including bank statements, credit card reports, payroll records, invoices and more. Your outsourced staff can classify and explain all your financial accounts in plain English. They can also routinely provide you access to your financial information.

  1. Avails the most up-to-date technology and tools
You can stay up to speed on the newest legislation and software with the correct outsourced bookkeeping service. Because outsourced bookkeepers have extensive knowledge, they can consistently supply you with reliable information. You will also have access to cutting-edge technologies via outsourcing.

  1. Assists with financial reporting
You may get thorough and accurate financial reports to investors, tax preparers, banks and anybody else who wants to analyze your firm’s data by outsourcing your bookkeeping services. Accurate financial accounts give you peace of mind and the confidence you need to make sound financial decisions.

  1. Is scalable
Entrepreneurs frequently start lean, but they want a comprehensive range of bookkeeping services as their firms develop. When you outsource your bookkeeping, you may scale up or down your resources based on your unique business needs. This adaptability also aids in long-term financial savings.

  1. Prioritizes security, confidentiality 
Professional outsourced bookkeepers can keep your financial information safe and secure. A bookkeeper who is up to speed on the latest software features or who has a thorough understanding of the most secure accounting solutions will ensure that your sensitive financial information is not compromised. You can also lower the danger of internal or external fraud when you outsource.

  1. Saves money on overhead
You will only be charged for the job that the outsourced bookkeeper does. As a result, you don't have to pay wages as you would for an employee when you don't need them. You can also save the money you'd have to invest in new bookkeeping equipment and software. In general, outsourcing accounting services is less expensive than doing it in-house.

  1. Increases efficiency
You can relieve your staff of monotonous and time-consuming back-office work by using outsourced bookkeeping services. You can then devote more resources to activities that generate revenue, like marketing, reaching out to new clients and so on, resulting in a higher return on investment. 

Drawbacks of outsourcing bookkeeping services

  1. Risk of selecting the wrong company
When you outsource a project for your company, there's always the risk that things won't go as planned. To ensure there are no red flags, ask for references and contact entrepreneurs who have done business with the outsourced bookkeeping service provider you are considering. Also, before you sign any agreement, make sure you establish the timetable upfront.

  1. Invisible costs
Examine the terms and conditions of the provider’s pricing policy before making any decisions. The outsourced service may have expenses that you aren't aware of.

  1. Security concerns
Be careful to evaluate the security measures of the outsourced firm under consideration to avoid exposing your personal information. Request that the outsourced firm signs a nondisclosure agreement to ensure that your data and information will be confidential and safe at all times.

  1. Communication is limited
Your ability to communicate with people outside your organization is more limited. Make sure you are assigned a permanent point of contact at the outsourced provider to contact whenever you need information.

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