How to determine if you should outsource accounting functions
With growth picking up for many of the firms we serve, our clients often ask if they should outsource some of their accounting functions —or outsource more of them.
It is no surprise they see outsourcing as a valuable strategy to expand their team’s capacity. Recent research by KPMG found that enterprise firms use outsourcing for a variety of tasks, such as:
- Accounts Payable: 23%
- Transactional Purchasing & Accounts Receivable: 19%
- General Accounting: 17%
- Management Reporting: 10%
- Analytics: 9%
While outsourcing does not work in every situation, consider these eight questions to determine if and when you should outsource your accounting projects.
- Does your company need a CFO’s expertise, but not full time? With salaries for internal financial staff rising, hiring a CFO for a permanent job only makes sense when you have enough work to occupy a full-timer. Outsourcing can allow you to attract the expertise you need without committing to a full-time hire.
- Do you run a private equity firm that has acquired companies that need accounting help? Relying on highly-skilled, outsourced professionals can help you if you want to keep overhead at your acquisitions lean. For instance, we work with a number of private equity firms that have done roll-ups and want to maximize the profitability of the companies they have acquired.
- Are you having trouble attracting a staff accountant? If you run a high-risk startup or your firm’s accounting needs are not especially challenging, it may be hard to lure the top candidates you need. Outsourcing can help you avoid the high cost of replacing recruits you have trained.
Typically, accounting firms that handle outsourced work employ staffers at many levels of experience. They will assign an accountant who will find your projects challenging. That way you will not have to worry about driving senior staffers out the door by asking them to handle an entry-level task like cutting checks.
- Is your existing finance team struggling with specialized areas of reporting and compliance? Ninety-nine percent of S. executives surveyed by the Financial Executive Research Foundation and Robert Half believe their compliance burden will either increase or, at a minimum, stay the same over time. If your staff is constantly grumbling about the effort it takes to keep up with ever changing rules and regulations, outsourcing can free them to focus on other important work.
- Are you doing business across national or state borders? Many firms are frustrated by the time required and regulated filings they face when they expand their operations and sales teams across state The same holds true for overseas firms that expand into the United States. Often, it is more cost-effective to rely on an outsourced professional with expertise in each state’s requirements than to develop this knowledge among their own internal team.
- Do you employ a bookkeeper but suspect your financial record keeping needs improvement? Many small and midsize firms rely on staffers who, while competent, keep messy That results in a lot of costly year-end cleanup work by their accounting firm. Having an outsourced professional organize your books monthly can reduce these hassles and give you the assurance that they are always in good shape.
- Is your company relying on one person to handle all financial functions without any segregation of duties? As a best practice, a company should maintain separation of By outsourcing work such as payroll, accounts payable or bank reconciliations, you can separate these duties and enhance internal controls.
- Is your accounting team fully staffed? If you are outsourcing enough work to occupy a full-time financial professional on an ongoing basis, it is usually time to consider making a new A good outsourced accounting firm will put into place best practices and technologies that help you make a smooth transition.
Hiring the right firm for your tax planning and return preparation is vital to your financial success.
RotenbergMeril is ranked as one of the top accounting firms in New Jersey and their specialized services include: audit/accounting, public company/SEC services, benefit planning, taxation, financial outsourcing, litigation support, valuation and international consulting. If you feel your business may benefit from outsourcing some or all of your accounting functions, contact the experts at RotenbergMeril at (201) 487-8383 or visit www.rmsbg.com to learn more.