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As of 2024, accounting services remain the most outsourced operations among small businesses in the US, with 37% of companies accounting for the statistic.
Apart from the fact that it’s a highly technical field, why else do businesses outsource accounting services, and why should you consider doing the same? We listed the top reasons below.
1. Cost Efficiency
Maintaining an in-house accounting team requires physical resources, including office space, furniture, and specialized accounting software, all of which incur ongoing costs.
Meanwhile, with outsourced accounting services, you can convert these fixed expenses into variable costs that are more aligned with your actual accounting needs. It also negates the necessity for investing in extensive training programs to keep an internal accounting department updated on the latest accounting standards, regulations, and technologies.
This flexibility in cost is particularly beneficial for small and medium-sized enterprises that may not require full-time accounting services year-round.
2. Access to Specialized Skills and Expertise
With a dedicated outsourced accounting team, you can get access to professionals who bring a wealth of knowledge and experience across the industry. These experts stay abreast of the ever-evolving financial regulations, accounting processes, and best practices, ensuring that your business's financial operations are compliant and up to date.
This level of expertise is particularly valuable in navigating complex tax services, international accounting standards, or industry-specific financial reporting requirements. By leveraging their specialized skills, businesses can reduce the risk of costly errors and omissions that could result from less experienced in-house staff.
For businesses looking to expand or operate in multiple jurisdictions, having access to this diverse expertise can be instrumental in managing compliance and strategic financial planning effectively, making outsourcing an attractive option for gaining a competitive advantage through superior financial management.
3. Scalability
Another critical advantage of outsourcing accounting services lies in scalability as it provides businesses with the flexibility to adjust their resources in alignment with their finance and accounting needs.
Several outsourced accounting firms allows companies to scale their accounting services up during peak periods without the need to hire additional permanent staff, thus avoiding the costs and complexities associated with recruitment, training, and employment. Conversely, during slower periods, businesses can scale services down, ensuring they are not paying for resources they do not need.
This scalability is especially valuable for businesses undergoing periods of growth, where the complexity and volume of financial transactions increase, or for those experiencing seasonal fluctuations that impact financial activity and reporting requirements.
4. Focus on Core Business Functions
Outsourcing accounting tasks enables business owners to redirect their attention and resources toward the core functions that are essential for driving business growth and innovation.
Because managing accounting in-house, especially for small and medium-sized enterprises, it can distract you from activities that directly contribute to revenue generation and competitive differentiation, such as strategic planning, marketing, product development, and customer engagement.
By entrusting financial management to external experts, business owners not only ensure that their accounting needs are handled efficiently and accurately but also reclaim valuable time that can be better spent on formulating strategies, exploring new market opportunities, and enhancing product or service offerings.
5. Improved Efficiency and Productivity
Outsourcing firms specialize in accounting and are equipped with the latest technologies, software, and processes that many businesses might not have access to or the expertise to utilize effectively in-house. This leads to leads to improved efficiency and productivity, a key benefit for businesses aiming to streamline their financial operations.
By leveraging these technological advancements, outsourcing firms can process financial transactions more swiftly, generate reports quickly, and ensure real-time tracking of a company's financial health.
This timely access to financial insights and performance metrics is invaluable for business owners, as it enables more informed decision-making. With a clearer understanding of their financial position, businesses can identify trends, pinpoint areas for cost reduction, and uncover investment opportunities more effectively.
6. Risk Management
Risk management is a significant advantage of utilizing professional accounting services, as these firms possess the expertise and tools necessary to identify, assess, and mitigate various financial risks that businesses face. This includes potential issues such as fraud, financial mismanagement, and inaccuracies in financial reporting.
Moreover, outsourcing accounting services ensures that a business's financial operations adhere to the latest accounting standards and regulatory requirements, thereby reducing the risk of costly penalties and legal issues associated with non-compliance.
This comprehensive approach to financial risk management not only protects the business's assets and reputation but also contributes to long-term financial stability and investor confidence, safeguarding the overall health and success of the business.
7. Enhanced Financial Reporting and Analysis
Outsourcing employs robust software and analytical tools that go beyond basic bookkeeping to offer detailed and customized management reporting. This advanced capability enables businesses to gain a deeper understanding of their financial performance, including revenue trends, expense analysis, profitability, and cash flow patterns.
Such comprehensive financial analysis is invaluable for business owners, providing them with the data needed to make informed strategic decisions. For instance, understanding the nuances of financial performance across different segments of the business can help identify areas of strength and pinpoint opportunities for cost savings or investment.
This tailored approach, combined with the expertise of professional accountants in interpreting financial data, can significantly enhance decision-making processes. As a result, businesses can navigate financial challenges more effectively, capitalize on growth opportunities, and ensure a stronger, more secure financial foundation.
Build Your Accounting Team in the Philippines
There are a plenty of reasons to outsource accounting services, but, the problem is that not all outsourcing companies can deliver the same results.
To succeed in outsourcing, partner with a company like KDCI that has 13+ years of experience providing tailored outsourcing solutions. At KDCI, we’ll build you an accounting team that can work according to your unique needs and requirements.
Are you interested in our accounting services? Contact us today to get started.
