When to Outsource Accounting Services (And When Not To)
.png)
Dealing with complex financial regulations and tax laws requires expertise these days. Unfortunately, there's been a noticeable decline in finance industry know-how, pushing many to seek help from finance and accounting outsourcing companies.
Interestingly, these firms aren't escaping the accountant shortage either. In fact, they’re also struggling to retain accounting experts. Over the past few years, more than 300,000 accountants have left their jobs, moving to roles that offer them better work-life balance.
So, how do you determine if outsourcing should be your next move for your business?
In this blog, we’ll guide you through making that decision.
What is Finance and Accounting Outsourcing?
Finance and accounting outsourcing is when you partner with external experts to manage your company's financial tasks remotely. This includes:
- Payroll processing
- Tax preparation
- Bookkeeping
- Financial reporting
- Budgeting and forecasting
- Audit and compliance
- Financial analysis
- Cash flow management
- Risk management
When Should You Consider Outsourcing Accounting Services?
Businesses outsource their accounting tasks for various reasons. Did you know that accounting is one of the most commonly outsourced processes for small businesses? Alongside IT services, about 37% of small businesses outsource to specialized finance and accounting outsourcing companies.
So, how will you know if it’s time to consider outsourcing your accounting functions? Here are the top scenarios:
Your business is experiencing rapid growth
As your business scales up, so do your financial responsibilities.
Outsourcing accounting services can ensure that your financial processes keep pace with your growth. You’ll have all the support you need, providing stability and support in compliance, financial reports, and insights to support decision-making.
You lack the in-house expertise to handle accounting tasks
Not every business has the resources to maintain a full-fledged accounting team comprising of the following roles:
- Chief Financial Officer
- Controller
- Accounting Manager
- Accounts Payable Specialist
- Accounts Receivable Specialist
- Tax Manager
- Financial Analyst
- Internal Auditor
- Payroll Administrator
- Bookkeeper
Outsourcing allows you to tap into specialized expertise without the cost and effort of hiring and training new staff.
You need to focus on core business activities
Managing accounting functions can be time-consuming and distract you from your primary business objectives. After all, accounting is a deadline-driven job. It’s no surprise that many in this profession work overtime, especially when a due date approaches.
Outsourcing frees you up, allowing you to concentrate on what you do best—driving your business forward.
Your business experiences seasonal workloads
Outsourcing accounting services provides flexibility if your business experiences fluctuating workloads throughout the year. Instead of hiring new employees during peak seasons and potentially facing surplus staff during slower periods, outsourcing allows you to scale services up or down based on your needs.
The costs of hiring locally extend far beyond salaries alone. When bringing on a new local employee, expenses include recruitment, training, equipment, and more. It can take up to 6 months to break even on this initial investment, which startups and small and medium-sized businesses may find challenging to manage.
You need valuable financial insights
Outsourcing accounting services often include access to advanced financial analysis and reporting tools. These tools can provide valuable insights into your business's financial health and performance, helping you make informed decisions and plan for the future.
When Not to Outsource Your Accounting Services
While outsourcing can be beneficial, there are situations where keeping accounting services in-house may be more appropriate.
Gartner predicts that by 2025, 60% of finance and outsourcing contracts will not be renewed. This is due to the solution's outdated pricing model and the increased use of automation.
However, budget isn't the only reason why it might be better to hire your accounting staff. Here are some situations where you should:
You need immediate financial information and quick decision-making
If your business requires real-time financial data and analysis for rapid decision-making, an in-house accounting team may be more responsive and aligned with your operational needs.
Imagine if you suddenly have an opportunity to secure a large contract that requires financial analysis. An in-house accountant can help you crunch the numbers, assess the risks, and gain the insights needed for informed decision-making.
Your business deals with highly sensitive financial information
With an in-house team, you can maintain the integrity of your business’s financial data, such as:
- Customer payment information
- Employee payroll information
- Business profit and loss statements
- Investment portfolios
- Confidential contracts and agreements
- Budgets and forecasts
- Sensitive pricing information
You’ll have tighter security and confidentiality, allowing you to safeguard your stakeholders’ trust, avoid cyber threats, and comply with regulations.
You need specialized finance and accounting professionals
Certain industries or complex financial operations may require specialized expertise best served by an in-house team with deep knowledge of your business.
But did you know that staffing accounting and finance roles in the US are becoming extremely competitive? Many accounting specialists are quitting their corporate jobs! In fact, 91% of senior managers in the US find hiring specialized finance and accounting professionals challenging.
You are a startup or small or medium-sized business
Startups or small to medium-sized businesses may benefit from having direct oversight and control over their finances, especially in the early stages of growth.
Nearly half of startups fail within the first five years, and about 82% of small businesses have cash flow problems.
This shows how a hands-on approach to your business and an in-house finance expert allows you to monitor cash flow and other financial processes closely.
You find it challenging to align with accounting firms
It’s not easy to find an accounting firm that fits your culture and your needs. Maintaining an internal team may be the best option if you see this as an issue.
Besides, with artificial intelligence (AI) intelligence and new technology emerging, many accounting firms are still concerned about the risks associated with it. About 89% of survey respondents had at least one of the following concerns about implementing AI:
- Work quality: 42%
- Data accuracy: 41%
- Fiscal costs: 31%
- Undetected bias: 26%
- Ethical issues: 21%
With an internal accounting team, you can ensure better collaboration and understanding of your business needs.
A Better Option: Hiring Specialized Remote Finance and Accounting Experts
Remote work has changed the economy and has become the new normal. Aside from the decrease in quit rates by 35%, businesses can tap specialized talent while saving 80% on labor costs.
Why hire remote talent?
Hiring remote accounting talent brings numerous advantages to your business.
When it comes to remote work, the possibilities are endless. With this solution, you can find the perfect fit for your accounting needs rather than limiting yourself to local hires.
For example, MultiplyMii, a remote staffing firm connecting businesses with Filipino remote talent, can help you hire and onboard the best experts with specialized finance and accounting skills.
What makes it better than outsourcing?
Unlike traditional outsourcing, hiring remote talent gives you more control and integration into your team, which is often an issue with outsourcing.
When you hire remote talent, you're bringing individuals directly onto your team, much like traditional employees who work from an office. These remote workers remain fully integrated into your company's culture, mission, and daily operations.
You have direct control over their tasks, workflows, and communication, just as you would with on-site employees. This setup fosters a strong sense of belonging and alignment with your company's goals.
On the other hand, traditional outsourcing involves contracting external companies or providers to handle specific tasks or functions on behalf of your business. These outsourcing firms are responsible for managing the individuals assigned to your account.
While outsourcing offers expertise and efficiency, it can sometimes create a disconnect because your company does not directly employ the workers. This means less direct control over tasks and less integration into your team's dynamics and culture.
Watch our Outsourcing vs. Offshoring video to learn their key differences and identify which one fits your business.
How does remote hiring work?
When it comes to hiring remote finance and accounting professionals, you have several options, such as direct hiring or using job marketplaces. However, partnering with a remote staffing agency like MultiplyMii is often the most effective choice.
MultiplyMii, a seasoned remote staffing firm, provides tailored solutions for businesses looking to scale without compromising quality. With over a decade of experience connecting businesses with top Filipino talent, MultiplyMii can do the same for you!
Check out our proven recruitment experience:
Assemble A Highly-Skilled Finance and Accounting Team For Your Growing Business
Build your team of specialized accounting professionals from the Philippines!
Partnering with MultiplyMii lets you save up to 80% on labor costs compared to hiring locally while tapping into the top 5% of Filipino remote talent. This ensures you get exceptional expertise without compromising on quality or efficiency.
Are you ready to scale? Book a discovery call with our team today!
