12 June '24

6 minute read

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With the rise of cloud accounting and shared visibility of data, outsourced accounting services can be a game changer for businesses looking to streamline their financial operations, cut costs, and improve profitability.

There are, however, several misconceptions about outsourcing that can prevent companies from taking advantage of this valuable resource.

Tanveer Mahtab-Ahmed explores some of the most common myths around outsourced accounting and how businesses can make the most of the tools available.

1. Outsourcing is just for the accounting basics

First thing to clarify is that there’s no single way to outsource your accounting services. Your strategy should be tailored to your existing team, your needs and your goals. One of the first, and most common, tasks to be outsourced once the technology became available, was bookkeeping and processing.

The reasoning is clear – these tasks can be time-consuming and inefficient to conduct in-house and are relatively simple to pass on to a third party. However, technology and workflows have moved on from this earlier paradigm, and outsourced accounting services can now provide much more value than just basic processes.

At Cooper Parry, we use the building blocks of managing AP and AR to help clients outsource their bookkeeping, VAT compliance and the preparation of annual financial statements and tax returns. We take a holistic view of the whole accounting function, building systems that provide value from the point of data collection, all the way to advisory.

Our systems enable us to offer value-added services like financial planning, budgeting, forecasting, high-quality management accounts, automation of manual bookkeeping and time-consuming manual administrative processes.

2. Outsourcing means losing control and quality

For businesses used to handling their accounts in-house where they can keep an eye on everything, there is a natural caution when it comes to moving this critical function outside your team. Solving this comes down to three key things: choosing the right provider, building the right systems and leveraging new expertise.

  • Choose a firm you trust that can demonstrate their value in clear ways.
  • One of the main benefits of cloud accounting is the ability to build in controls and shared visibility to ensure the work is done to a high standard.
  • Set reviews to monitor the work and ensure it meets your business’s specific standards and requirements. For example, we use strict quality control measures, backed by clear SLAs, to ensure that all work is completed accurately and on time.

In the long term, outsourcing can actually raise the overall quality of your accounting function, allowing you to engage a larger, more specialist team of accounting professionals on an ad hoc basis.

This means that you can access experts who are not available locally and tap into more experience in specific areas of accounting, such as tax specialisms, without hiring expensive, full-time team members.

3. Moving accounts out of my business means firing my team

Every business needs financial oversight and expertise. And we’re firm believers that this should include in-house as well as external advisers.

Having team members embedded in your business, seeing them day to day, understanding your customers and engaging with your team is hugely valuable for your long-term success. But only when they’re not bogged down managing manual workflows and digging through incomplete data.

By outsourcing basic tasks like bookkeeping and invoicing, and using a partner to provide clean, ready-to-use accounts, your internal team can focus on more complex tasks, such as drilling into the specifics of margins and using the data and accounts to drive improvements in the business.

4. Outsourcing is just for big companies

While we often think of outsourcing as the domain of major international businesses, targeted outsourcing can actually be even more beneficial for smaller companies looking to scale up their operations and improve their financial management.

  • Outsourcing allows early stage or growing companies to access specialised systems and experts before they have the budget to hire a full-time FD.
  • By outsourcing tasks such as bookkeeping, payroll, and tax preparation, smaller companies can free up time and resources to focus on core business functions such as product development, customer service, and sales.
  • Outsourcing can help smaller companies to stay up-to-date with changing regulations and compliance requirements, without hiring additional staff.

One of the main advantages of building a long-term relationship is the ability to adapt your outsourced functions as you grow and your needs change. In early stages, you may want to focus on compliance and payroll, but as you scale and expand, your outsourced team can adapt and help you build growth-ready processes and provide deeper insight for revenue strategy, evolving the service in line with changes in your team and goals.

5. Outsourcing accounting is more expensive

Adding in a new external function feels like an additional cost. But, outsourcing can actually simplify your financial management processes and be more cost-effective in the long run, compared to managing all your processes in-house.

  • Outsourcing can provide access to specialised systems that handle manual work and experts for advice, making it more cost-effective than hiring a full-time employee.
  • Outsourcing can also provide scalability for businesses, enabling them to grow and expand their operations without worrying about hiring additional staff or acquiring new technology.
  • By automating manual bookkeeping and administrative tasks, outsourcing can save time and reduce errors, while also providing accurate financial data that can inform business decisions.

6. Outsourced accounting is impersonal

While working with an off-site provider for an accounts service might feel impersonal, in today’s digital age, remote and hybrid working is increasingly the norm, making collaborating with non-premises colleagues quicker and easier than ever before.

I regularly sit down with my clients to explain their accounts, talk through financial performance and discuss their future planning. My role is to help businesses achieve their goals by providing a fresh perspective and innovative ideas, whether that’s an objective viewpoint or offering insights and recommendations on how to improve financial performance and drive business growth.

To find out more about how outsourcing your accounts or finance function can help you meet your goals, get in touch with Tanveer.