Many business owners are focused on increasing revenue and reducing costs while optimizing operations and managing customer needs. Since these areas have the biggest impact on the bottom line, it is only natural to focus on these strategic priorities. However, as a business grows or changes, the increased focus on sales and operations often leads to neglect of the accounting function. It is only when chronic issues with report accuracy, timeliness, or productivity arise that the impact of this neglect becomes apparent. To solve these problems, many accounting and finance leaders look to third parties to provide accounting services. The continuity of service, accuracy of data, timeliness of financial reports, and streamlining of processes that outsourced accounting can provide are invaluable for decision making. To help clients, prospects and others become familiar with the benefits of our Accounting Services practice, Calvetti Ferguson discusses some of the benefits below.
Outsourced Accounting Benefits
Well-designed Processes and Reporting
QuickBooks online and other cloud-based accounting software systems make it seem simple to initially set up or transfer the company’s books. Unfortunately, these online platforms are simply a tool that is used to execute formalized accounting processes. Without such processes, the data entered in the system is more likely to be unreliable and untimely. In addition, the lack of a process misses the opportunity to connect the accounting function to the rest of the business to ensure the information provided is adequate to support the decisions the business owner must make.
Using a third party will offer greater levels of experience and expertise that provide more nuanced and forward-thinking insight. An external advisor can partner with the business owner to look toward the future and envision where the business could be in a few years or more and then set up books to capture, report, and analyze relevant data points to meet the future needs and growth.
Efficiency and Productivity
Employees with little formal accounting training and business owners that oversee back-office accounting end up investing an extraordinary amount of time to accomplish routine tasks. It often takes longer to prepare reports, reconcile accounts, and update transactions. This can easily translate to several hours per week or per month diverted from essential business activities. Spending just 15 extra minutes per day not doing accounting-related work will increase productivity by about three percent over a year. When that time saving is translated to dollars, the benefits are even more tangible. One study estimated that a $3 million business would save more than $93,000 per year by getting 15 minutes per day back. Not only can a third party take on these tasks, but they have the experience to optimize the process and deliver higher value for the investment made.
Security and Fraud Protection
Small businesses also face growing security threats from internal and external bad actors. On the accounting side, small businesses are most susceptible to check and payment tampering, billing, and payroll fraud. Financial statement fraud is less common, but much more devastating at a median loss of $954,000, according to the Association of Certified Fraud Examiners. Working with an outsourced accounting advisor will protect against many of the fraud schemes that employees could otherwise try to perpetrate. There are fewer opportunities to commit fraud, better controls, and outside financial experts monitoring transactions. Plus, outsourced accounting advisors can help the business establish anti-fraud controls across the business and ensure the processes and controls evolve to keep pace with current fraud schemes.
Inefficient or understaffed accounting departments frequently fail to keep receipts, update expenses, and communicate changes, and often misclassify accounting activity. Utilizing outsourced accounting means fewer mistakes translating to a more efficient financial reporting process and provides the ability to take full advantage of all available tax incentives.
It is hard for an in-house or DIY bookkeeper to anticipate upticks in business or respond well to unprecedented growth. In addition, many of these bookkeepers lack the skill set required for a larger company. As a result, we see many scenarios where the accounting function can no longer keep pace with the increased transactions and does not have the knowledge to properly account for more complex transactions.
Our accounting services team, on the other hand, is made to scale up as the business grows and has the deep experience to stay connected to the business owners to serve as a partner in looking ahead and proactively adapting to the changes.
Budgets and Forecasts
The value of an accounting team is in the ability to interpret the numbers in the general ledger and communicate what it means to your business. They understand how the pieces fit together and use this understanding to offer real-time recommendations on how to optimize resource use and plan for the future. Updated data can inform key business decisions and set the company up for future growth.
Chronic issues and mistakes with financial reports can significantly impair management’s ability to make the best decisions. Calvetti Ferguson will take a strategic approach to partner with you to remedy the problems and provide a reliable solution that can expand to meet changing needs. If you have questions about the information outlined above or need assistance with an accounting or tax issue, Calvetti Ferguson can help.