Understanding the Cost-Benefit of Outsourced Bookkeeping

Bookkeeping is often the central character in the ballet of corporate finances. It’s the painstaking recordkeeping, classification and aggregation of financial transactions that make up the core of your business’s financial wellbeing. Yet, as your business grows and evolves, do we need to keep books in-house, or do we consider outsourcing?

Here at Protea Financial, we understand this intersection. We understand that every company is different, and has different needs, priorities, and resources. Let’s take a moment to explore the financial benefits and disadvantages of outsourced bookkeeping to help you know if it is right for your business.

The Essential Role of Bookkeeping: Why Businesses Need It

Before we talk about the in-house vs outsourced bookkeeping, you must first understand why bookkeeping is vital for any company no matter how big or small. Bookkeeping provides the foundation for:

• Bookkeeping ensures that your business’s transactions are recorded, categorized, and summarized in a reliable and concise manner to give an insight into your company’s financial position.
• Proper financial information lets you take smart business decisions on pricing, investments, and resource consumption.
• The tax laws and regulations are kept in compliance with proper bookkeeping, reducing the chances of penalties and audits.
• Bookkeeping gives you the information to budget, predict, and analyze your finances so that you can plan for the future and make smart decisions.
• By keeping track of revenue and expenses, bookkeeping will let you check how your business is doing, trends, and profitability.
• Well-maintained financial records exemplify transparency and accountability, which is helpful in raising funds or securing funding.

The Consequences of Neglecting Bookkeeping

If you don’t focus on bookkeeping, the consequences for your business can be serious. Here are just a few of the issues you may face if you do not keep up with your bookkeeping:

• Unreliable financial information can result in making incorrect decisions, missing opportunities, and losing money.
• Unorganized bookkeeping can lead to tax penalties, audits, and legal concerns.
• Without proper management of income and expenses, businesses may find it hard to generate cash flow efficiently and end up in financial limbo.
• Lack of proper supervision and internal controls may lead to fraud and embezzlement.
• In extreme cases, neglecting bookkeeping may lead to business failure through a lack of financial oversight and unreliable understanding of the financial status of the company.

If business owners are mindful of the necessity of bookkeeping, then they can put a strong emphasis on that very task and make sure their accounting systems are accurate, trustworthy, and contribute to their future success.

The Traditional Approach: In-House Bookkeeping

The way companies have traditionally handled bookkeeping is that they’ve hired a dedicated bookkeeper or simply given the job to someone who already works there. Though this approach gives a certain degree of ownership and direct oversight, it comes with its own costs and constraints:

• The cost of hiring a full-time bookkeeper includes salaries, health benefits and possible payroll taxes.
• If you want to ensure that your in-house bookkeeper stays at the cutting edge of the profession, you’ll have to invest in training and education.
• You’ll need accounting software, hardware, and IT infrastructure to manage your bookkeeping processes.
• Think about office space, equipment, and supplies for your bookkeeper staff.
• Keeping track of an in-house bookkeeper is time-consuming, as it takes time to hire, train, oversee, and evaluate them.

The Outsourced Alternative: A Shift in Perspective

Outsourced bookkeeping provides a compelling alternative to subcontracting financial duties to others. This strategy offers distinctive advantages:

• Outsourcing can be cheaper than full-time staffing and eliminates the salary, benefits, and infrastructure cost.
• Get a team of seasoned bookkeepers with experience across industries and accounting packages.
• Professional bookkeepers offer precision and accuracy to avoid costly mistakes.
• Outsourced bookkeeping providers use cutting edge software and automation techniques to cut down costs and enhance efficiency.
• You can quickly scale your bookkeeping service up or down when your business grows or decreases without the hassle of implementing or eliminating employees.
• Free up your time and resources to concentrate on your core business, like product development, sales, and customer service.

Weighing the Costs and Benefits: A Holistic Approach

The decision to outsource bookkeeping is about carefully weighing up the costs and benefits when you decide to outsource bookkeeping. Here is a guide for doing so:

1. Determine what you need, based on your transaction volume, financial sophistication, and reporting needs.
2. Estimate the total cost of in-house bookkeeping operations including salary, benefits, software, infrastructure, and overhead.
3. Get estimates from trusted outsourced bookkeeping companies, compare their services, cost, and experience.
4. Other than cost, think qualitatively about the expertise, accuracy, efficiency, and being able to get back to your core business.
5. Determine how much outsourced outsourcing can pay off in terms of cost reduction and free time and resources.

Making the Decision: Factors to Consider

Price is one important consideration, but it’s not the only one. Here are some other considerations in making your decision:

• Business Size and Complexity: Small companies with simple accounting could manage their bookkeeping internally while larger and/or fast-expanding businesses could leverage the expertise and scale of outsourced bookkeepers.
• Specialized Requirements: Some industries, like medical and construction, require special bookkeeping and compliance needs that might best be addressed by specialty providers.
• Technology Adoption: If your business has embraced technology and cloud software, outsourcing can offer you access to more sophisticated tools and automation.
• Staff: Do you have the internal resources and expertise to handle bookkeeping on your own or are your staff better off working on other critical tasks?
• Projections: Plan for your growth and determine whether your bookkeeping system will be flexible enough to support your needs.

The Protea Financial Advantage: Your Partner in Financial Success

Here at Protea Financial, we know that outsourcing bookkeeping is a significant step. We take a hands-on and open approach, talking with you about your needs, your alternatives, and ultimately helping you make the right decision for your business. We offer the following services from our highly experienced professionals:

• Our bookkeeping solutions are tailored to fit your requirements – be it basic bookkeeping, maintenance of your financials, or even managing documents for compliance.
• We use the latest accounting software and automation tools to automate your finances and give you access to real-time information.
• We provide personalized support and communication to make sure you know where you stand financially and what’s happening.

To Discover More About the Cost-Benefits of Outsourced Bookkeeping, Contact Protea Financial

The price-benefit evaluation of outsourced bookkeeping must consider both financial and quality considerations. If you take the time to determine what you need, what options you have, and what the long-term impact of your choice becomes, you will be able to make a well-informed decision that helps your business succeed. Are you ready to learn more about the pros and cons of outsourced bookkeeping? Give our team at Protea Financial a call today for a free consultation. We look forward to talking with you.