10 Benefits of Outsourcing Your Small Business Bookkeeping
One of the true benefits of expanded access to the Internet and the interactions that access provides is the ability to more closely and easily connect with companies and services to help your business prosper and grow. Especially true in struggling economic conditions, businesses need to consider every avenue when outsourcing or making structural changes within an organization.
While it's true that outsourcing can save money, that's not even the most important reason to outsource bookkeeping services to a third-party provider. Striking a balance between critical functions of your business and those that you can afford to outsource can be the difference between a well-oiled machine and too many cooks in the kitchen - or too few. Wise and considerate outsource, however, provides a number of benefits in the long run.
Companies that hire in-house to perform research, accounting, development, and marketing costs have higher overheads, leading to higher costs for customers. Third-party service providers have built their businesses to scale, offering lower prices for services equal to or in greater quality than companies are able to offer in-house. Furthermore, the perspective and economy of scale provided by enlisting an outside provider can offer greater institutional efficiency and provide your firm a distinct competitive advantage.
By offloading some of the workload away from your team, you'll be allowing them to better focus on critical operational aspects and immediate activities without being dragged down by minutiae and time-consuming tasks. With this extra time, your employees will be given the opportunity to perform on a higher level and contribute more fully to your efforts.
Help Control Costs
While cutting costs is often the first thought when "outsourcing" comes to mind, the savings often comes much later on and without a significant alleviation for the books. Outsourcing doesn't just reduce overall costs; it converts fixed costs into variable costs, helping to release resources to apply toward other aspects of your business. This can also help free up valuable capital early on in your business' history.
Additionally, by outsourcing certain aspects of your business can save in ways you may not expect at the outset. If you take certain aspects of a business, such as IT, accounting, or marketing, you can not only save on the costs of hiring full-time employees to fill those departments, but the cost of upkeep, maintenance, logistics, and technology to support those initiatives can be eliminated from your budget.
Stay - Or Become - Competitive
Especially as a scrappy upstart, it's difficult to compete in a well-established industry full of big-league players and major roadblocks to progress. Because most smaller companies can't afford the in-house support found within larger, better established organizations, outsourcing provides the opportunity to level the playing field in a meaningful way - though not necessarily financially.
Plus, many outsourced firms in the IT, marketing, or consulting world have the economies of scale needed to attract and retain top talent. This can provide excellent flexibility to switch providers if necessary and keep your services operating at a high level you may not be able to achieve by hiring in-house.
Reduce Costs of Labor
Hiring specialists or training staff for one-off projects, short-term endeavors, or low-priority initiatives provides unmatched flexibility for employers. Because contract or temporary hires don't always meet expectations, hiring a specialized outsource firm to help achieve your business goals can be very rewarding in the long run.
Automation of certain tasks - especially clerical or reporting duties - can help eliminate redundancies and help keep your bottom line in check.
Initiate New Projects More Quickly
If your company is embarking on a new initiative or project, it's unlikely you'll have the resources and expertise to needed to see it through to completion on the same timetable as would a specialized firm. A good outsourcing firm, whether its operating in a technical, creative, or production capacity, will have the resources on-hand needed to get your projects up and running right away.
Hiring for the same project in-house isn't only cost-prohibitive, it could hinder your ability to progress in a competitive manner - especially if the project requires significant capital investments at the outset. By outsourcing some aspects of your major projects, speed, cost effectiveness, and efficiency will all be improved.
Inherent in every business is the notion of risk. While you can always do your best to mitigate and offset the chances of exposing yourself and your business to risk, it's sometimes wise to offload more vital or sensitive aspects of your business to a responsible third-party.
Because market and economic conditions as well as competition and government regulations can change with very little notice, savvy business owners will ensure their companies manage that risk accordingly. Investing in outsourced services rather than hiring internally for the same outcome can not only save money, it can allow you to adjust assets and leverage them to your greatest possible benefit.
Focus on the Strengths of Your Business
It's a common story, no matter the business or area of focus: the company begins with a certain product or service and finds success early on, but a new initiative or employee brings a level of expertise and authority to your business that transforms it in a meaningful way, but you still have customers and clients that rely on your business for certain services you may no longer be interested in providing - or are simply not cost-effective to focus on full-time.
In these situations, offloading some of the so-called "grunt work," such as bookkeeping or accounting, to third-party providers can allow you to focus on the true strengths of your business without worry or hindrance.
In the case of bookkeeping, there are plenty of reasons why you'd want to outsource the service to a professional firm, but one major aspect commonly overlooked is the notion of privacy. Because things like payroll and employee financial information is very sensitive and complicated, many companies do not want to share those details with internal staff members. Outsourcing bookkeeping, HR, or accounting from your company, you can reduce the risk of sensitive information falling into the wrong hands. In the event of data loss or a breach, keeping that information off-site and well within the realm of responsibility for another company can reduce your risk of exposure and liability should the worst occur.
Whether you own a retail store, restaurant, or professional office, you've likely heard of the term "profit-per-square-foot." Put simply, this metric measures the amount of money generated per square foot of office or retail space leased/owned by the business. While this boils down solely to numbers, it's more often than not used to measure efficacy of management and its ability to create revenues based on the amount of physical space available to them. The higher the profit-per-square-foot, the better the performance of management can be measured.
Because profits and revenues can be directly influenced by employee salaries and overhead, moving various services to a third-party provider can help improve overall profit-per-square-foot.
Independent Support and Advice
Especially in times of financial crisis, it's beneficial to keep an independent, unbiased resource for financial advice and outlook. An outsourced bookkeeping company will provide unbiased advice, but they're also easier to offload than full-time staff if the decision is deemed necessary.
Finding a reliable expert in the bookkeeping and accounting world help keep your books in check, yes, but the true benefits may come in the form of financial forecasting and advice. A professional bookkeeping service not only provides day-to-day upkeep on your revenues and expenditures, but can provide business owners with valuable insights into the world of finance. A third-party firm with in-depth knowledge of your business' financial situation can help forecast risks, look for money-making (and saving) opportunities, help avoid cash-flow problems, and helping find ways to manage both income and spending. Furthermore, their experience in the world of finance can help keep your company compliant through changing laws, regulations, and tax liabilities pertaining to your specific industry.
If you're searching for a trusted partner to handle your company's daily bookkeeping and accounting needs, look no further than Honest Buck. With decades of experience working for businesses both large and small, our team is committed to helping businesses grow with best-in-class bookkeeping services and respected insights into the world of finance and accounting. Contact us today to schedule a consultation with our team or to learn more about our services.