Let’s say you went through the benefits of outsourcing finance and accounting services and decided they are the best fit for your business.
You have made up your mind and are all ready to say goodbye to the in-house accounting and finances. However, where and how do you start?
A transition from in-house financial operations to an outsourced one isn’t easy. It is full of challenges like finding the right service provider, ensuring you can rely on them, and sharing and migrating the data.
Therefore, before you delegate your accounting and financial operations to a third party, you will have to go through a hustle, probably for the last time, if everything works out.
However, not to worry. In this transition guide on outsourced finance and accounting services, we will guide you on how to switch from in-house financial operations step by step.
We will also cover the expert tips that will make your overall transition experience smooth.
What are Outsourced Finance and Accounting Services?
We take it that you have gone through the benefits of outsourcing finance and accounting services. However, for the uninitiated, we would like to cover the basics of finance and accounting outsourcing and its benefits.
Outsourced finance and accounting is a business practice of delegating the company’s accounting and financial operations to an external service provider.
Therefore, transfers the burden to a third party and takes it off the shoulders of the business management and owners.
Outsourced finance and accounting services is a product of advancement in financial and communication technology.
The advanced software makes it possible for financial firms to carry out a large number of tasks, automate repetitive tasks, and carry out high-volume accounting in a very accurate manner.
They can work collaboratively in a highly secure environment thanks to cloud technology.
Through cloud accounting software and tools, finance and accounting outsourcing firms communicate with clients in real time and provide fast services.
Everything Outsourced Finance and Accounting Services Include
Outsourced finance and accounting services cater to all aspects of business operations. It includes a plethora of services like:
- Managerial Accounting
- Tax accounting
- Accounting audit
- Forensic Accounting
- Virtual Bookkeeping
- Tax Services
- Cloud Accounting
- Day-to-Day Bookkeeping
- Accounting & Taxation
- Auditing and Assurance
- Payroll Services
- Financial analysis
- Statutory reporting and compliance
Salient Benefits of Outsourced Finance and Accounting Services
Outsourced third-party accounting and finance services have numerous benefits for a company. Let us explore these advantages.
1. Increased Efficiency
Outsourced accounting and financial services offer great efficiency. The firms take a proactive approach to conducting and managing the financial operations.
With the help of the cutting-edge tools and expertise of seasoned professionals, the firms elevate the efficiency of their financial operations.
2. Optimizes Expenses
A company spends a great deal on the accounting and financial operations. However, if the efficiency is low, these operations offer low value for the resources and money.
The outsourced accounting and financial services deliver a higher return on investment (ROI). Moreover, it costs less than the in-house accounting operations.
In this way, the businesses are able to reduce the total expenses, optimize cash flow and generate more income, increasing the overall profitability.
3. Access to Advanced Financial Technology
Although financial technology has involved multifold in the past few decades, not everyone has access to it. Utilizing cutting-edge technology requires spending a great deal of money on infrastructure and training.
However, businesses can simply outsource the accounting and financial operations to a firm that has these resources.
Therefore, the businesses can benefit from the latest financial technology at a minimal cost.
4. Frees Time
Outsourcing the accounting and financial operations to a third party frees up the time of in-house employees. Therefore, it allows them to focus on the core business activities and work hand in hand to achieve company goals.
Moreover, outsourced accounting and financial operations have a short turnaround time owing to the technology they use.
The business doesn’t have to wait for long for reports and end results and can go about different operations without delays. This saves significant time for the business and propels its growth.
5. Peace of Mind
Accounting and finances can take up too much of management’s time. Moreover, it is tedious to supervise all the processes, ensure timely reporting, and streamline the overall financial operations.
However, with tax management services and third-party accounting firms handling the basic financial operations, the management can focus on strategic decision-making. Therefore, management can lead the business better and make sure it’s on the right path to success.
6. Reduces Infrastructure and Hiring Costs
Hiring in-house accountants and financial experts and maintaining their infrastructure is expensive. Moreover, the company has to spend on employee benefits, software, and technology, not to mention the cost and time spent on hiring new employees and human resource management.
Outsourcing the financial operations eliminates these costs on infrastructure and hiring. This reduces the overall expenses for a business.
One of the most unique benefits of outsourced finance and accounting services that in-house accounting can never offer is the sheer flexibility.
The outsourced financial operations are scalable and can be modified as the business requirements change. This means the company can quickly respond to changing business environments, markets, or economy.
Whenever the company needs to save costs, it can scale down on the accounting and financial operations without losing money on hiring, relieving, and rehiring employees.
8. Rich Quality Financial Operations
The accounting and financial firms leverage sophisticated software and tools and a wide knowledge of the business and finances to offer rich quality end results.
This elevates the effectiveness of the business operations and helps the business save expenses, increase profitability, enhance performance, and boost productivity.
The implications and results of rich-quality financial operations are many and multi-focal. The high-grade financial operations and research support the decision-making and business strategies.
All this helps in leading the business to new heights and prosper.
How to Switch to Outsourced Finance and Accounting: Step-by-Step Guide
Switching to outsourced accounting and finances requires you to consider the timing, figure out your requirements, and come up with a plan to make the transition smooth.
The steps listed below will help you approach the whole migration process professionally and guide you through every bit of it.
1. List the concerns
You might face some concerns when carrying out accounting in-house or with your current accounting systems. List all these concerns, as these will be helpful in defining your requirements from the third-party accounting firms.
2. Identify and sort the requirements
You should be clear about your expectations from the third-party accounting service provider. To define that, evaluate your business requirements and list down all the accounting and financial operations you need. To make sure that you don’t miss anything, consult an accounting expert. Defining and sorting the requirements in descending order of priority helps when you browse for the right partner to outsource to.
3. Create a backup of your financial data
Your financial data is the backbone of your business operations, almost like the source code of a program. Therefore, you should create a backup of the financial data for disaster readiness, future references, etc.
Create a backup of your accounting software and other data and store them on a secure disk or preferably a secure cloud storage like Dropbox.
4. Figure out a plan before you start
Once you are all set to begin switching to an outsourced finance and accounting firm, you need to come up with a detailed plan for the sequence of events and guidelines.
Moreover, you will need to appoint a dedicated team or person in your company to oversee the migration procedure and be the person of contact for the third-party firm.
5. Define the budget
You might be spending a considerable amount on the accounting and financial operations. When you switch to outsourced financial services, you can tweak your budget depending on your business requirements.
It is time to define your budget for accounting and financial operations before starting to explore the services.
If you are starting a new venture and don’t have a definite idea of the budget, you can connect with an accounting expert to help you with the same.
6. Find a suitable outsourced service partner
The main hustle is to find a suitable outsourced accounting service partner fit for your business. This requires you to clearly know the business requirements and define how much you wish to spend on the financial operations.
Thereafter, you can find an outsourced service partner who is credible, offers rich quality services with significant consideration for data security, suits your budget, and offers scalable plans.
7. Complete the paperwork
Once you have selected the right outsourced finance and accounting services, you need to complete the formalities. This needs considering all the terms and conditions and carrying out the paperwork required.
Once done, will come the next part of migrating the financial data. That will be taken care of by your third-party accounting firm. However, your coordinator, the person or team you nominated to oversee the whole migration process, must be very involved in this phase.
8. Migrate the core operations first
The migration part is the most crucial and can slow down business operations for days. Therefore, it is essential that you migrate the core data first and get the core operations running. The rest of the data and operations can be migrated after that.
Outsource to A2 Accountants
The above transition guide will get you started with the outsourced finance and accounting services and help you switch seamlessly.
We encourage small and mid-sized businesses to take a free trial of our outsourced accounting and financial services. This will help you find out if our services are right for your business. Dial +1(800) 580-5375 and connect with our accounting experts today!