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Outsourced Bookkeeping Service - What Business Owners Need To Know

Outsourced Bookkeeping Service – What Business Owners Need To Know

30 Oct 2023 Outsourced Bookkeeping Service - What Business Owners Need To Know

In a competitive industry, keeping up with bookkeeping can be demanding. Startups, entrepreneurs, and SMBs are significantly affected. Emerging technologies also bring individuals closer to commercial interactions and streamline company operations.

Outsourced accounting service providers that help organisations at every step at a cheaper cost are rare. However, the accounting software market is predicted to increase from $18.08 billion in 2023 to $28.08 billion in 2028 at a CAGR of 9.20%. Unfortunately, business owners realise that in-house bookkeeping is ineffective for productivity and cost efficiency. Managing and controlling the everyday process makes bookkeeping difficult. Therefore, when it comes to bookkeeping, any company can benefit from selecting and depending on outsourced bookkeeping services. Instead of placing unnecessary stress on the staff, it is always preferable to hire a bookkeeper from an outside company.

Outsourcing Bookkeeping Services – A Detailed Overview

Third-party service providers with expertise in transaction classification and account balance reconciliation are known as outsourced bookkeepers. Organising financial data through back-office procedures is the responsibility of bookkeeping specialists. The following are among the duties of the outsourced bookkeeping assistant:

  • Sorting and classifying transactions, such as revenues and business expenses
  • keeping track of invoices and monitoring income when it’s paid
  • Regular and timely account reconciliation
  • Putting together financial reports for lenders or investors
  • Assembling tax documentation to speed up the process of submitting returns

Typically, accountants analyse financial data; bookkeepers do not. Yet, some outsourced bookkeeping services assist businesses in determining areas of overspending or poor cash flow.

How Outsource Bookkeeping Services Helps Financial Firms?

Businesses can streamline their accounting processes and monitor everyday financial activities by bookkeeping outsourcing services. The bookkeeper’s primary duty is to provide precise and current financial data on the company. 82% of SMBs now use cloud accounting to handle their financial operations. Outsourced bookkeeping services streamline the following five daily duties:

  • Recording daily transactions – selecting information from the original paperwork and entering journal entries into the accounting software
  • Reconciliations – balancing bank accounts and reviewing the general ledger to ensure accurate management of financial data
  • Data entry – entering the financial information required to handle payroll and keep track of credits and debits. Ensure a correct net salary calculation and adjust employee tax withholdings
  • Money monitoring – keeping track of accounts payable and receivable to make sure that suppliers are paid on schedule and that timely collections are made
  • Report generation – creating correct financial records and other information for CEOs of the firm

When do Businesses Need to Adopt Outsourced Bookkeeping Services?

When companies or startups first form, they don’t want to take care of their bookkeeping. Accounting outsourcing services help them focus on core business operations, development possibilities, or relaxing from the daily grind.

Businesses can obtain vital financial reports and statements, such as balance sheets, cash-in or outflow statements, and account reports, through outsourced bookkeeping. These reports and statements are essential knowledge for every business owner.

The four scenarios listed below illustrate why companies should outsource bookkeeping:

  1. Small or startup companies seeking expertise instead of a typical accountant
  2. Unable to get a suitable worker who can handle finances at a reasonable price
  3. Should companies need interim assistance
  4. Growing from a startup to an established company seeking to expand

Nonetheless, there exist diverse categories of enterprises in which the financial aspects of bookkeeping are not integral to the primary functions. A company’s core expertise is a crucial element in its success.

Impact of Accounting Automation in Businesses

Things Businesses Need to Look for Before Hiring Outsourced Bookkeeping Services

After deciding to outsource, the following step is to select an outsourcing company that best matches the goals and objectives of the organisation. But more importantly, one that can fulfil the needs and demands of the company. When managing business books and accounts, outsourced bookkeeping services should prioritise effectiveness and quality.

But a few more crucial elements still need to be taken into account.

  • Outsourcing Requirements

Profitability requires excellent financial management. This entails meticulously maintaining accounts payable and receivable, creating monthly or annual reports, and immediately filing federal agency statements. Organisations often use accounting software or outsource bank account reconciliation and analysis.

  • Competitive Plans

There are various alternatives for the price available for outsourced bookkeeping services, including fully customisable options tailored to particular business requirements. As such, companies can select pricing options based on which best meet their needs both financially and operationally. They can base their choice on more factors than just cost-effectiveness, though.

  • Data Security

When outsourcing bookkeeping services, startups that want to succeed must recognise how important data security is. A well-regarded business should ensure that every transaction is secure and manage customer data cautiously. It is essential because companies will provide them with cash flow data and sensitive information.

Top 5 Reasons to Use an Outsourced Bookkeeping Service

It takes a while for business owners to realize how important it is to have accurate financial records for their company and how outsourced bookkeeping services may help them succeed. But routine maintenance is also necessary for the firm to run well, which is the owner’s top priority. The value of time spent keeping financial records increases business expansion, yet entrepreneurs didn’t start businesses to become accountants or bookkeepers.

The following are five compelling reasons for using outsourced bookkeeping services:

  • Privacy

Financial information about businesses requires additional security and must always be kept private. As data breaches occur in today’s fast-paced market, hiring trustworthy bookkeepers to manage firm secret financial information so that they can stay loyal to aims and maintain confidentiality is difficult. By eliminating employee access to financial documents, outsourcing virtual business bookkeeping with good customer references can give business owners peace of mind.

  • Scalability

Even while a newly founded business may not initially require extensive accounting services, as it grows, it will. However, by using outsourced bookkeeping services, companies can expand without adding new employees or spending much on training. Financial operations can be managed by outsourcing organisations, which will also keep a careful eye on the company’s cash flow so that it can focus on its core business.

  • Training and Management

Because most business owners know less about bookkeeping than their accountants, they cannot monitor or educate their staff effectively. The benefits of having a bookkeeper who knows about online bookkeeping solutions or state tax legislation and reporting procedures improve bookkeeping quality.

  • Preserve Business Resources

To manage and organise their financial operations, startups and small enterprises invest a substantial amount of time and money. The budget and output suffer due to the increased headcount or reassigned duties. When there are so many options for outsourcing, however, they should prioritise the most critical work. Businesses should not waste time and money managing their financial records internally.

  • Tax and Audit-Ready Financials

Professional bookkeepers are appreciated by accounting and banking services since they handle tax and audit reports. Outsourced bookkeeping services can assist organisations in making sure their reports, audits, and account bills are correct and up-to-date since money matters.

Maintaining accounting duties is essential whether a company has current financials to provide to a lender or just to track cash flow. Hiring a professional service to handle the books is an easy option.

How Can RecordMe Help?

You may be concerned with back-office management because of the time it takes away from more crucial business tasks. The safest move is to work with a seasoned outsourcing firm like RecordMe, an automated accounting platform that provides customised, outsourced bookkeeping at a reasonable price.

Still unsure if you need professional bookkeeping services? Get in touch with us, and our expert bookkeepers will advise you.

Frequently Asked Questions (FAQs)

Q1. What is Automated Bookkeeping?

Ans. The use of particular methods and tools to enhance financial operations is called bookkeeping automation. It might consist of bookkeeping technology, software, and even services. Without requiring direct human involvement, automation makes time-consuming activities instantaneous.

Q2. What are the Benefits of Automated Bookkeeping?

Ans. Saving time, avoiding mistakes that could be costly, and having access to all relevant papers are all made possible with the use of automated bookkeeping software. It improves the efficiency of month-end closing and data quality, as well as cash flow management and cash visibility.