Gone are the days when outsourced accounting used to be a foreign concept for businesses. Nowadays, businesses of all industries and sizes are adopting it in all parts of the world and getting tremendous results from it.
Outsourcing offers numerous advantages over traditional accounting. Speaking of which, some of the most talked about advantages of g are its flexibility, expertise, affordability, etc. Apart from that, outsourcing also enables businesses to utilize world-class resources and technology at a minimal cost.
Naturally, a large number of businesses have already realized its benefit and latched onto this opportunity (of running their operations more smoothly) with both hands. Although, there are a few things that businesses need to be mindful of when outsourcing.
Despite being around for a while, outsourcing is still a fresh concept for most businesses. Not everybody knows how things are done in outsourcing and how to properly utilize it for maximum benefit. Hence, today we will tell you about 7 of the most common mistakes businesses should avoid when outsourcing their accounting.
1. Not establishing definite outsourcing goals
Outsourcing is undoubtedly advantageous for businesses, but they should have a clear picture of what they are expecting from it. One of the most common mistakes businesses make when outsourcing is not setting a specific goal. For example, having a definite goal like utilizing specific expertise in a particular service, saving costs on your accounting projects, or simply saving efforts helps you determine the progress of your outsourcing projects.
If you don’t set a clear incentive for outsourcing a particular accounting operation (or your entire accounting function), you may not get the results you may be hoping for. There is no point in outsourcing simply because you got to know that you can save money that way.
2. Opting for the cheaper option
One of the unique selling points of outsourcing is that it is a way cheaper option than traditional accounting; there is no doubt about that. However, here too, extremely competitive prices may be a sign to take a step back and weigh your options again. There might be some catch to the surprisingly low cost. For example, the firm offering such prices may ask you for more money later.
And then, there are freelance accountants. There is a good chance you may have come across a few freelance accountants by now. Their prices might be super affordable, but are a few good reasons for that. One of the biggest reasons is they not having expertise in specific accounting functions. Trying to save a couple of bucks isn’t worth risking the mess-up of your books.
3. Blindly trusting an outsourcing company
Businesses new to outsourcing often make the mistake of blindly trusting an outsourcing firm. There are many layers to accounting which consist of several different accounting operations, payroll management and accounts payable, for example. Understanding what outsourcing services you’re signing up for before you do is important.
Some firms may try and get you to sign up for services or software you may not necessarily require. The right outsourcing company should listen to your requirements, understand what you need, and provide a proper roadmap accordingly.
4. Not standardizing the outsourcing workflow
A standardized workflow system is crucial when outsourcing, not only to track the work progress but also to huddle up when obstacles arise for the team and overcome them as a unit. You need to constantly communicate with your outsourcing team, keep track of how the work is going and communicate your expectations with them.
Consider utilizing tools like Trello and ClickUp to manage and standardize your outsourcing workflow smoothly, identify gaps and fix them.
5. Having a communication gap with your outsourcing team
One of the main reasons companies outsource their accounting functions like payroll or bookkeeping is that they don’t have to do them themselves. However, that still doesn’t mean they can completely forget those accounting tasks. Once you outsource a certain accounting task (or all your accounting functions), you should stay in regular touch with the accounting team to ensure they understand your requirements properly and see that the work is on the right track.
Keeping in touch with your outsourcing team eliminates the possibility of issues that can occur because of communication gaps and keeps you updated on the project’s progress.
6. Not feeding back your feedback
Apart from conveying with your outsourcing team about the tasks, you should also be open to talking to them about what needs fixing, whether it is about the work you assigned to them or anything regarding their company functions.
An experienced outsourcing firm would listen to your positive feedback and implement the necessary actions to make the experience and delivery better for you.
7. Not assessing the outsourcing firm thoroughly
Nowadays, one of the biggest mistakes businesses make is relying entirely on online reviews when choosing an outsourced accounting company. While online reviews are helpful, you must still interview them formally.
A great way to start that is by a formal email interview. You can ask the outsourcing company questions like whether they’re a CPA firm or a specialized outsourced bookkeeping service provider, etc. If you’re satisfied with the response to an email interview, you can move ahead and schedule a telephone interview.
Speaking of choosing the right company to outsource your accounting to Key Carrier Accounting has a dedicated staff of accountants with over 10 years of experience under their belt. If you find this post useful and have requirements for accounting functions, be sure to send us your formal email interview here.
Apart from that, if you have any queries regarding any query regarding us or anything relating to accounting, be sure to let us know. We’ll be more than happy to help.
