The Comprehensive Guide to Outsourced Accounting: Unlocking Efficiency and Expertise

Outsourced accounting is becoming more popular for businesses seeking to streamline their financial operations, reduce costs, and keep their focus on the core activities that generate revenue for their business. This guide will explore outsourced accounting’s benefits at a high-level, what you should come equipped with when having meetings with outsourced accountants, what does an implementation look like, and then walk through a real-world example of a company that benefited by transitioning to outsourced accounting. By the end of this you should have a general understanding of how outsourced accounting can transform your business while also setting you up for success when approaching those conversations with potential firm while keeping your expectations in check. 

Introduction to Outsourced Accounting 

What is Outsourced Accounting? 

Outsourced accounting in a nutshell is hiring an external firm to handle various accounting tasks, such as bookkeeping, payroll, financial reporting, and tax preparation.  Although the end deliverable is fairly standardized, the process to get to the end deliverable is typically tailored to meet the specific needs of any business, ranging from small startups to large enterprises. The scope of outsourced accounting can include basic transactional tasks like general ledger entries to more strategic financial management roles such as financial statement preparation or annual forecasts. 

Types of Services Typically Included (From Routine to Specialized) 

1. Billing, Collections and Daily Routine Transactions: Routine financial activities, including invoicing and collections (accounts receivable), or paying bills (accounts payable) are efficiently handled by outsourced accounting teams that are dedicated to these tasks. They are familiar with various systems to help streamline this process and manage cash appropriately. 

2. Creating Financial Statements: Outsourced accounting firms can manage the creation of financial statements, ensuring accuracy and adherence to accounting standards. These statements provide a clear view of the company’s financial health and may also include month over month analysis, budget vs. actual analysis, and more which are essential for decision makers. 

3. Establish and Monitoring KPIs: Outsourced accountants assist in setting up and tracking key performance indicators (KPIs) that are crucial for decision makers to review. This provides valuable insights into the company’s performance and aids in strategic decision-making. 

4. Developing Financial Forecasts: Accurate financial forecasting is vital for planning and growth. Outsourced accounting services can include developing detailed financial forecasts, helping businesses make informed projections and better prepare for the future. 

Benefits Of Outsourced Accounting 

Let’s take a look at the many benefits of outsourced accounting that help businesses with growing financial reporting and accounting needs. 

Overview Of Benefits

• Reduction in Overhead Costs

  Outsourced accounting helps businesses save money by reducing the need for full-time in-house staff and the associated costs of salaries, benefits, and training. 

• Avoidance of Hiring and Training Expenses

  Hiring and training new employees can be time-consuming and costly. Outsourcing eliminates these expenses, as the service provider ensures their staff is properly trained and updated on the latest accounting practices and technologies. 

• Access to a Team of Accounting Professionals

  Outsourced accounting firms provide access to a team of seasoned professionals with expertise in various accounting and financial disciplines, ensuring high-quality financial management and compliance with relevant regulations. 

• Utilization of Advanced Accounting Software and Tools

  Outsourced accounting providers leverage cutting-edge technology and software to deliver accurate and timely financial information. These tools enable businesses to automate routine tasks, reduce errors, and gain real-time insights into their financial health. 

• Scalability and Flexibility

  Outsourced accounting services can be scaled up or down based on the evolving needs of a business, allowing for adjustments in accounting support in response to growth, market changes, or seasonal fluctuations without the hassle of hiring or laying off staff. 

Additional information on the benefits of fractional accounting services over a full-time hire is included in another article linked here.

Choosing an Outsourced Accounting Provider 

Factors to Consider 

When selecting an outsourced accounting provider, businesses should consider several factors to ensure they choose the right partner for their needs: 

Experience and Industry Expertise 

Look for providers with a proven track record in your industry and the necessary expertise to handle your specific accounting needs. Providers with industry-specific experience are more likely to understand the unique challenges and regulations that apply to your business.  They will know the common pitfalls, high risk areas, and improved processes to upgrade your business. 

Range of Services Offered 

Ensure the provider offers a comprehensive suite of services that align with your business requirements. This can include basic bookkeeping, payroll processing, tax preparation, financial reporting, and more complex financial planning and analysis.  The last thing you would want is to stitch together a bunch of consultants that are working on the same data.  There’s a loss of efficiency with every added “cook in the kitchen”. 

Technology and Software Used 

The provider should use advanced, secure accounting software that integrates seamlessly with your existing systems. This ensures that your financial data is accurate, up-to-date, and accessible when needed.  Below are some example tools that can help streamline the outsourced accounting project: 

Category	Tools
Accounting Software	Quickbooks Online
AP Management	Bill.com
Expense Management	Expensify
Month End Close Management	Floqast
Team Planning Software	ClickUp
Payroll Software	Gusto

*These are example tools that may be beneficial to companies building out their technology stack, however, this is not a full list and these systems could be an additional fee.   

It would be beneficial to ask them what they are currently using to see how efficient their process is going to be.  If the answer is Excel, or just Quickbooks Online, run the other way. 

Understanding Outsourced Accounting Pricing Models 

Selecting the best accounting option to scale your business to the next level can be daunting for businesses. The choice between an in-house accountant and an outsourced accounting firm involves considering training, control, reporting, and cost. Understanding these differences is crucial for meeting your accounting needs as the company grows. 

Outsourced accounting offers scalability and expertise without the hassle of the hiring process. These firms provide flexible pricing models, including: 

• Hourly Rates: Pay for the actual time spent on your accounting tasks. 

• Fixed Monthly Fees: Consistent monthly charges for ongoing accounting services. 

• Project-Based Pricing: Fees based on specific projects or one-time tasks. 

Assessing fair costs isn’t always straightforward and involves comparing service levels and comparing against your needs. Evaluate the range of services offered, the firm's experience, and client reviews. Look for transparent and scalable pricing and avoid firms with hidden fees. 

In contrast, hiring an in-house accountant involves fixed costs like salary, benefits, and training. While this option provides direct control, it may lack the same level of expertise and scalability as an outsourced solution. 

By understanding outsourced accounting pricing and assessing fair costs, you can make an informed decision that supports your business's current needs and long-term growth objectives. 

Questions to Ask Potential Providers 

You have some meetings booked with potential providers.  Before finalizing your choice, here’s a list of questions to ask to ensure they meet your expectations: 

• What is the size of the outsourced accounting team? Ensure that the provider has the resources available to scale up if needed.  If you are teaming up with a one-person shop or even a team of less than five, they may not have the resources to scale up if you need it. 

• What is their reporting process and timeline? Understand their typical reporting timeline. Typically, a full set of financials is provided by the 10th business day of the preceding month. Determine if that aligns with your expectations or if you might need it sooner.   

• Do you plan on using offshore accountants to service this account? Confirm that the firm you sign on with will be the one performing the work. Some companies prioritize cost, while others prioritize quality. In the age of AI and offshoring, a lot of firms are trying to lower their cost of delivery.  That’s okay because the savings typically get passed on to the clients in some regards, but quality of financial information is not something you want to skimp on. 

• Are you comfortable using the Company’s ERP system or current tech stack? Ensure the accountants are well-versed in your systems. Familiarity with your ERP and adjacent systems are invaluable and the speed to get up and running and troubleshoot are exponentially better when there is systems knowledge.  

• Ensure they have the right resources for the job. Properly staff the project with the right individuals to avoid overpaying for underqualified work. This ensures you get the best value for your money. Examples include having junior level employees doing routine tasks and more senior members doing the more complex tasks like financial statement preparation or financial forecasting. 

• Do you have any case studies or referrals? Ask for case studies or referrals to evaluate the provider's track record and client satisfaction. Case studies can provide insights into the provider's expertise and effectiveness in handling similar projects, while referrals can offer firsthand feedback on their performance and reliability.  Even better if they can supply referrals with companies that are similar showing they’ve been down this road before. 

Items to Prepare for Proper Project Scoping 

Preparation Guide 

Properly scoping a project is critical for the success of outsourced accounting services. Providing the necessary information upfront ensures that the outsourced accountant can accurately assess the project requirements, leading to efficient and effective service delivery. Failing to scope a project correctly can result in cost overruns, operational headaches, and poor results. To avoid these issues, companies should prepare and provide specific items that will help the accountant scope the transaction accurately.  

Items that would typically be needed for scoping are: 

1.  General Ledger Detail for the Past 12 Months: This provides a comprehensive view of all financial transactions and is essential for understanding the company’s financial activities and identifying any recurring patterns or anomalies. 

2. Financial Statements for the Last 12 Months: Even if they are system-generated, financial statements offer a snapshot of the company's financial health and performance, which is necessary for accurate scoping.  This would be a snapshot of the financial health of the company. 

3. Volume of Transactions: Information about the number of transactions processed in a typical month helps in estimating the workload and resources required. 

4. Month-End Close Checklist: This checklist outlines the steps involved in closing the books each month, providing insight into the company’s financial processes and timelines.  If you don’t have this, it’s okay, just make sure you clearly indicate what the expected deliverables are on a monthly basis in your current process. 

5. Manual Processes and Bottlenecks: Identify any manual processes and bottlenecks in your current financial workflow. Understanding these areas helps the outsourced accountant plan for process improvements and anticipate potential challenges. 

6. Clear Expectations and Necessary Deliverables: Being explicit about what you expect from the outsourced accounting services and the specific deliverables required ensures that both parties are aligned and can work towards common goals.

By preparing these items in advance, businesses can ensure a smooth and efficient scoping process, which is foundational for the success of the outsourced accounting project. 

You've Chosen Your Outsourced Accountant: What to Expect 

Once you've chosen an outsourced accountant, hooray! The next steps involve implementation and integration. Understanding what to expect during this phase will help ensure a smooth transition and set the stage for successful partnership. Here’s an overview of what typically happens: 

Initial Assessment and Onboarding – Month One 

Kickoff Meeting 

This initial meeting introduces key decision makers, discusses goals, and outlines the implementation plan. It sets expectations, timelines, and defines roles and responsibilities to ensure everyone is aligned from the start. 

Data Collection and Transfer 

The outsourced accounting team will request access to your financial systems, historical data, and key documents such as the general ledger, financial statements, and transaction records (if not already provided during the scoping stage). This step ensures they have all the necessary information to begin their work accurately. 

System Setup and Integration 

Setting up the outsourced accounting team with access to all your software tools and ERP system is essential for kicking the project off. Ensuring they have the appropriate access and permissions from the start will be critical in enabling them to hit the ground running and efficiently manage your financials. 

Ongoing Management and Communication – Month 2+ 

Regular Updates and Reporting 

Setting up weekly or bi-weekly meetings is key, especially in the beginning, to ensure alignment and track progress effectively. These regular check-ins help maintain clear communication channels, address any issues promptly, and ensure the timely delivery of reports. This proactive approach is all about collaboration and keeps both parties informed and aligned on goals and expectations as things start to ramp up. 

Performance Monitoring 

Setting up a system for continuously monitoring the performance of outsourced accounting services is essential. This includes tracking KPIs and conducting regular reviews to ensure that the services are meeting expectations. Regular performance assessments help identify areas for improvement and ensure that the outsourced team remains aligned with your business goals.  Examples of a performance monitoring metric would be if they are consistently meeting their month end close deadline, if they are sending out invoices or paying bills on the established cadence, and if their response time is no longer than one business day. 

Handling Changes and Adjustments 

Addressing changes in business needs or financial processes should be transparently discussed during check-in meetings. Ensuring that any adjustments are openly communicated helps maintain alignment with business goals and keeps both parties informed. Regularly updating the outsourced accounting team on evolving requirements ensures they can adapt promptly and continue to provide effective support. 

Key Take-aways 

Outsourced accounting offers numerous advantages, including cost savings, access to expertise and advanced technology, and the ability to focus on core business activities. By understanding the process, preparing the necessary documentation, and maintaining clear communication, businesses can effectively integrate outsourced accounting services and achieve significant operational efficiencies. 

Real-World Example: How a Modern Media Company Benefited from Outsourced Accounting  

A leading community and media platform for women professionals and entrepreneurs sought to optimize their financial processes and manage their accounting needs effectively. They turned to  Zeroed-In Consulting for their expertise in outsourced accounting and financial management. 

The Challenge: 

• Historical financials maintained on a cash basis needed conversion to US GAAP for a pending sale. 

• High costs associated with maintaining an in-house accounting team. 

• Inconsistent financial reporting, impacting decision-making. 

The Solution: 

• Zeroed-In converted multiple years of financials from cash basis to US GAAP, increasing confidence in the numbers for potential buyers. 

• We took over bookkeeping, payroll, and financial reporting, including implementing advanced accounting software for real-time tracking. 

• We assisted in transitioning the accounting work back in-house, providing clean, high-quality workpapers for easy understanding. 

The Results: 

• Increased confidence and accuracy in financials, facilitating a successful sale. 

• Significant time savings through optimized processes, allowing more focus on key business areas. 

• Real-time financial analysis capabilities through Tableau, enhancing financial visibility and control. 

Ready to Transform Your Financial Operations? 

At Zeroed-In Consulting, we're here to help you streamline your financial processes and ensure compliance with accounting standards. Our team of experienced professionals is ready to provide tailored guidance and support for your unique needs. 

Take the Next Step: 

• Schedule a Free Discovery Call: Connect with one of our accounting experts to discuss your business needs and explore how outsourced accounting can benefit you. 

• Get Personalized Advice: Receive a customized plan that addresses your specific challenges and goals. 

• Start Your Journey: Begin transforming your financial operations with our expert assistance. 

Click here to schedule your free discovery call now and take the first step towards unlocking efficiency and expertise in your accounting practices! 

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