Common Mistakes to Avoid in Outsourcing Accounting Services
Many business owners shy away from accounting. To do it right, you need to know accounting and updated rules and time. However, investing in the right outsourcing accounting services provider can help you with your statutory compliance.
Employing the best accounting services firm gives you access to expert accountants, CPAs, and bookkeepers. It enables you to streamline the workings of your accounting and finance departments. It helps them reduce wastage of resources, efforts, and expenses.
However, the move can also backfire if not done properly. Here are common mistakes to avoid when hiring an experienced accounting services company.
Mistakes to Avoid in Outsourcing Accounting Services
1 Failing to Identify Your Business Needs
Many owners fail to identify business needs and how outsourcing of accounting function can help them take care of them. Start with your goal or what you want achieve by hiring a provider. It can be getting rid of manual bookkeeping, saving money, or getting an access to expert CPAs. Don’t focus on getting cheap services because the chances are that it may not work for you.
You also must decide whether to outsource your entire accounting function or a part of it, such as bookkeeping. Outsourcing a specific task, such as payroll processing, can save money. It is cheaper than hiring an in-house payroll executive for the task. In return for an affordable fee, you will save on employee salary, benefits, mandatory contributions, insurance, Etc.
Outsourcing your complete accounting function will free up your internal resources. You will get to reassign them to achieve the business goals and objectives.
2 Failing to Know Your Accounting Services Firm
Do not ignore or fail to completely assess the provider’s depth of experience, professionalism, track record and portfolio of services. Know as much about them as possible, even if you find them through a reliable source. After all, you are going to trust them with the sensitive financial data of your company.
Use email, chat, and video calls to discuss your needs with them and to know what they know about conducting accounting for a business in your niche. Ask them for information about their work culture, processes, systems, setup, and the
- Number of accountants and CPAs in their team
- How do they manage the workload, especially when an employee leaves
- Their experience in your industry and business niche
- Software and tools they use
- The process or the system they use to deliver accurate financial documents
3 Choosing a Cheap Accounting Solution
Every business owner wants to save money to improve the bottom line. It is why they choose to outsource accounting services. However, it should not come at the cost of the quality of output. Know the services you will get at the advertised price. Ask questions to reveal hidden costs you will need to pay to get the job done completely.
Make sure that hiring a provider will not make you miss any due dates. It will simply defeat the purpose of outsourcing. After all, you employing them to secure your statutory compliance and to reduce workload. If you must pay a higher price to achieve it, do so.
4 Trusting the Provider with Complex Tasks Prematuarly
Ask the provider if they will execute one of your accounting tasks on a trial basis. If they do, it will give a basis to judge their competence.
Even after selecting a firm, start them with a standard or procedural task. Depending on the result, you can decide whether to trust them with your complex accounting tasks or not.
5 Not Communicating Clear Expectations about Fulfilment of Requirements
Miscommunication is one of the mistakes to avoid in outsourcing accounting services. Clearly communicate what you expect from them in terms of requirement fulfilment. Sign a contract covering details of what you get from them. It should cover:
- Number of work hours
- Communication schedule and modes
- Reconciling of books of accounts
- Resolution of issues in delivering accounting services
- Customer care service
- Measures to secure data
- Ways to deal with data breaches
6 Not Focusing on Fulfilment of Your Business Needs
It is not a good sign, if your provider insists on you buying unnecessary services. It may happen, if you are outsourcing accounting services for the first time. Don’t agree with them and put yourself in an uncomfortable position. Rather, look for some other services provider.
So, even if you are a newbie business owner, you should focus on your business needs. Hire a provider who is ready to listen to you and is capable of coming up with customised solutions. Such a firm may turn out to be the right one for you.
7 Ignoring Security Risks
Many business owners avoid outsourcing their financial data to a third-party. They worry about the data security. However, choosing the best provider to outsource accounting services can help you overcome the problem.
Look for a firm that implements standard operating procedures to prevent unauthorised access to clients’ financial data. Find if you can trust their data security protocols and polices, the last time these were updated, and how they monitor the implementation.
You also need to invest time in knowing the technologies and software systems they use to protect your data from hacking, ransomware, Etc. Ask them whether they are insured against an incidence of data breach.
8 Failing to Monitor Execution of Your Outsourced Tasks
You employ an accounting firm to take care of your compliance. Still, you or someone capable must, from time to time, keep an eye on the execution of outsourced tasks. If there is laxness on the part of the provider, it can jeopardise your compliance. You should promptly take such issues with them and streamline the completion of your tasks and the delivery of output.
Businesses should monitor progress on outsourced projects regularly in order to ensure that tasks are taken care of on time and according to expectations. If there are any issues, businesses need to address them immediately with the provider in order to avoid further delays or problems down the line.
9 Failing to Understand the Provider’s Terms and Conditions
As a business owner, you must be careful in signing any contract. You have to understand the terms and conditions it covers. Otherwise, your ignorance can cost you financially. It can also tarnish your business’ image and credibility.
Before hiring the best outsourcing accounting services firm, do not forget to negotiate fees. Try to swing the best deal possible for your business. Contact us at info@sbsgroup.com.sg or +65-6536 0036, if you are searching for affordable and customised accounting solutions.
Also Read: Role of Accounting and Bookkeeping
