When your business is growing, you probably have considered whether to have an in-house bookkeeper or to outsource your bookkeeping functions.
Bookkeeping is an essential part of the business and it’s important to get it right. In this article, we’ll cover when and why you should outsource bookkeeping.
The most common signs when you need to outsource your bookkeeping
Typically, a lot of small business owners will handle their bookkeeping on their own to save money. However, when the business grows and the volume of transactions increases, bookkeeping becomes more complex and time-consuming.
This naturally takes time and efforts away from the core business itself but also causes the risk of not having an accurate representation of how your business is performing because the numbers aren’t recorded accurately.
Here are the most common signs when you should consider outsourcing your bookkeeping:
- You are not sure if you are keeping the records correctly or don’t have confidence in the accuracy of your financial data
- Your tax and/or other compliance is getting complicated
- Doing the books is taking you away from working on your business
- You’re not keeping up to date with all the business transactions, like forgetting to send invoices
- You are unsure if you are making a profit
- Your tax and BAS lodgments are usually late
- You need reports that clearly breakdown your company’s cash flow
Why you should outsource bookkeeping
Especially for small businesses, the major consideration of hiring a bookkeeper is cost. Outsourcing your bookkeeping is generally a more cost-effective solution than hiring an in-house bookkeeper.
Engaging an external bookkeeper eliminates costs associated with:
Whether you are managing the books yourself or recruiting, hiring, training and supervising staff, it is a time-consuming task. By outsourcing your bookkeeping, you will free up a lot of time and effort that allows you to focus on your core business.
Outsourcing your bookkeeping will put your financials in the hands of qualified and knowledgeable professionals, which will give you expert insights into your business operations, helping you to make well-informed decisions for your business. Additionally, they may also work with businesses within your industry, so having access to their expertise will give you a great advantage.
Bookkeeping and accounting firms are legally obliged to keep up with constantly changing regulations and laws around taxation and superannuation. Therefore, when you work with a bookkeeping firm, you’ll have peace of mind knowing that your bookkeeper is on top of current compliance laws.
Accounting and bookkeeping needs change when your business growing. A bookkeeping firm can respond to growth by providing you with the services that you need without having to worry about increasing staff resources. What may start as basic bookkeeping can turn into advanced management accounting and reporting.
In-house Bookkeeping vs. Outsourced Bookkeeping Cost
A comparison of costs of a full time, part-time and outsourced bookkeeper.
What you should look for when outsourcing
There is a lot to consider before you outsource. Here are just some of the points to note when looking for your new outsourced bookkeeper:
Location: Ensure that the bookkeeping firm is local. Having cultural differences, language barriers and different time zones can impact the quality and value of the information you receive.
Accountability & Fee Structure: What time did they start work? What time did they finish? How long did they spend on it? Having a fixed fee package allows you to have confidence in the value for your money spent and you never suffer from bill shock. It can also provide you with better budgeting and cash flow as you know exactly how much you will need to pay.
Expertise: Ensure that your outsourced bookkeeper is registered and qualified.
Confidentiality and Security: You are sharing your financial information with them, so make sure that they have high security procedures in place to protect your data.
Client Example – Case Study
A family-owned giftware retailer, with 5 locations, was suffering from several processing issues as they couldn’t accurately track what was coming in and what was going out. They were overpaying their suppliers, weren’t claiming their GST accurately, their payroll was time-consuming and super payments were never paid on time.
The client converted their accounting system to Xero and outsourced all their payroll, bookkeeping and BAS management to Wilson Pateras. They worked out that they were paying approximately $68K annually for the manpower to process their bookkeeping in-house, when they could actually be paying $45K to outsource the tasks instead.
The client now has a clear overview of their business performance and data accuracy and can use their resources and staff to expand and improve the business. As a result, not only have they saved several hours of processing time, they also have saved *$23K annually!
Outsource your bookkeeping
Having a committed financial insight into your business will have a very positive effect on your exponential business growth.
Outsourcing your bookkeeping functions can reduce your costs of the business, scale up as your business evolves, reduce the headaches of payroll responsibilities and free up your time to focus on your core business.
While making the decision to outsource, it is important to ensure that the bookkeeping company has the expertise and knowledge that you need.
Wilson Pateras provide bookkeeping services in Melbourne that goes beyond the bookkeeping basics. We provide you with proactive advice that will improve your efficiencies and allow you to make smarter financial decisions. Learn more about our transformational bookkeeping services here.
*Please note identifying details has been changed to protect the privacy of the individuals. Figures contained in this case study are based on this client’s circumstances only and does not take into account your financial situation or needs.