Payroll and accounting services are a hefty and important aspect to any business of any size. It’s no wonder mistakes in those areas can cost companies billions of dollars.
It’s a delicate aspect of virtually any industry, but it’s a requirement that no one can avoid.
A lot of business owners, especially smaller ones just starting out, may be tempted to take all the aspects of the business on themselves.
While there’s a lot of merit to doubling down and doing it all yourself, there are actually many advantages of outsourcing specific functions.
In particular, outsourcing accounting and payroll services offer a number of benefits that you’d be sore to miss.
What is Outsourcing?
When you outsource anything, you’re giving specific business operations to a company outside of your own.
It may seem odd. After all, if you started your own business, why would you want anyone else to have a part in it?
The reality is that finance and accounting outsourcing (or FAO) has steadily become more and more popular in the business world for many years now.
In fact, as of 2018, nearly $33 billion is spent worldwide on outsourcing finance and accounting processes.
It has grown nearly 25 percent in the past five years and doesn’t show any signs of slowing down.
As odd of a concept as it may seem, it’s certainly nothing to scoff at.
What are the Advantages of Outsourcing Accounting and Payroll?
If you’re hesitant to take advantage of outsourcing accounting and payroll services, it’s important to consider the benefits.
Some companies are growing faster and stronger and part of that may be due to the fact that they take full advantage of various outsourcing options.
The obvious reason to consider outsourcing is the cost advantages, but there are actually a number of other benefits to consider too.
1. Outsourcing Accounting Saves Time
Probably one of the most common and obvious advantages of outsourcing is the amount of time you save.
It’s a simple concept: accounting and payroll take time. If you’re doing it yourself, then that’s time lost.
These are delicate aspects of any company, and it takes time to pay attention to detail. As your company grows, so does the size and complexity of your staff, and therefore the time required to maintain accounting necessities.
There are a lot of different aspects to consider and it becomes a balancing act. By outsourcing your accounting and payroll services, you simply save time that’s better spent on core tasks.
2. Outsourcing Accounting Reduces Overhead Costs
“Why would I pay for outsourcing when I can do it myself?” is what you might be saying out loud to yourself or in your head.
It’s a fair question, but the answer is that outsourcing can actually save you more in the long run by reducing overhead.
In business, your time is money, and after you’ve calculated employee hours, paid time off, sick leave, taxes, printing and distributing pay stubs, it all adds up.
Outsourcing saves money in the long run by paying a fixed amount for the services offered.
3. Outsourcing Accounting Improves Data Security
When you take accounting and payroll services on yourself, no matter how good you are at it you’re still reliant on:
- The security of the software you use
- The security of the servers or networks you house the data on
You could be the most careful accounting expert in the world, but you still may not have the security and peace of mind offered by an outsourcing company.
Outsourced accounting and payroll services companies have already invested the money into highly secured servers using the best encryption technology.
The amount of money you would have to invest in that technology alone already exceeds what you most likely would pay for the outsourcing service itself.
All in all, it ties back into reducing overhead costs. The outsourcing services already have the necessary data security you’ll need, and you’ll be at peace putting that data in their hands.
4. Outsourcing Accounting Gives You Access to a Variety of Services
One of the other advantages of outsourcing accounting and payroll services is the variety of other services that may be included.
Other than the expected services, such as payroll or tax calculations, a good outsourcing option may also offer other benefits.
This could be anything from contract generation to bookkeeping services, but the reality is that they may have more than just the basics.
Even having access to mobile apps and on-the-go options is a value-added benefit.
5. Outsourcing Accounting Helps You Make Better Decisions Faster
Accounting information is necessary for making better business decisions on the fly.
It can be very difficult to make quick decisions while balancing the multitude of changing laws, policies, technologies, etc. Business forecasting is a multifaceted approach with a lot of aspects to balance.
When you use an outsourced option, you take advantage of the accounting benefits like reliable information in an easily digestible format.
After all, if you’re paying money to work with the experts, they’ll have the information you need to see in a way that makes sense. This allows you to continue to make decisions to grow your business with peace of mind.
6. Outsourcing Accounting Minimizes Risks
Accounting services are a hotspot for risks. Penalties, interests charges and even litigation are all pitfalls of accounting no matter what business you’re talking about.
Unfortunately, risks can even come from within your own company. It’s not unheard of for your own employees to manipulate records for their own benefit. In fact, embezzlement is a hot topic in news. There are people, like Jonathan Schwartz, stealing millions of dollars from clients and businesses over just a few years.
When you outsource a good company, you’re counting on the fact that they employ the best of the best within that field, thus minimizing risk. They are experts who understand the complexities of regulations, government compliance, taxes and human resources.
While you’re busy taking care of core tasks and growing your business, your accounting service is busy doing their one task as well as humanly possible.
7. Outsourcing Accounting Increases Valuation
When firms are sold, buyers look at the profitability of the company as a whole.
This can include many factors, but outsourcing accounting and payroll services make your business look better and more profitable in the long run.
Unlike companies who don’t outsource these services, the accounting services you use will likely increase your company’s valuation which means better terms for you down the line.
8. Outsourcing Accounting Helps you Retain Projects and Clients
Going back to the idea of saving time and focusing on core business tasks, outsourced accounting services allows you to focus on new projects and clients.
When your time is freed up, you’re able to deliver your own services faster and better. You’re no longer too tied up to focus on the important things.
9. Outsourcing Accounting Helps Avoid Staff Turnover
If you already have tackled accounting services on your own, you know that it can require long hours and be quite stressful.
Staff turnover is not uncommon, and smaller businesses don’t have the benefit of having an “overflow” staff on hand.
When you opt for a reputable outsourcing company, you have the benefit of their large staff dedicated to these specific services. They have the means and the team size to anticipate unfortunate and sudden losses of key workers.
10. Outsourcing Accounting Provides Efficient Direct Deposit
Want to keep your employees happy? Offer direct deposit through efficient accounting services.
If you try to tackle it all on your own, paying on time through direct deposit can be something like a moving target.
Your employees trust you to pay them what they’re owed, on-time and in a convenient fashion.
Outsourced accounting services can get this done quickly and efficiently, keeping your employees loyal and happy.
11. Outsourcing Accounting Keeps You Updated With the “Big Picture”
If you’re on the fence about outsourcing one service or another, an important thing to keep in mind is the amount of information and insight you might receive.
Good quality accounting and payroll companies will have a “big picture” in mind after dealing with your company for a while.
This information can be had at a moment’s notice, and advanced technologies can help you obtain personalized reports giving you the insight you need to further your company.
Outsourcing With ScaleFactor Today
Needless to say, whether it’s accounting and payroll, marketing, information technology or administrative tasks, outsourcing may be a foreign idea to some.
It’s not uncommon to feel wary of the idea in the first place.
The advantages of outsourcing accounting and payroll services clearly pay for themselves in more ways than one, though.
On top of just handling day-to-day accounting tasks on your behalf, your company benefits from:
- Increased available time
- Higher profitability
- Lower turnover rates
- Risk reduction
- Higher valuation
- and much more!
Professional outsourced accounting services are a clear avenue to smoother and easier payroll, bookkeeping and forecasting options.
If you’d like to talk more about the advantages of outsourcing, feel free to contact ScaleFactor today or check out some testimonials!