What is Outsourced Accounting?

Reviewed by: Elizabeth Houseman

Outsourced accounting, or the practice of transferring accounting functions to a third-party provider, has increased in popularity due to world-shifting events like the pandemic and the Great Resignation. The reason for the change? As available resources diminish, more and more companies are moving to the cloud. Outsourced accounting is a cost-effective, flexible solution that provides access to the tools and expertise needed to meet the growing demands of businesses.

Outsourced Accounting Functions and Offerings

Outsourcing accounting and financial analysis functions to an established CPA firm offers a cost-effective way for growing companies or firms with specialized needs to obtain financial management expertise when needed — without incurring additional overhead and ongoing expenses.

Depending on the complexity of the business and the level of support required, outsourced accounting services may include:

  • Day-to-day transaction processing, such as bill payments
  • Tracking banking and credit card activity
  • Cash reconciliations
  • Assistance with financial reporting to drive business decisions
  • Cash flow management
  • CFO or Controller services

Benefits of Outsourcing Finance and Accounting Services

Hiring an outsourced accounting firm instead of having a full-fledged in-house team provides several potential benefits that can help you grow your business.

Reducing the Stress of Hiring an In-house Accounting Department

A significant benefit of outsourcing accounting functions is accessing qualified accounting staff, which may be challenging in today’s labor market. As remote work gained momentum, companies realized the benefit of outsourced services. Now, businesses can access accounting and financial management professionals without making expensive investments in full-time hires.

Having a certain level of flexibility is especially valuable for growing small businesses that may not need a full finance team but can benefit from specialized expertise at specific times during the financial cycle or to help them manage organizational milestones. For example, a growing mid-sized company may choose a staffing schedule that calls for the following:

  • Staff accountants to handle accounts payable, accounts receivable, account reconciliations, and basic financial reporting weekly.
  • Controller to review the organization’s financial statements twice a month.
  • CFO to provide management with detailed analysis and strategic guidance quarterly.
  • Budgeting experts to assist management with annual planning.

This staffing schedule would provide the company with the right level of staff to perform various functions and financial oversight without overburdening the company’s budget with extra resources during downtime.

Staffing Outsourced Accounting Specialists

Outsourcing accounting and financial services can also help companies meet specific accounting and financial needs for situations as they arise. For instance, pursuing latter-stage funding rounds or debt will require more robust financial statements and a stronger degree of oversight than the company can produce on its own. Bringing in specialized expertise can help the company prepare reports for investors or lenders while preparing the company for further growth.

Keeping Consistent Staffing

Turning to outsourced accounting services also helps an organization maintain consistent staffing levels because the outside provider is responsible for ensuring the proper headcount for the company’s needs. Outsourcing can ebb and flow with your needs. The outside firm handles vacation or sickness outages, eliminating the concern that the client organization will be short-handed during important periods.

Accessing the Latest Accounting and Finance Technologies

Enlisting support from an outside provider can also help a growing company access the latest accounting systems and financial management tools without having to purchase expensive software and provide ongoing training on its own. The outsourced provider will likely use sophisticated financial data tools to perform work on its clients’ behalf, giving those clients the benefits of a more robust system, increased efficiency, and lower costs.

Assemble Your Outsourced Accounting Team Today

For businesses looking for expertise on everything from their day-to-day transaction processing to forecasting cash needs and future insights, outsourced accounting and finance services can offer a flexible solution to meet various business needs.

If you’re considering outsourced accounting and financial services and want to understand your options, contact us for an expectation-free consultation.