A Guide to Outsourced Accounting

If you want to sustain the long-term success of your organisation, then maintaining stability and health of financial operations should be treated as a core function. Most decision-makers think this would entail a financial and accounting structure that should remain in-house. However, that is not the case. Instead, decision-makers should turn to outsourcing their finance and accounting.

Do you have trouble believing us? If yes, then sit back and let us take you through why you should consider outsourcing your finance and accounting. We’ll also discuss how finance and accounting affect the valuation of your company and which areas of your organisation’s finances you should consider outsourcing.

How Do Finance and Accounting Affect the Valuation of Your Company?

Several factors determine the value of your company. From cash flow to financial leverage and future performance, every factor has an important role to play. This means if you are seeking funding or you intend to sell your business, then you would need your accounting valuation to understand the value of your organisation’s assets and liabilities.

Beyond this, factors like earning history and growth prospects play an important role too. The individual who is appraising the value of your business will also want to take a look at the income trends of your company. 

But what if your company has outdated and inefficient transactional processing and you further lack formal documentation policies or financial controls? In that case, you will be hurting your business and negatively impacting your company’s valuation.

Because of these reasons, consistent maintenance of your financial records is crucial. This would give transparency to your business by showcasing your success and exposing your weaknesses, which is extremely important in making informed decisions down the line. But for all of this to happen, you need:

Sadly, not all business owners have the time, expertise, or leadership to ensure proper financial and accounting departments are in place. This is understandable given the number of challenges any SME business owner faces regularly.

Thankfully, the solution here is quite simple. Smart business owners can turn to outsource accounting service providers instead of bleeding resources every month to maintain an in-house accounting team.

The best outsource service providers customise the services to match the requirements of their clients. This means that you will only get the financial services you need to fill in the gaps in your business!

What Should I Consider When Opting for Outsourced Accounting?

If you are still with us, you roughly see the importance of outsourced accounting. However, before making a final decision, you would want to know whether this decision will work for your business or not. To help solidify your decision, we’ll outline a few key steps you should take moving forward.

1. Is Virtual Accounting Right For My Company?

Instead of scouring the internet for international accounting standards, you need to decide whether outsourced accounting makes sense for your business. This means that if your current accounting process falls into any of the categories mentioned below, you are an ideal candidate for outsourcing:

2. Does Outsourcing Align with My Company’s Goals?

The benefits that you get out of outsourcing your accounting will only become visible with time. And to measure those benefits, you need to create KPIs that are actionable and well-defined! This means that you can no longer follow any professional advice without having a well-defined plan in motion! Instead, you have to make your accounting process all about your company!

3. Additional Tips

Apart from the basic steps mentioned above, there are some additional factors that you should consider when opting for outsourced accounting. Let’s take a closer look.

Finding the Right Vendor

Start your search online and narrow it down to a handful of potential vendors. Get in touch with them and see if there is an alignment

Bringing Everything to the Table

After you have finalised the accounting firm you wish to move forward with, create a roadmap of how things will transition moving forward. If you have questions related to the accounting packages, then this is the right time to get those questions answered

Analyse the Services

It’s easier to get lost in the world of finance and accounting. This is why you must analyze the services that your accounting firm is offering to you. This means that you evaluate the validation, demonstration, breakdown, communication, timeline, and tech check that is being provided to you

Transfer Your Knowledge

If there is something important to your business, then don’t shy away from letting your outsourcing provider know about it

Identifying Opportunities

After the initial setup, communication should not die down. Instead, always connect with your outsourcing provider to look at any trends and opportunities that would be beneficial for your company

The Benefits of Outsourced Accounting Services

There are several benefits of outsourced accounting. Let’s quickly go through exactly what outsourced accounting can do for your business!

Significant Cost Reductions

Hiring, training, and retaining employees is a high-cost process. By outsourcing, you can simply save on all of these expenses. You can also get rid of additional expenses related to hardware, software, office supplies, and any upgrades that come with it!

With outsourcing, you can get access to expert accountants, bookkeepers, and finance professionals at a lower cost. You further save on employment taxes, infrastructure fees, and other overhead costs because those experts will be employed by your outsourcing firm and not directly by your company.

Latest Technology

When it comes to outsourcing and financial services, only relying on cutting-edge technology and software is the way to go. And if your outsourcing partner has access to those technologies along with the Xero accounting system, then you get the benefits of using the latest technology without paying any additional costs!

Managing Operations During Tough Times

If the COVID-19 pandemic has taught us anything, then it’s the simple fact that life can change at any moment. This means that if situations change economically, then companies should be ready to shift their workforce. This can be a very challenging and resource-intensive process.

However, if the responsibility of managing the talent assigned to a particular project, including paying team members, lies with an outsourcing company, then it can make your life easier. You would be able to scale up or down in terms of staffing with ease.

Scalability and Flexibility

When your business grows and expands, then it would become critical to have the right software and expertise to manage your accounting needs. Hence, it is best to outsource your accounting services to a firm that can provide you with active support when you scale your business.

Boosting Compliance

Financial and tax regulations are always changing when it comes to local laws. Adjustments have been made due to Brexit and how the COVID-19 pandemic has affected the industries. It is extremely essential that you keep up with those changes. But as a business owner, you might not have that kind of time. This is where an outsourced accounting firm can help you.

With outsourced bookkeeping services, you can avoid tax penalties and maximize your tax benefits by ensuring compliance with local laws. This means that you will always be on top of all tax and accounting requirements!

Say Goodbye to Mistakes

If you outsource your finance and accounting to experts, you can avoid mistakes and the government penalties associated with the same! Finance experts will make it easier for your company to solve even the most challenging cash flow management issues. Your books will be accurately checked, and all the transactions will be reported, which means there will be no chance of your books being manipulated.

Improved Confidentiality and Data Security

It seems counterintuitive to say that getting an outsourced accounting team will enhance your data security. However, that is the truth. Outsource accounting firms spend a large chunk of their time maintaining the security of your data. This means that you and your information are always secured against data threats with impenetrable security systems!

24×7 Access to Records

When accounting services are outsourced, then you gain the flexibility to operate 24×7 with a time-zone advantage, which allows you to access your data at any time. Hence, all your important tasks will always be taken care of in a scheduled manner.

Prioritising and Saving Time

Outsourcing accounting services can free up valuable time that you can utilise for managing and growing your business. It will allow you to devote time to revenue-generating and value-added tasks like:

This is extremely beneficial for small to medium size businesses.

Top 6 Outsourced Accounting Services You Should Get

Now you know about the benefits of outsourced accounting and financial services. But which services should you get? Are you truly able to get the most out of what you spent?

Right now, we’ll help you figure out the answers to these questions. Go through the quick list we have created of the top 6 outsourced accounting services that any business should get!

1. Xero Support

This is a holistic bookkeeping service that includes everything from capturing receipts to reconciling bank transactions and helping you get paid faster! If your outsource accountant helps you chase those customers who are delaying payments, then you’ve got a keeper!

2. Management Accounts & Analysis

Looking back at numbers and data is vital if you want to keep your business moving forward. You should get an outsourced accounting firm that digs and takes a closer look into how good your business is doing and what can be done to improve it further.

This exercise should be performed either monthly or quarterly. Further, setting up KPIs and seeing how much your business spends in comparison to the actual budget set are important steps of this procedure too!

3. VAT Returns

VAT returns and registration services should appraise the most suitable VAT scheme that a business should apply for. Your outsourced accounting partner should do all the leg work here and communicate directly with HMRC. Further, these returns should be filled on time and well ahead of the deadlines.

4. Company Secretarial

This service consists of checking the proposed company name and registering your company with Companies House. It further includes making sure that all of the legally required filings are done on time. if there are any future changes to shareholders or directors, then that should be taken care of too.

5. Payroll

Efficient organisations provide their employees with constant access to payslips so that employees do not lose those documents. Your outsourced accounting partner should be doing that for you. Payroll should be run smoothly in a timely manner while keeping you informed of when you need to pay your PAYE.

6. Statutory Accounts

Your outsourced accounting partner should be a firm of Chartered Certified Accountants who are qualified to prepare accounts to the highest technical standard. They should be required by law to complete technical training every year to keep ahead of any developments in the domain of accounting standards and tax.

Finding a Great Outsourced Accounting Partner at Pennyhills

The services that we have mentioned and the picture that we have painted of an outsource accounting partner seems too good to be true. However, you get all of that and more when you contact us at Pennyhills.

At Pennyhills, we go above and beyond for our clients. We always make sure that you get:

The only thing missing from this list is a good culture and value fit. And we can establish that right now if you schedule a friendly call with us!

Don’t know what to say? Then, send us a nice old hello! And we’ll take it up from there.