Outsourcing Your Accounting : What are the benefits for your SME?
Are you the owner of a small or medium enterprise (SME) that’s thinking of outsourcing your accounting and bookkeeping? Taking this step could allow you the time to focus more on your business’s core activities, and focus more on growing your output.
Owners of SMEs are often short on two things: time and resources. From inception, most owners of SMEs will wear many hats, including that of an accountant. The truth is, for your business to grow, you will likely need to outsource this function sooner rather than later. In this article: we’ll answer the following questions
- • What is outsourced accounting and bookkeeping?
- • When is an SME ready to outsource its accounting and bookkeeping?
- • What are the benefits of outsourcing your accounting and bookkeeping?
What is outsourced accounting and bookkeeping?
Outsourced accounting and bookkeeping is the process of bringing a third party expert in to manage your businesses financial records.
These services can include, but are not limited to: payroll, tax, accounts payable and receivable, and bank reconciliation.
To find out more about outsourced accounting, please read our summary article on the subject.
When is an SME ready to outsource its accounting and bookkeeping?
Very few small business owners start their business because they love admin and back office tasks. But the reality of the early years of an operation is that it will take up a lot of your time.
A 2021 survey by YouGov found that many business owners struggle with the reality of running a business. Two-fifths of respondents suggested that part of the reason they founded their own operation was to have ‘more flexible hours’. In reality, the same proportion of SME founders reported that running their own business was in fact more time consuming.
A quarter of those surveyed said that managing company finances and accounting was their most time consuming task.
Many of these business owners will continue to soldier on with this task, with the misguided view that; a) they can cope with their workload, and b) they can’t afford the help.
Neither of these statements can be proven wholly true or false without intimate knowledge of the business; however a very simple rule of thumb applies. If you are spending more time on accounting and bookkeeping than you’d like, you should outsource it (we’ll come to the budget part later).
What are the benefits of outsourced accounting and bookkeeping?
- • Significant cost reductions: Outsourcing your accounting can save you money in myriad ways. If you’re growing and doing more business, you might think about bringing resources in house. Hiring, training and integrating a new employee has a lot of hidden costs (according to Glassdoor the average cost in the UK is £3,000), let alone the software costs associated with accounting, and the savings you can make on taxes. All of these costs are in essence swallowed by your outsourced accounting partner.
- • Latest tech: Accounting and bookkeeping firms will always be updating their systems to keep up with new regulations and functionality. Make the most of that new software, without any additional cost to your business.
- • Scalability & flexibility: As your business succeeds, your headcount grows. This would be true of an internal accounting team. Without the need to hire more backroom staff you can hire more forward facing talent to your business, giving you more options in growing your operation.
- • Managing compliance: You know your industry inside out, you shouldn’t need to worry about keeping up with the latest tax legislation. Defer to the experts, and they’ll make sure you remain compliant.
- • Increased data security: The idea that your data is safer outside of your business’s infrastructure might seem false, modern accounting businesses will be highly secure and well versed in fending off cyber attacks.
- • Improved accuracy: Any accounting firm worth its salt will pride itself on a keen eye for detail. Finance experts know the common mistakes to avoid, and can save your business thousands of pounds in fees by ensuring your income is reported accurately to the authorities.
- • Prioritising & saving time: As we discussed earlier, business owners are notoriously short on time. Passing on your accounting and bookkeeping to a trusted third party source gives you more freedom to work on tasks that add real value to your business. These include; strategising, working on financial projections, building relationships with partners and clients and developing new products and services.
- • Fall back in love with your business: We know you’re passionate for your business. Why else would you spend all this time working on your financial reporting? We also know this is not what you started your business for. Feed your passion, avoid burning out and get back to doing what you do best.
At Pennyhills, we act as a strategic partner to our clients. Find out how outsourcing your accounting and bookkeeping to us can help you grow. Get in touch today.