By Shannon Earnhardt of Lucrum Consulting
Bookkeeping is the process of recording all financial transactions within a business and is required in every business regardless of size. It can be a tedious process for a business owner who wants to focus on growing the business. Or, this task is often delegated to an in-house employee who may not be the ideal fit for a variety of reasons. Outsourcing bookkeeping is a solution that many business owners have chosen to ensure they get the accurate information they need.
Here are six reasons outsourcing bookkeeping may make business sense:
- Better financial management and analysis
This is often not the first thing that motivates a business owner to outsource bookkeeping, but it should be. Outside bookkeepers should provide valuable, timely reports to monitor the health of the business. And since it’s their sole focus, they often put more energy into accuracy and timeliness than in-house employees who may have other demands on their time and other priorities. Regular review of bookkeeping reports helps business leaders understand which areas of the business are performing and which areas need attention.
- Ensuring that tasks are completed on time
As we all know, business owners are very busy people. It’s easy for owners to become sidetracked with the numerous, everyday tasks related to running a successful business. Staff management, inventory, production, service delivery, vendor relations, and new business development can pull a business owner in many directions. Keeping up with the flow of financial paperwork can be onerous. An outsourced bookkeeper maintains the important financial duties, giving the business owner less to stress about and ensuring invoices go out, client payments come in, and bills and payroll are paid on time. Timely bookkeeping tends to have spillover effects, such as helping a business develop a much more robust cash flow.
- Reducing risk
Outsourcing bookkeeping reduces the risk of making costly financial mistakes. Bookkeepers are trained to accurately record financial transactions. Having someone that focuses only on bookkeeping ensures that the records are correct, up-to-date, and comprehensive. It also helps segregate the accounting function from other tasks within the company providing a reduced opportunity for theft.
- Maintaining privacy
As noted by the creators of IBM’s Small and Medium Enterprise Toolkit, http://www.smetoolkit.org/blog/smetoolkit/2012/12/10-reasons-to-consider-outsourcing-your-bookkeeping/, some accounting information, such as salaries and benefits, may be sensitive and not information business owners want to share with an on-staff accountant. Outsourced bookkeeping keeps sensitive information one-step removed from employees, which is sound financial practice and helps to prevent fraud.
- Saving money
Sure, it doesn’t cost a business owner anything extra to do the bookkeeping, or maybe there is a person on staff who is not at full capacity. But for some businesses, there is not enough work to hire a full-time bookkeeper or the owner wants to ensure the work is done properly. In these situations, outsourcing is the perfect solution. Maintaining accurate, up-to-date reports gives the owner good information all year long, can make tax season go much more smoothly, and usually leads to cost reduction from things like avoiding fines and receiving lower interest rates. Finally, outside bookkeepers give a fresh perspective and given their diverse background often have a breadth of knowledge greater than in-house staff; just one piece of guidance could save a business tens of thousands of dollars.
- More time
Hiring a bookkeeping service saves business owners valuable time, time that can be used to focus on new sales. It’s pretty easy math to figure out how many new customers or clients are required to cover the cost of outsourcing bookkeeping so that the owner can concentrate on what he/she does best. Additionally, bookkeepers are much more efficient than business owners at maintaining the books, as this is their primary focus. Typically, bookkeeping is done more accurately, on-time, and outsourcing may even result in additional profit due to new sales.
Outsourcing bookkeeping gives business owners full-time knowledge without having to pay a full-time employee. By putting your books into the hands of highly skilled staff who understand best practices and how to properly address certain tasks, your job becomes a whole lot easier—and effective. If you have further questions or if Lucrum Consulting can provide your business with a bookkeeping services quote, please do not hesitate to reach out.