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The Risks and Benefits of Outsourced Accounting Services

Outsourced bookkeeping, accounting, and financial controller services are becoming a much more popular solution for SME businesses today. Previously, this option was in the main reserved for larger companies but now smaller companies are moving to this alternative.

Having an Irish-based accounting team, business owners and their senior team have access to experienced, highly trained staff working to help them be more profitable, grow faster and make better decisions. There can be significant cost savings compared to building up an internal accounts department.

Why do companies outsource?

The big drivers to outsource are cost savings and efficiency, freeing up time to focus on the core business, and solving resource issues. Progressive businesses use outsourcing to transform and deliver improved business profitability.

It’s important to consider the risks and benefits so that you make an informed decision about whether outsourced accounting is right for you and your business.

1st Benefit – Cost-Effective

Selecting an outsourced accounting service will usually cost less than hiring in-house employees to operate the account’s function. With an outsourced accounts team, you don’t have the overhead costs such as Employers PRSI, sick days, holidays, training, HR, etc. Having an entire team’s expertise and experience rather than just one employee working internally reduces the risk of things being missed or a knowledge gap that can lead to unreliable financial information.

1st Risk – Hidden Costs

The scope of the service requirement can end up growing if the scope of the work is not clear and can result in additional costs that you were unaware of. It’s important that the deliverables are clear and expectations are set in advance to minimise this risk. Solve’s onboarding process ensures you have full visibility on how Solve’s outsourced accounts team works for you.

2nd Benefit – Proactive, not reactive

When you decided to go into business, you did not envisage becoming an accountant to oversee the accounts function of your business. Focusing your time on business growth and driving the business forward is what you want to spend your time on. Having an outsourced accounting team to highlight expenditure issues before they become problems keeps you ahead of the game. Better decision making and confidence in the numbers comes from knowing that you have a team of finance experts in your corner.

2nd Risk – Less Control

You don’t have a person sitting in your office that you can walk over to and ask a specific question in person. Instead, you will have an account manager that you can call who will quickly answer your question or guide you to where the answer is available. Outsourcing your accounts requires an element of trust between both parties in the business relationship. An excellent communication structure in place ensures your outsourced accounts team are available and within easy reach when you need them.

Handing over control of the management of your accounts can feel uncomfortable for business owners and it’s important that the onboarding process defines all the roles, task management and timeframes of delivery to ensure there is full transparency for the business owner and his team.

3rd Benefit – The risk of fraud is reduced.

With any organisation, when there is only one person who is in control of the accounting part of your business there is always the risk of fraud. For many businesses who have been hit by fraud, this can start with a fake invoice or expense being processed and then paid. This can then evolve over time and go on for months or years without detection.

Separation of duties is one of the best process controls in combating fraud. Having an outsourced accounting service, you have many sets of eyes reading and examining your books and records on a continuous basis. While fraud can never be totally ruled out, having a team that is led by best practice accounting will provide a much better chance of avoiding the risks of fraud in your organisation.

3rd Risk – Instability

When selecting an outsourced accounting partner, it is not only important to be confident that the provider will be able to do what they are engaged to do but also, that they will be there for the medium and long term. It’s great when you have a partnership that works well. There is nothing worse than finding out that your outsourced accounting provider has gone out of business or will be no longer able to continue to complete the work.

Researching your outsourced accounting partner before the partnership starts is paramount to give the business owner confidence in terms of service delivery – doing what they say they will do.

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