What Outsourcing Your Bookkeeping Really Means

For many businesses, outsourcing ancillary functions such as accountancy and bookkeeping can seem immediately attractive. It is important, however, to properly analyse the advantages and disadvantages of such a significant shift before making any final decisions.

The most obvious advantage of outsourcing a business’ accountancy function is simply the saving in cost. Most small to medium enterprises cannot afford a full time accountancy department, and even if they can, the price of training and professional development in this area can often prove to be prohibitive. By outsourcing accountancy functions to an agency whose only purpose is to focus on bookkeeping, such overheads are cut out at a stroke. Even the often significant charges from such agencies often represent a large saving when compared to the cost of maintaining internal accountancy expertise.

Many companies, even large ones, also prefer to outsource ancillary functions so as to be able to focus on their primacy business activities. It is often easier to follow a strategy of focusing on a business’ unique selling point if the amount of time spent managing functions such as bookkeeping and invoicing is kept to a minimum. Entering into contracts with professional outsourcing agencies allows this, with employees ideally only having to deal with ancillary functions at the time when the outsourcing contracts are signed. By cutting down the burden of administrative red tape, many companies find that internal resources are freed up to focus on growth.

Outsourcing bookkeeping to professional agencies can also assure expertise, as long as the right company and contract is chosen. As might be expected, an agency which focuses as its core business on delivering accountancy functions is often able to deliver savings which an overworked or undertrained internal accountancy department cannot even spot. With a flexible contract, your business is in a position to change bookkeeping agencies rapidly if your needs are not met, thus assuring that the agency is incentivised to fulfil your contract professionally.

However, it is important to view the issue of outsourcing in the round. In trusting your bookkeeping to an outside agency, you are opening up potentially sensitive data to a third party, and exposing yourself to breaches of confidentiality. It is vital to choose any outsourcing agency carefully, and on the basis of references from other satisfied customers. Even if you are confident that the confidentiality of your information will be safe, you are still exposing yourself to potential quality issues if you do not choose the agency you deal with in a sensible fashion. What is more, unlike a situation in which your internal accountancy department is failing, you cannot exert direct managerial pressure to turn things around. As mentioned above, you may have sufficient contract flexibility to take your business elsewhere, but by then the damage may have been done.

Despite these potential drawbacks, outsourcing your bookkeeping can often mean financial savings, less administrative hassle, and a more efficient business. As long as you choose carefully, it is an option worthy of careful consideration.

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.

Back to top