Accurate and timely financial accounting is more than just an important obligation; it’s a compass that directs businesses toward sustainable growth and profitability.
Yet, many organizations still grapple with various challenges in this area.
The numbers on financial statements often seem unclear, presenting a complex puzzle that requires endless hours of work to untangle. Data, a necessary element of quality decision-making, appears more cloudy than clear in the midst of compliance and accuracy woes.
Vital financial deliverables slowly move through the approval process, arriving to decision-makers when it’s almost too late to take action. Adhering to basic Generally Accepted Accounting Principles (GAAP) can be challenging, with missteps here potentially causing issues with investors and regulators.
Amongst these challenges is a clear solution with impactful results — hiring an outsourced accountant or accounting team.
These financial professionals step in to ensure every number is aligned, data is accurate, and compliance is no longer a dark cloud hanging above the head. But outsourced accounting is much more than a service; it’s a partnership.
By outsourcing accounting tasks to external experts, businesses can alleviate many of these pain points. These professionals deliver accurate and timely financial data, ensure compliance, and, most significantly, free up valuable time — enabling your team to focus on core business activities. The best outsourced accounting teams provide an all-in-one, finance team in a box type of service that scales with the needs of your business.
This guide will explore the role outsourced accountants play in everyday business dealings and outline how these financial experts can be a game-changer for organizations dealing with troublesome financial hurdles. Moreover, we’ll explore the process of finding a reliable outsourced accounting partner, one that can offer value far beyond just resolving immediate accounting issues.
G-Squared Partners: An Experienced Outsourced Accounting Service
When it comes to outsourced accounting services, G-Squared Partners offers unparalleled expertise and reliability. With over a decade of experience, our seasoned team of financial professionals caters to diverse accounting needs across various sectors, including startups, tech firms, and commercial real estate funds.
Our outsourced accounting services are tailored to meet the unique needs of each client. Whether it’s creating monthly financial statements or bookkeeping, ensuring GAAP compliance, or providing strategic financial insights, our services cover a wide range of accounting needs. We’re equally adept supporting large financial projects as we are in providing routine monthly accounting support.
If you’re searching for a partner who can fortify your financial foundation and scale with you as you grow, connect with the team at G-Squared Partners.
What is Outsourced Accounting?
Outsourced accounting encompasses a wide range of financial services. At its core, it is the delegation of a company’s accounting tasks to external specialists. This can range from routine bookkeeping tasks to strategic CFO-level advisory services. As a result, outsourced accounting tends to be a catch-all term that covers this wide breadth of financial actions.
For businesses striving for comprehensive fiscal accuracy and operational efficiency, these types of services can prove invaluable.
One of the key features of outsourced accounting services is their flexibility. Most firms offering this level of financial expertise will often tailor services to meet the unique needs of a business’s operations. This comprehensive approach not only frees up time for team members to focus on core competencies but often adds a level of financial expertise that can prove transformative for organizations.
Outsourced accounting is often known by other names such as fractional accounting or Client Accounting Services (CAS). While the essence of the work remains the same, these roles highlight the adaptability of external accounting services.
For example, a fractional accountant will operate in a part-time nature while CAS emphasizes a more client-centric approach.
The differences in terminology reflect the evolving needs of modern business. Since there is no one-size-fits-all approach to accounting, these flexible and customized approaches tend to prevail. This adaptability makes outsourced accounting a popular choice for businesses of varying sizes and diverse industries. The best outsourced accounting firms take a flexible approach that scales up and down with the accounting needs of your business.
In short, outsourced accounting acts as your organization's financial Swiss army knife. These financial professionals carry a wide range of tools and expertise that equip them with what they need to handle a variety of fiscal challenges.
Types of Outsourced Accounting Services
As mentioned earlier, the spectrum of services offered through outsourced accounting is as diverse as the financial challenges businesses face. As a result, leadership looking to explore these external financial services should endeavor to understand the nuances of outsourced accounting before making any final decisions.
The right outsourced accounting service will tailor their offerings to help your team not only grow but also meet the evolving demands of your business. You might start with a one-time project, and then expand your relationship over time as the needs of your business change.
As you navigate through different service providers, you’ll find that each firm comes with its own unique blend of offerings designed to address specific areas of your financial operations.
Recognizing what each service entails will not only clarify the scope of outsourcing but also aid in finding a partner whose expertise aligns with your specific business objectives. Remember, you’re looking for a partner that takes a flexible approach to provide the services best suited to your business – not one that offers a cookie-cutter approach.
Below, you’ll find a breakdown of the various outsourced accounting services. By understanding what each service entails, the tasks covered, and the potential benefits and drawbacks of each offering, your team can make a more informed decision.
Outsourced bookkeeping covers the delegation of basic financial tasks. Common tasks include:
- Recording transactions/data entry
- Reconciling bank and credit card statements
- Sending and paying invoices
- Running payroll
- Gathering information for tax filing
- Ensures accurate and timely transaction recording
- Frees up internal resources for strategic activities
- Often more cost-effective relative to a full-time bookkeeper
- May lack the in-depth understanding of the business that a full-time employee might have
- Communication and data privacy can be concerns depending on the chosen vendor
A step above bookkeeping, outsourced accounting services cover a wider range of complex financial duties. Common tasks include:
- Preparing financial statements and reports
- Budgeting and financial planning
- Preparing financial forecasts
- Closing books on a monthly basis
- Customer billing and collection
- Establishing and monitoring monthly key performance indicators (KPIs)
- Setting up and managing accounting systems
- Access to higher-level financial expertise without the cost of a full-time accountant
- Better financial reporting and insights for decision-making
- May lack the personal touch and depth of understanding of business operations
- Possible communication barriers and time zone differences if outsourced offshore
Outsourced Controller or VP of Finance
- Overseeing month-end close procedures
- Producing financial reports, including profit and loss statements, cash flow statements, and balance sheets
- Coordinate with tax accountants to prepare filings
- Overseeing bookkeeping tasks such as recording and categorizing transactions
- Monitoring accounts payable and receivable
- Sending invoices and paying bills
- Ensures compliance with financial statements and regulations
- Provides a higher level of oversight for financial processes
- Costs can be higher compared to lower-level accounting services
- May not have the same level of control and immediate access as an in-house controller
Outsourced Chief Financial Officers (CFOs) offer comprehensive strategic financial leadership. Common tasks include:
- Building internal accounting and finance frameworks
- Establishing budgets for new projects
- Supporting capital raising and managing investors and lenders
- Reviewing tax work and financial statements for distribution to investors
- Strategic financial leadership to guide business growth and investment
- Often brings a wealth of experience and network connections across different business sectors
- Can be expensive, although usually far more cost-effective than a full-time CFO
- May not be fully integrated into the company’s culture or day-to-day operations
Why Do Businesses Work with Outsourced Accounting and Bookkeeping Services?
Outsourcing accounting and bookkeeping services offer business several key advantages:
- Cost Savings: outsourcing is often more cost-effective relative to maintaining an internal team, especially for growth-stage businesses.
- Time Savings: it alleviates the time executives spend on overseeing back-office tasks, allowing them to focus on strategic initiatives.
- Increased Financial Clarity: provides real-time financial information for better decision-making.
- Industry Expertise: access to specialized expertise tailored to your business's industry.
- Scalability: easier to scale accounting functions as the business grows.
Especially for startups raising venture capital, engaging an outsourced accounting firm can be pivotal for becoming GAAP compliant or preparing for a funding round. Mature businesses have a completely different set of financial needs from fast-growing startups. This showcases the flexible approach that tailored external accounting services offer.
When Does a Business Need an Outsourced Accounting Firm?
With growth comes the need for additional, and sometimes external, assistance. During those early stages of business growth, managing finances effectively while navigating the complexities of expansion can become a daunting task.
This is where an outsourced accountant can become a hugely important ally.
To help you understand when to explore these services, here is a breakdown of some key factors that can drive a business toward outsourced accounting:
- During Rapid Growth: during expansion, maintaining a keen eye on financial health is critical. Outsourced accounting firms provide the essential financial expertise necessary to manage finances effectively, freeing up resources so businesses can focus on growth-centric strategies.
- Lack of In-House Expertise: small to medium-sized enterprises might lack the in-house financial experience needed to effectively manage finances and stay compliant. An outsourced accounting service can help fill in these gaps.
- Cost Issues: if a firm is looking for a more cost-effective solution relative to hiring a full in-house financial team, a team of external financial experts, like an outsourced accounting firm, can provide their services at a cost reduction — a great choice for startups and small to medium-sized enterprises (SMEs).
- Access to Advanced Technology: outsourced firms come equipped with the latest in financial and accounting technology, which is often out of reach due to financial restrictions to startups and SMEs.
- Preparations for a Funding Round: an experienced accounting firm will provide the comprehensive financial preparation, including valuations and due diligence processes, to ensure the business is investment-ready.
- Compliance with Regulatory Demands: with shifting financial regulations, experts with a specialty in financial compliance can prove invaluable and help mitigate the risks of costly legal ramifications.
- Ability to Scale Services: businesses often have unpredictable needs. When your accounting department embarks on a major project, you might need to quickly draft in the resources of an outsourced accounting firm to handle that project. Once the project has been successfully completed, services can be pared back as required.
As a business matures, reaching around the $25 million revenue level, the pendulum often swings toward building an in-house accounting and finance team. The complexities of financial management at this stage warrant a dedicated internal team with an in-depth understanding of the particular business's operations.
However, the collaborative partnership with an outsourced accounting team often continues during this stage. This is especially the case for projects that require a high degree of specialized expertise, such as sale readiness, profit improvement and turnaround, or audit preparation services. These projects leverage the outsourced firm’s extensive knowledge and experience, providing the mature business with additional strategic insights and solutions.
Transitioning to an in-house team doesn’t mean the end of the relationship with an outsourced firm; it's an evolution of the partnership to suit the changing needs of the business.
How Much Does Outsourced Accounting Cost?
The cost of outsourced accounting hinges on the specific needs of the business.
As an example, the price of an outsourced CFO can range from $200 to $350 per hour or more. Your monthly costs will be driven by the volume and complexity of the financial tasks you need support with.
Understanding your business’s precise needs, whether that’s basic bookkeeping, sophisticated budgeting, or strategic financial advice, is crucial for a more accurate cost estimate.
Regardless of your needs, moving forward with an outsourced accountant or accounting team often proves more cost-efficient than in-house hiring once you factor in salaries, benefits, and other associated expenses.
Additionally, while weighing your needs against possible outsourced accounting services can help you better determine overall costs, there are also other cost-saving factors that can arise over time. For example, the expertise of an outsourced accountant in managing financial records, ensuring compliance, and providing insightful financial reports often translates to better financial health, which can then lead to further cost savings over the long run.
This pragmatic approach to accounting services often makes outsourced firms a valuable and cost-effective solution for many businesses.
Find an Outsourced Accounting Service
When seeking out an outsourced accounting partner, a methodical approach is critical.
Begin with a comprehensive review of your financial needs and the scope of service needed. This type of clarity is necessary because, as we’ve touched on earlier, these firms often offer a wide range of services that all fit under the accounting umbrella.
After you have a firm understanding of your unique financial needs, your next step is to explore and research potential external accounting services. Be sure to scrutinize over their expertise, review client testimonials, and read through case studies, if available. Prioritize firms that take a flexible approach that can be scaled up to meet all of your financial needs as your business grows.
If you can, try and meet either in person or over virtual conferencing to get a better feel for the chemistry between your team and the outsourced accounting firm. Since you’ll be working quite closely with this team moving forward, this level of compatibility is crucial for success and a beneficial long-term partnership.
Seek out references to ascertain their reputation. Another key step here is to ensure they’re well-versed with your industry’s financial regulations. Some sectors, like finance, will have specific accounting guidelines and best practices to follow. Ensuring each potential accounting firm is capable of handling such variances in operation is key. Lastly, discuss the fee structure in depth to avoid unforeseen costs and set general expectations.
This structured approach aids in finding a firm that aligns with your business’s financial objectives.
The Right Culture Fit
A harmonious cultural fit between your company and an outsourced accounting firm lays the foundation for a fruitful partnership. It not only streamlines communication but also helps foster a shared understanding and appreciation of work ethic, values, and priorities.
To help you better assess cultural compatibility, here are a few factors to consider:
- Understand Your Company Values and Priorities: delve into your business's core values, work ethos, and priorities. Know what matters most in how you operate and interact.
- Learn About the Firm's Mission and Principles: investigate their mission, values, and guiding principles. Review their website and read up on leadership to gain a clear picture of their workplace culture.
- Meet Multiple Team Members During the Vetting Process: engage with a variety of team members during the evaluation process. This can provide deeper insight into their operational culture and whether it aligns with your team’s expectations.
- Inquire About Policies for Communication, Availability, and Issue Escalation: this can provide insight into how the potential outsourced accounting firm will handle these areas of everyday operations and help you level-set expectations.
- Consider Work Style: does the firm in question operate similarly to your team? Whether it's more formal, structured, adaptive, or flexible, it’s important that work styles mesh well to ensure smooth collaboration.
When you meticulously pour over culture fit, you can often enhance the likelihood of a successful and enjoyable partnership. This can lead to better communication, smoother project execution, and a higher level of mutual respect and understanding.
Questions to Ask Prospective Accounting Partners
Finding the right outsourced accounting partner is crucial for the financial health and operation of your business. To ensure a smooth vetting process, it’s imperative that you not only assess your organization's financial needs but also come prepared with the right questions.
To help you find the right accounting partner for your company, here are a few critical questions to ask and the rationale behind asking them.
Business Tenure and Industry Expertise
Ask: How long have you been in business? What is your experience in my industry?
By understanding a firm’s longevity and experience in your specific industry, you can gain clearer insight into its expertise and adaptability.
Accuracy and Compliance Assurance
Ask: How do you ensure accuracy and compliance in your work?
This question helps you explore the accounting firm’s processes for maintaining accuracy and adherence to regulatory compliance — which is crucial for mitigating possible financial risks.
Communication and Reporting
Ask: What are your communication and reporting processes?
Effective communication and transparent reporting are mission-critical. This question ensures the firm will provide a good working relationship and informed decision-making.
Scalability of Services
Ask: How can services scale as my business grows?
As your business grows and evolves, so do your accounting and financial needs. Make sure a potential outsourced accounting firm can scale to meet changing demands.
Technology and Software
Ask: What technology and software do you use?
Review the firm's technological capabilities. This can help streamline processes and integrations, which, in turn, enhances accuracy and fosters better collaboration.
Ask: Can you provide client references?
Real feedback from current or past clients can provide genuine insight into the firm’s competency and reliability.
Onboarding and Implementation
Ask: What is the onboarding and implementation process?
A smooth onboarding process indicates how a potential outsourced accounting firm approaches organization and customer support.
Conflict of Interest Management
Ask: How are conflicts of interest handled?
It’s crucial to know how a firm navigates conflicts of interest. This can help ensure your business's needs remain a top priority.
G-Squared Partners: A Proven Outsourced Accounting Partner
Financial accuracy and efficacy are the linchpins of sustainable growth and operational excellence. For businesses experiencing rapid growth and navigating the complexities of compliance, or even mature enterprises pursuing complex financial projects, outsourced accounting offers a cost-effective solution for obtaining external financial expertise.
Through this guide, we’ve explored the wide spectrum of outsourced accounting services, underscored several key factors surrounding the sourcing of external financial experts, and presented a roadmap for businesses searching for a trustworthy accounting service.
G-Squared Partners offers unparalleled financial acumen and tailored services to answer the demands of your business. We come equipped with not only the experience spanning various industries but also the tools and technology needed to manage a broad spectrum of financial tasks effectively.
We’re adept at crafting financial solutions that resonate with your business's overall operational goals.
We invite you and your team to dive deeper into how G-Squared Partners can catalyze your financial management by exploring our resources. Our Outsourced Accounting Services Cost Calculator is a great starting point for understanding the financial blueprint of working with our firm.
Schedule a call with G-Squared Partners today to learn how our services can impact your business’s journey toward financial security and operational efficiency.