Outsourcing is defined as any task or job that can be performed by employees but instead is contracted to a third party. These functions can be performed onsite or offsite. Many fast paced businesses today maintain a small base of employees, employees that know the business of the company and are trained to perform those tasks. Bookkeeping is a task that is necessary for the “business of the business” and therefore is a candidate for outsourcing.
Outsourcing your company’s bookkeeping is a subset of Business Process Outsourcing or (BPO). Business Process Outsourcing in general is a good idea provided that it saves you money, time and increases your overall productivity. Outsourcing began in India and has grown to a substantial $47 billion dollar industry. The top categories for outsourcing are Information Technology (IT) and BPO.
Bookkeeping is a business process that has to be evaluated to determine if it is a good candidate for outsourcing. Bookkeeping is a specialized task that requires an employee that has very specific skills that are often not the core business of the company. Qualified bookkeepers can cost anywhere from $30,000 to $50,000 dollars per year and that is money that is a direct expense to the bottom line and not serving in a capacity to produce income.
Bookkeeping quickly impacts the bottom line. That is not to say that bookkeeping is not important. Bookkeeping is very important to the operation of a business. In this regard, businesses often attempt to use other employees to serve this capacity with less than stellar results. Poor quality bookkeeping can be the ultimate downfall of an organization.
There are several advantages of outsourcing bookkeeping tasks. The first would be the rate of payment. The rate of payment to an outsourcing company, especially overseas, compared to keeping it in-house can save the company as much as 50% on accounting fees. When you compare the cost of hiring an employee and providing benefits, outsourcing costs can be a lot less expensive.
Outsourcing to a professional company can also alleviate stress to you as the business owner. You can be assured that you have the power of an entire company working with you compared to a single individual and their abilities.
The second would be that outsourcing companies often employ the latest software for accounting which provides you with a superior output on your bookkeeping activities and can provide enhanced reports. An outsourcing company is staffed with highly trained individuals that can offer record keeping that can help you monitor the success or failure of your business. They can provide you with financial analysis to support your business decisions and can often assist with venture capital procurement, tax preparation and budgeting for your organization.
This translates to another savings as the business does not have to purchase or maintain the software, or train someone to know how to use it. The business does not have to seek out qualified individuals to perform those tasks in order to reap the rewards. Another benefit to outsourcing bookkeeping would be the ability to re-capture lost time and to manage time more effectively in the future.
The goal for outsourcing a business process such as bookkeeping is to turn a specialized task into one that becomes an output that the business owner can review. This allows the business owner and the employees to focus on the core objective of the business, which is the sale of the product or service.
Make sure that you outsource for the right reasons. An outsourcing vendor should be brought into your business to eliminate problems and to allow you to increase your core business profitability. Before you jump into an outsourcing relationship, be sure that you evaluate your current process- look for strengths and weaknesses and evaluate any problems that have occurred in the past. The successful engagement will add strength to your organization and eliminate problems.
Courtesy Ronni Rebsdorf at Argentum regnskabsservice, the first Danish accounting company specialized in outsourcing bookkeeping tasks to offshore employees.
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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