Why Outsourced Accounting is Cost-Efficient

Written by Jason Granado
Startup Accounting
Team of happy female coworkers during a planning session

Accounting is a key component of any successful business, but for small and emerging businesses, investing in an in-house accounting team can be prohibitively expensive. In today’s economy, it can be challenging for small and emerging businesses to compete with larger corporations. One way to level the playing field is through outsourced accounting.

Thanks to advanced technology and detailed reporting tools, outsourced accounting specialists can provide affordable expertise that can help businesses make data-driven decisions. With the ability to quickly adapt to changes in the market and determine what strategies will drive success in a fast-moving economy, outsourced accounting has become essential for many startups and small businesses.

Unlike an in-house accounting team, outsourced accountants require much less investment in terms of salary and overhead costs. And because outsourced accounting is done on a per-project basis, it allows businesses to focus their resources on other areas of the company where they will have more of an impact.

At the same time, outsourced accounting comes with many other benefits as well, including streamlined processes, greater efficiency, and faster turnaround times. By outsourcing these tasks, businesses can access the knowledge of seasoned accountants at an affordable price. This expertise is often only otherwise available within large and established companies.

The benefits of outsourced accounting

When starting a new business, it is important to have access to a reliable accounting system. At the early stages of a company’s development, there are often limited resources and personnel available to focus on financial reporting. This is where outsourced accounting comes in. By leveraging the expertise of experienced accountants, startups can ensure that all their accounting needs are met in an efficient and cost-effective manner.

Control overhead costs

As a growing startup, it is essential that your business stays in control of its overhead costs. Managing finances can be a time-consuming, complicated task, and it’s crucial that you have full control over every aspect of your company’s financial situation to maintain long-term success. By choosing outsourced accounting services, you not only gain access to expert advice and support, but you also benefit from the ability to tailor your accounting needs to fit your budget. With outsourced accounting, you can take advantage of flexibility and scalability as your company grows, all while keeping close control of your overhead costs at every step along the way.

Streamline operations

Another key focus is streamlining your operations to minimize costs and maximize efficiency. This can be challenging, especially when it comes to managing the accounting side of your business. Instead of trying to juggle bookkeeping and filing taxes on top of everything else that you have going on, you may want to consider outsourcing these services to an experienced accounting firm. By outsourcing your accounting needs, you can benefit from several efficiencies that will help to improve the overall performance and operation of your business. For example, by having an expert team keeping track of all financial records and maintaining updated ledgers, you will be able to spend more time focusing on things like marketing, sales, product development, or customer service.

Reduced fraud risk

To reduce the risk of fraud within your small business, it is important to consider outsourcing your accounting needs to a trusted third-party provider. Not only can outsourced accounting services offer more rigorous controls and oversight, but they also enable you to access high-quality financial expertise without having to spend a large amount of time or money on hiring and training in-house staff. Additionally, outsourced accounting providers are often experts at identifying potential red flags and implementing data security measures, so you can rest assured that your company’s finances are in good hands.

Reliable, real-time financial data

It is essential to have reliable and up-to-date financial data to make informed decisions about your company’s growth and trajectory. Many startups struggle with this need, as they may lack the resources or skillset necessary to manage an efficient accounting system. However, by outsourcing your accounting needs, you can gain access to high-quality data that is updated in real time.

By working with an established outsourced accounting provider, you will be able to tap into a network of trained professionals with knowledge of the latest trends in financial management. By carefully evaluating potential outsourced providers based on factors such as their rates, track record, and level of customer service, you can ensure that you have reliable data that will support your goals for your startup business.

Expertise & peace of mind

Outsourced accounting services are specially designed to meet the unique financial needs of startups and small businesses. These services are typically provided by experienced accountants who have in-depth knowledge of tax laws and regulations, as well as expert software skills that allow them to smoothly maintain books and records. This allows you to access real-time financial reports at any time, so you always know exactly how your business is performing.

When you outsource your accounting, you also gain the invaluable benefit of expertise. A professional outsourced accountant will be able to provide valuable insights and advice that can help you make smart business decisions that grow your bottom line. With this peace of mind and an expert team to support you every step of the way, achieving success with your new venture is well within reach.


Picking the right outsourced accounting partner for your business

When looking for a financial provider to handle your outsourced accounting needs, it is important to find one that:

1. Approaches Their Work As A True Partnership, With An Emphasis On Building Strong Client Relationships.

Ideally, you want to find a financial partner who truly sees your relationship as a two-way street, working with you not just to achieve short-term goals, but to build and maintain solid relationships over the long haul.

This means choosing an outsourced accountant who places emphasis on getting to know you and your business as well as possible, leveraging their deep knowledge of the accounting industry coupled with their first-hand understanding of the challenges and obstacles you face daily. By investing in meaningful, genuine partnerships with their clients, outsourced accountants are better equipped to help you meet your business goals and resolve any challenges that may arise along the way.

This approach places the focus squarely on your needs and priorities, allowing you to trust that the outsourced accountant truly understands what you are trying to achieve. With such a financial partner at your side, you can rest easy knowing that your outsourced accounting needs are in good hands – and that those hands are truly invested in making sure your partnership is nothing less than successful.

2. You Will Need To Evaluate Potential Partners Based On Their Experience And Expertise In The Field.

A strong outsourced accounting partner should have a proven track record, with many years of experience managing all aspects of financial reporting and compliance. They should also be well-versed in all relevant industry regulations, as well as current best practices for running an efficient and effective accounting department.

3. Another Key Consideration Is Communication.

You will need to be able to work closely with your outsourced accounting partner, so you should look for a company that offers clear and timely communication channels such as phone, email, fax, or even video conferencing.

4. In Addition To Their Technical Expertise, You Should Also Evaluate Their Cultural Fit With Your Organization.

Is the outsourced accounting firm’s communication style and work ethic aligned with your own? Can they collaborate effectively with other members of your team to meet your unique business needs? Will their priorities and values align with yours?

A good outsourced accountant will understand the importance of trust and integrity when it comes to their work, and they will go out of their way to ensure that you feel comfortable sharing your information with them. They should be professional and knowledgeable, but most importantly, they should be someone you can truly rely on to keep your financial data safe and secure.

To minimize risk, it is important to carefully vet any outsourced service providers before engaging their services. Ideally, your outsourced accounting team will be experienced and knowledgeable in all facets of financial management. They should also have measures in place to ensure that information about your company always remains secure and confidential.

The cost of inadequate accounting support

CB Insights compiled a list of the twelve most common reasons why startups fail by collecting data from recently failed startups. Most notably to our team at Rooled, they found that not having the right team had a significant impact on long-term success. In the case of Katerra, a construction startup which raised close to $1.5bn in funding, lack of experience in conjunction with financial mismanagement is what led to its demise.

When Katerra first emerged on the construction scene in 2015, it quickly became known for its innovative and forward-thinking approach to the industry. Its groundbreaking use of prefabricated materials and modular construction techniques promised to revolutionize homebuilding, with faster turnaround times, lower costs, and unmatched quality.

However, Katerra’s facade quickly began to crumble. Challenges related to management issues, a lack of internal cohesion, procurement delays, and other problems resulted in a growing number of projects that ran behind schedule or over budget. The company was then accused of artificially inflating its finances to mislead investors and secure substantial funding from venture capitalists.

At the root of Katerra’s financial misconduct was widespread misrepresentation and mismanagement across various departments. Misleading statements were made about projected revenue streams and future earnings, creating false expectations for investors. Furthermore, money was moved from more productive projects towards those with less potential for growth or profitability. Employees were charged with intentionally overstating project costs, understating profits, and falsifying data about the company’s assets. This cheating allowed Katerra to appear more profitable than it was, helping it to attract more investment and fund additional projects.

In addition to its internal problems, Katerra also faced external scrutiny because of the scandal. Investors filed lawsuits against the company, alleging that they had been deceived into providing funding at an unreasonably high valuation. The SEC also launched an investigation into Katerra’s finances, and official charges were brought against several key executives within the organization.

Outsourced accounting is going to not only provide your business with the expertise you need to stay ahead of the curve, but help your bottom line, too. Particularly for startups and small businesses, you can’t afford to wait on expert advice OR to spend all your funds on a single in-house expert that might not be able to check all the boxes you will require. Avoid the hefty price tag, training and onboarding energy, and management responsibilities for the peace of mind that your finances are in good hands.

Whether you’re looking to optimize your cash flow or simply keep a close eye on your bottom line, outsourced accounting is the right choice for businesses of all sizes and industries. So why not give it a try today?

About the Author

Jason Granado

Co-founder of Rooled and Director of Accounting, Jason has been involved in the outsourced accounting industry for 17+ years. Jason graduated from San Jose State University where he received his Bachelor of Science, Accounting degree.