Why You Should Outsource Your Accounting
Updated: Jul 12, 2020
I have been in accounting for over 25 years (erg - I just aged myself) and in those 25 years I have seen many changes in business, in systems, in human resources and the list goes on. I have watched leaders and CEOs totally miss out on great opportunities because they had no visibility into the workings and financial standings of their companies. Sadly, many business owners I come across tell me that basically, if they have money in the account, they must be doing ok. There are so many places where this can go wrong, but more importantly they are missing out on opportunities.
So why outsource:
Cost - I go into this in more detail below
Time savings - if you hire, you need to grant sick days, PTO, etc. You have to face this if you outsource as well; however, if you outsource a firm rather than an individual, this risk is limited as most often firms, like Viteri Accounting, is setup with cross trained professionals so there is always some on hand to work on your account
Expertise - To hire people who have a high expertise in finance and accounting, your industry or your ERP can be difficult. This is why we do everything we can to bring you these expertise in the form of a full team. This is a common function of accounting firms.
Process Improvement - when you hire a firm you hire not only the expertise of the professionals within, you also hire the experience. If the firm has the proper team, you will hire decades of experience in various industries and companies which brings along the knowledge of what has worked and what has not in all facets of business.
Limited Risk - Again, if you hire a firm, be sure they are fully insured (as we are) to limit any risk you could incur from outsources your most private information. Not only should the firm have insurance, but also be sure they have processes and procedures in place that includes checks and balances within their firm to catch mistakes, omissions and fraud.
There are a lot needs of any business, from large SEC publicly traded, down to the "Mom and Pop" on the corner. Most companies have the same needs, it's just that we can only afford what we can afford and large, full-staffed finance departments are not an option.... or are they? I will take you through a standard department and then we will talk options.
The successful Finance teams that I worked with in industry were made up of two halves. (1) Accounting, which does the backwards looking work. What actually happened and account for it. (2) Finance, which does the forward looking work. Where can we go, what are the possibilities and what are the pitfalls. When these teams are combined, the image is beautiful. An executive leadership team should have all the tools they need to know financially what happened, why, how, how to do better, where can we go, and how do we get there.
Accounting. So this team is made up of Accounts Receivable (AR), Accounts Payable (AP) (sometimes these can be combined), Staff Accountant (or senior), and a manager. There are many levels in between and above but these are the basics. The AR/AP individuals book the cash and credit card transactions of the business including vendor bills, customer invoices, expenses, and payroll. The Staff Accountant books any adjustments that are non-cash, corrects any errors, ensures all postings are correct and finishes up the general ledger. The Manager pulls all this together and ensures everything runs smoothly. Sometimes they do reporting, other times it's Finance; however reporting is important to both sides.
Finance. Remember that this team is forward looking so Finance handles a lot of analysis of what the Accounting team has worked through. There are varied roles in this group but most have Financial Analysts, Planning & Reporting Specialists, Cash Forecasting Specialists, and of course, a manager. They will create budgets which are important to know if we are heading where we want to at a detailed level. They analyze trends and data to see if we are where we were last year, going up or down in expenses or revenue, analyze the return on investment on marketing spends, or possibly help you project the acquisition of other businesses. This group will also review and report on the monthly financial package the Accounting team processes for accuracy and reasonableness.
Above both these departments you have a Chief Financial(Accounting) Officer, Finance Director, or Controller. These individuals (or a combination of all) guide all these teams to success. They also advise on strategic directions for the company as a whole, work to ensure all departments flow well together, and guide all financial decisions of the company. It is imperative to have a leader who can take the Finance and Accounting terminology and turn that into usable and useful information for the rest of the company.
With all of this said, a standard team at average US salaries is listed below:
$11,993 Chief Accounting Officer
7,664 Cash Manager (Specialist)
7,604 Financial Planning and Analysis Specialist
7,207 Finance Manager
6,337 Accounting Manager
5,957 Senior Accountant
3,429 AP Specialist
3,368 AR Specialist
$53,559 per month in salaries
$642,708 annual Financial Team Cost
Now, I cannot speak for all virtual accounting teams but I can promise you that our cost comes at a fraction of this rate yet we bring all these positions, and then some, to your business. There are several virtual finance teams that will customize services for you as well. For example, say you have someone in-house that does the bookkeeping yet you need it all watched over, adjusted and some advice from time to time, then you may only need the services of upper level accounting. Whether you go with us or another firm, be sure to look closely at the services and match them up with your personal needs.
If you are afraid of the adjustment to virtual from in-house, we have steps to take you from physical to virtual accounting at the pace you are comfortable with. With COVID and other craziness hitting the world, now is the time to change into contracted, virtual accounting and finance teams that work when the world stops.