Outsourced accounting continues to be an alternative that businesses chose to pursue instead of doing the work in-house. In 2016, Deloitte found that outsourcing of financial functions was projected to increase by 27% globally. However, whether you’ve been considering outsourcing or not, you may still be hesitant to take the leap due to some myths that exist. Many of these beliefs are based on outdated information, misunderstandings and misconceptions. Because of this, we wanted to share the top 5 myths and truths about outsourced accounting.
1. Outsource = Overseas
The mere definition of “outsource” is that you obtain goods or services from an outside source; however, many make the mistake of thinking that outsource directly means that you obtain work from overseas. You can outsource your services to a local firm in your own city. The term does not mean that you have to hire someone offshore to complete the work.
2. Losing Control
While many may believe that outsourcing your accounting procedures is risky and makes you feel like you’re losing control – it is quite the opposite. Allowing another company to control and manage your business actually enhances your control. Outsourcing gives you real-time data that offers you better control over your cash flow and other performance indicators. Additionally, you set the guidelines and expectations for the provider to meet your needs.
3. It’s Expensive
Contrary to beliefs; outsourcing will most likely save you money. In Deloitte’s 2016 Global Outsourcing Survey, a majority of surveyed companies said the main reason they choose to outsource was because it is a cost cutting tool and allows them to focus on their core business. Instead of having to hire someone that you have to pay wages and benefits, you can spend your valuable time on growing your business. This allows you to focus on your core competencies and essentially grow your business while reducing cost.
4. My Business is Too Small
Small businesses may actually enjoy more benefits with outsourcing their accounting than larger firms. Outsourcing removes overhead costs that lets you shift more revenue to operational growth, while also freeing up your own time. Economy of scale usually leads to lower costs than if your small business does accounting in-house.
5. It’s Not Secure
Sending sensitive information to a third-party can be concerning, but there are some questions you can ask your outsourcing agent to make sure your data is secure and safe. First of all, make sure you know whether the third-party is using a secured network for its business. Secondly, ask the provider what they do once they are finished with your files (do they destroy, store or keep them on hand?). Finally, if your outsourced accountant gives you access to data via cloud storage, you might want to ask them what security measures they use for data protection. Outsourced accounting can be done in a secure and safe matter; however, you need to make sure that whomever you choose can be trusted and is willing to answer your concerns and questions along the process.
What do you think about outsourced accounting? Have you been reluctant to take the leap on outsourcing due to common myths?