Accounting Trends in 2022 That Can Help Your Business

Accounting Trends in 2022 That Can Help Your Business

The accounting industry continues to quietly undergo a transformation that will be revolutionary once the history books are written. This transformation is mainly the fruit of rapid developments in the technological infrastructure that powers the day-to-day functions of accounting practice. 

Those organizations who are adaptable and among the early adopters of these emerging accounting trends stand to capitalize significantly over their competition. On the other hand, organizations that are resistant to change will fall farther behind and may even become obsolete.

In this article, we take a closer look at three emerging trends in accounting practice for 2022 and how they can help your business.

1. Accounting Automation

Accounting automation is enabled by cutting-edge software programs that allow daily accounting functions to be completed with minimal human involvement. Any routine accounting function that has a clear set of rules can now be designed by software and executed by these programs automatically without human intervention.

The automation of accounting functions will be a rapidly growing trend in 2022. There are tremendous benefits for organizations that adopt automation technologies in their accounting practices. The two most significant benefits are increased efficiency and reduction of errors.

Increased Efficiency

Prior to automation, many daily accounting tasks were done manually. These manual tasks were time-consuming and required substantial amounts of human resources. With accounting automation, these tasks that were once done manually are now done automatically by software programs. The result is that those tasks are completed much faster and with much fewer human resources.

This increased process efficiency enabled by automation allows the members of your team to focus on activities that are more valuable to your organization. These high-value activities include delivering better customer service and spending time on strategy and planning. Since the manual tasks are now automated, your accounting team is freed up to delight your customers more as well as spend time and energy planning how to make your business even better for the future.

Reduction of Errors

If your accounting team is overwhelmed by a mountain of daily tasks that they have to do manually, they will have to work faster to try to get everything finished on time. This rushed process will inevitably result in more errors in their work. Accounting errors are not only a source of liability for your company, they also take up a considerable amount of extra time by having to diagnose, correct, and readjust downstream books and records that were impacted. 

By implementing automated accounting technologies in 2022 your organization will experience tremendous benefits because the automated programs will be able to detect and even prevent accounting errors from occurring. Furthermore, if an error is detected by the automated accounting program, it will be much easier and less time-consuming to fix because once the error is corrected, the software will take care of adjusting all downstream books and records that were affected by the error.

2. Agile Accounting

A recent survey found that 54% of CFOs plan to make remote work permanent for their accounting teams even after the coronavirus pandemic is over. This phenomenon represents a major shift in thinking about traditional processes within accounting departments. 

One of the most significant consequences of this shift is that accounting teams will need to be more agile in 2022 than ever before. In short, an agile accounting team is one that can have its members working in different locations at different times, but still meeting the goals of the accounting practice.

One of the keys that is going to enable agile accounting is cloud storage technology. Prior to the dawn of agile accounting in the industry, firms stored their accounting data on local servers within their organizations. As a result of this local storage, team members generally needed to be onsite to access the accounting data. With cloud services, an organization’s accounting data can now be securely stored within the cloud and accessed from anywhere in the world. In this way, cloud storage is a game-changer and has revolutionized the approaches businesses are now taking towards implementing more lean and agile accounting processes in their organizations.

In addition to bringing increased agility to accounting teams themselves, agile accounting is also going to have an impact on hiring and retaining top accounting talent in 2022. Agile accounting methods have obvious attractions for potential new team members. With an agile model, job candidates are attracted by the ability to work from their current cities and not have to move to a new location. They are also enticed by being able to work at different times during the day or night depending on what best suits their lifestyle. 

In short, agile accounting methodologies—enabled by cloud storage technology—will be a major disruptor in 2022. Accounting teams will become more agile and leaner than ever before. Organizations that don’t adopt agile methods may encounter problems hiring and retaining top accounting talent in 2022.

3. Outsourced Accounting

The year 2022 will also see a continued increase in outsourced accounting. Outsourced accounting encompasses many accounting functions including:

  • Accounts payable
  • Account receivable
  • General ledger accounting
  • Budget projections
  • Payroll
  • Time and expense reporting

With outsourced accounting, these standard accounting functions—as well as many others—are outsourced by businesses to specialist accounting firms.

Many organizations will continue to realize in 2022 that outsourced accounting firms bring a wealth of experience to their business. Additionally, by entrusting their standard accounting functions to qualified experts, businesses are freed up to focus on high-value activities such as revenue generation via more sales and better customer service.

Two additional benefits that businesses will realize from outsourced accounting services are the application of advanced technologies to their accounting processes and consultative financial expertise. Third-party outsourced accounting firms are experts in the latest accounting software programs. These outsourced partners can help businesses build valuable accounting software ecosystems that will automate many of their accounting functions. 

Outsourced accounting partners also bring tremendous value to their clients in the form of consultative financial guidance to help their business planning and strategy. With outsourced accounting, you get access to a highly-experienced controller or CFO who can leverage their decades of experience to help you optimize the accounting and financial aspects of your business even further.

Staying Ahead of the Accounting Curve in 2022

As you can see, 2022 is going to be a year of rapid progress for the accounting industry. Accounting teams who are quick to adopt automated accounting technologies will make leaps over their competition in terms of vastly increased efficiencies. 

Additionally, companies who become leaner and more agile will enjoy higher employee satisfaction and be able to attract top accounting talent. For organizations who are feeling overwhelmed by the demands of running a top-notch accounting practice, outsourced accounting services will be more necessary than ever in 2022.
For more information on how Lavoie can help Charlotte businesses stay ahead of the accounting curve in 2022, reach out to us today by calling 704-481-6699.

Top Private Equity Accounting Mistakes & How To Avoid Them

Top Private Equity Accounting Mistakes & How To Avoid Them

Accounting is one of the most important ingredients of success for private equity firms large and small. 

When accounting is optimized for the best practices of private equity, it becomes an additional catalyst for success. On the other hand, if accounting is not done properly based on the unique aspects of a private equity firm, the results can seriously hinder performance.

In order for private equity accounting to be a catalyst for success, it needs to be competent and actually bring value in several key areas including:

  • Leveraging next-generation automated accounting technologies to enable scale
  • Seizing any and all opportunities to put in place real-time accounting reporting
  • Extracting value from accounting practices to support strategic growth 

While the goals for private equity accounting teams are clear, reaching them can prove challenging. In this article, we want to take a closer look at a few of the most common accounting mistakes made by private equity firms and how those mistakes can be prevented.

3 Private Equity Accounting Mistakes & How To Avoid Them

1. Failure To Scale Accounting Systems

One of the primary accounting mistakes made by private equity firms is the continued use of manual accounting processes while trying to scale growth. If your accounting team is spending most of their time manually performing tasks, the growth of your portfolio companies will be hindered.

The key to avoiding the failure to scale accounting systems is by implementing clearly defined workflows across intradepartmental teams, which are backed by automated accounting technologies. 

There is an increasing number of accounting software-as-a-service (SaaS) platforms covering a wide range of accounting functions. It can be helpful for private equity firms to consult with qualified accounting SaaS experts to help build an ecosystem of these platforms for your firm. 

This accounting SaaS ecosystem will bring automation and scale to the accounting operations across your portfolio. Instead of hindering growth, this automation will help scale and empower your firm’s growth.

2. Making Key Decisions Based on a Lack of Real-Time Information

Private equity firm principals and partners need to have the most up-to-date accounting data as possible. 

Prior to the entrance of SaaS accounting platforms, private equity leaders had to rely heavily on the CFO for the pulse on the accounting state of affairs. And often, the CFO themselves did not have the most up-to-date accounting reports. With the introduction of an automated accounting software ecosystem we previously discussed, it is now possible for all leaders of the firm to have access to real-time accounting data. 

This real-time view of accounting reporting and performance is a game-changer for the private equity industry. Leaders of private equity firms can now make the most informed decisions possible about their portfolio companies. 

Often events can unfold rapidly in the mergers and acquisitions world, and vital decisions about the future of a given portfolio company need to be made quickly. In these situations, the old method of having to wait weeks for accounting data to be compiled is a thing of the past. With the current software ecosystems properly implemented, private equity leaders have the key information they need in real-time to make important decisions.

It is imperative that CFOs and accounting leaders avoid the mistake of allowing delays in their accounting reporting systems due to outdated technologies and processes. If these delays aren’t remedied, the leaders of these firms could end up making poor strategic decisions about their portfolio companies and that could prove very costly. 

In order to ensure you are taking advantage of all the opportunities to put in place real-time accounting reporting systems, it is helpful to partner with a consultant that has the ability to understand your unique portfolio and where those opportunities exist. Doing so will result in tremendous benefits for the leaders of your firm when it comes time to make big decisions about the future.

3. Mismatched CFOs

Selecting a CFO for your private equity firm is one of the most important decisions you will make. One of the key roles your CFO should play is in knowing how to use accounting practices to aid rapid growth.

As we discussed earlier, many private equity firms have a growth focus. The mistake that is commonly made is when a private equity firm hires a CFO who does not have robust experience in running the accounting practice to maximize the growth of the organization. 

The reality is many CFOs come from backgrounds that are focused more on accounting for mature companies. In these contexts, the CFOs have not spent enough time in a high-growth environment. They may be very capable CFOs—even coming from very large enterprises. However, if they have not had experience in running a successful accounting operation towards growth, they will likely be unqualified as the CFO of a private equity firm. 

In order to avoid these mistakes, private equity firm leaders should search for CFOs with demonstrated experience in creating and running accounting systems for high-growth companies. 

For CFOs to be successful with accounting practices in a growth environment, they need to have the ability to bring meaningful strategic guidance to the leaders of the firm. This ability to bring guidance can only come from significant past experiences in running the accounting operations in sometimes volatile and chaotic growth environments. 

These CFOs are not expecting to show up on day one and have tightly organized systems in place. On the contrary, they have had past experiences taking a somewhat disorganized, rapid growth situation and cleaning up the accounting operations—streamlining and scaling them in order to foster further growth. 

The best way to find a CFO who could be a potential fit for your private equity firm is to ask them during the interview process what strategic growth-related guidance they have given from an accounting perspective in the past at their previous organizations.

Let Accounting Help Grow Your Private Equity Firm

At a big-picture level, the accounting practice for your private equity firm needs to be just as growth-focused as the rest of the firm. CFOs with a maintenance-only mindset who lack the ability to bring strategic accounting guidance to the table when it comes to growth, will not let your firm realize its full potential. 

Similarly, sticking with outdated accounting technologies and processes will hinder the growth of your firm as you try to scale your portfolio. Not only should you seek the assistance of a qualified consultant to help you select and implement an accounting SaaS ecosystem, you should also have this advisor help you bring real-time accounting reporting to all the leaders of your firm. 

In the midst of rapid growth, it can be difficult to find the time and resources to take the appropriate steps you need to take to ensure the success of your accounting operation. That is why it can be helpful to find a consultant you can trust to aid you in these important initiatives for the future success of your firm. 

To learn more about how Lavoie can help your private equity firm avoid making the mistakes in this article, contact us online or give us a call at 704-481-6699 today.

Solve the Biggest Accounting Challenges with Outsourced Accounting

Solve the Biggest Accounting Challenges with Outsourced Accounting

Every business needs reliable financial reporting and management in order to make sound company decisions. That means every company needs an accounting team that’s skilled in financial processes, reporting, and compliance. For the highest quality accounting, many businesses, including those with in-house accounting departments, turn to outsourced accounting firms. These firms are a tremendous resource for companies, helping them overcome some of the biggest accounting challenges. 

So what are some of the accounting challenges that outsourced accounting firms can help solve? 

Keeping Up with Technology

IT literacy is no longer a nice-to-have competency. Accountants and their firms can no longer provide client write ups as their sole activity. They need to embrace a host of new technologies brought on by the digital transformation that has changed the way companies conduct business and how consumers interact with them for at least the past decade. 

An outsourced accounting firm, like Lavoie, can ensure that your company is using the most up-to-date CPA software and that you’re maximizing the tools and efficiencies within that software.  

CPA software automatically categorizes incoming data and uses that data to create a personalized and automated experience. This streamlining of information allows accountants to spend less time on manual data crunching and more time on interpreting the data to make savvy business recommendations to clients. 

Cash Flow Management

Accounting clients expect their accountants to advise them on many issues, and one of the most important is successfully managing cash flow. Freeing up cash flow is particularly important during times of economic uncertainty or hardship. Small business owners realize cash management is crucial, but many don’t know how to accurately estimate future levels of cash on hand. 

An outsourced accounting team can focus on improving cash flow, identifying cost-cutting measures, and creating processes to streamline accounts receivable and accounts payable, all while keeping a close eye on expenses, overdue invoices, and other cash flow metrics. 

Furthermore, because outsourced accounting utilizes cloud-based software, critical cash flow data can be accessed from anywhere at any time. Further, because the client’s data is hosted in the cloud, people don’t have to pass it around via emailed spreadsheets. Security is enhanced.

Recruiting and Hiring Talent

One of the biggest burdens of managing accounting in-house is that when employees leave the company, they often take their knowledge of the company’s accounting practices with them. That leaves the company with the task of finding a replacement. Plus, the company has to patiently wait as new hires learn the ropes before becoming proficient in their role.  

The benefit of an outsourced accounting firm is that you can skip the hassle of finding and retaining talent. And you don’t have to endure periods of onboarding new employees when new hires are prone to making mistakes. With an outsourced accounting firm, there are no disruptions to your financial capabilities due to employee turnover.

Diversifying Accounting Skills

An accounting team is only as good as its employees. Meaning, if a company is confined to a small accounting team, they can only benefit from the skills of a handful of employees. That can make it difficult to adopt emerging trends, software, and efficiencies. 

If your in-house accounting team is struggling to stay ahead of your clients, offering services reactively upon client request versus proactively, an outsourced accounting firm can help. Outsourced accounting firms are solely dedicated to one thing: accounting. These firms are made up of leading experts that bring a broad range of skills to the table. They possess the technical and accounting knowledge to create better forecasting and analytics, as well as the insight to interpret the data accurately. 

Managing Compliance and Regulations

Changing accounting standards have long been a challenge for in-house teams. Many in-house accounting teams have experienced the ever-changing rules, and penalties, within the accounting industry. 

The benefit of an outsourced accounting firm is that they are at the forefront of accounting changes. It’s their job to be in the know. An outsourced accounting partner can therefore help your company stay ahead of changing regulations, avoiding costly fines and time delays. 

Managing the Customer Experience

Virtually every company has rethought and adjusted its focus toward customers over the last decade. While companies used to sell products and services based upon price, features, value, and other factors, companies today focus on customer satisfaction and the customer experience, which they consider to be key competitive differentiators.

An accounting practice, like every other business, wants satisfied clients. Highly satisfied customers buy more than those who are dissatisfied. They become unpaid word-of-mouth advertisers when they recommend the company or its offerings to others. Achieving high customer satisfaction ratings reduces the cost of sales and marketing and helps a company grow. But by how much?

Forbes points out that “Brands with superior customer experience bring in 5.7 times more revenue than competitors that lag in customer experience. Customer-centric companies are 60% more profitable than companies that don’t focus on customers.”

Accounting services traditionally focused on monthly client writeup, which gave business owners a monthly snapshot of how the business is doing.

Now though, with the advanced features offered by outsourced accounting firms, accountants and their teams can recapture the time it takes to produce financial reports and use it to deliver a broader range of services that help a business grow.

According to Accountancy Age, clients want their accountants to feel confident that their company’s financial performance is under control. When an accountant gives clients that peace of mind, business owners regain time and the focus needed to get on with running their companies.

And when the client’s business is focused and growing, the accounting firm receives its payoff in the form of high customer satisfaction scores and the resulting growth that Forbes and others have documented.

Learn More

Outsourced accounting firms, with their broad range of skills and experience, help businesses and in-house accounting teams overcome some of today’s most pressing financial challenges. If you think your team can benefit from an outsourced accounting partner, contact Lavoie today.

12 Signs It’s Time to Outsource Your Accounting

12 Signs It’s Time to Outsource Your Accounting

Every business knows that there are times, be it times of growth or times of strain, that additional accounting resources are needed to help the business meet or exceed its goals. The question remains: How do you know when it’s that time? We’ve outlined 12 common scenarios that signal when you need to look for an outsourced accounting partner

1. Is there high turnover in your accounting department?

If your bookkeepers, accountants, or accounting clerks are leaving in droves, and the accuracy of your financial records is degrading, then it’s time to outsource. Outsourcing your accounting will ensure you have the personnel, systems, and tools to get you back on track. 

2. Is your administrative staff overwhelmed by accounting tasks?

Transaction volumes, technical accounting issues, and system deficiencies can cause you and your staff to be stretched thin, especially if your team lacks the in-depth knowledge to handle accounting tasks with accuracy. When you start noticing your team making consistent errors, consider outsourced accounting. By partnering with a team of experts, you can ensure project accounting, month-end-close or payroll processing are all accurate.  

3. Are your accounting systems old or outdated?

Technology is constantly evolving including cloud-based accounting and time management systems. These systems can be cost-prohibitive for some businesses, and there are so many options in terms of brands and applications, it can be difficult to choose one. An outsourced accounting firm like Lavoie can help you select the right system for your business. Additionally, an outsourced accounting firm can help you optimize accounting software so you’re maximizing the tool to benefit your business. 

4. Is accounting eating up too much of management’s time?

In running a business, your customers are the number one priority, and you should devote as much time as possible to meeting their requirements. Distractions such as spending inordinate amounts of time on accounting can keep you from satisfying your clients. Relieve the stress on you and your leadership team by outsourcing to Lavoie. We can help your teams focus on the most important aspects of your business by taking over the accounting tasks for short or long-term projects.

5. Is your business growing at a rapid pace?

When your business is winning and starting to take off at a rapid pace, it can be exciting. All of that growth, however, can create challenges in terms of accounting. You need to pay invoices and collect on receivables to ensure your business remains viable. The fastest and most accurate solution to support your growth is to work with an outsourced accounting firm. Otherwise, the time spent on hiring an in-house staff member can hinder or stall your growth. 

6. Are you unable to assess the profitability of your business?

Understanding the financial position of your business, and its overall profitability is a necessity. Otherwise, you cannot steer your organization in the right direction. An outsourced accounting firm has the experiences and tools in place to not only paint your current financial situation but also to explain how you got to this point and where you should go next.

7. Is your business not as profitable as it should be?

While your top-line sales may be growing, and you are turning a profit, your business may not be realizing its full potential. There may be extra costs and wasteful expenses that can be cut from your budget. An outsourced accounting firm can help you prepare budgets, identify wastes and help scale your operations for long-term sustainability.

8. Do you lack forecasting capability?

Being able to forecast sales, cash flow, profit margins and a myriad of performance metrics related to your business is integral for effective decision-making. If you do not have a financial analyst, and your accountants do not have the time or capability, an outsourced accounting firm can help establish meaningful forecasts and budgets to help steer your business. We have the tools and insight to make your forecasts more meaningful.

9. Do you have enough work for a full-time accountant?

There are situations that call for an in-house accountant or bookkeeper. However, if you don’t have enough workload to justify the costs of hiring a full-time employee, an outsourced accounting firm is a cost-effective alternative. Reduce your overhead by using professionals only when you need them.

10. Is there more work than your full-time accountant can handle?

If there are seasonal fluctuations in the workload of your full-time bookkeeper or accountant, and you need occasional support to maintain your accounting function, an outsourced accounting firm can help fill in the gaps. 

11. Do you need technical accounting assistance?

The world of accounting can be complex. If there are technical issues that your team cannot crack, you can temporarily broaden your skill-set by bringing in an outsourced accounting firm. They can help advise your accounting team or takeover tasks that require a higher degree of experience and knowledge. 

12. Is your accounting missing critical customized reports?

The usefulness of accounting and finance departments goes well beyond financial statements. Ad hoc reporting for management decision-making can prove critical when purchasing equipment, determining capital structure, and making decisions about employee headcount among many other scenarios. Lavoie can help you understand your business through custom reports and synthesis of your financial data.

In Summary

When your resources are limited, or you need additional accounting or business expertise, outsourcing to Lavoie can make all the difference. You can streamline your administrative processes, improve the quality of your financial reporting, and scale your business for growth. To learn more about Lavoie and outsourced accounting engagements, please contact us today. We are ready to help you meet your objectives with support services.

In-House Accounting vs. Outsourced Accounting

In-House Accounting vs. Outsourced Accounting

When a business is in growth mode, executives need to make more difficult decisions that are efficient and cost-effective for their organization. The foundation of these decisions is a firm grasp of the financial health of the organization. That is why business owners need professional assistance with core business operations like accounting and financial management. Organizations, however, have the choice to have that professional accounting assistance in-house or hire an outsourced accounting firm

While in-house accounting staff performs specific business operations such as accounting and financial reporting, outsourced accounting staff can conserve costs and optimize performance through tailored solutions. Businesses get to conserve time and focus primarily on core operations through outsourcing tedious functions. Reviewing the pros and cons of both options will help your business choose which is right for you. 

Contents

What is In-House Accounting

Hiring employees and paying them a fixed payroll to perform specific business operations such as accounting, financial reporting, strategic planning, and HR management is referred to as an in-house resource. In-house accounting teams provide budgeting for the company, as well as bookkeeping, and accounting services.  

Pros of In-House Accounting

  • Dedicated workforce is aligned to the business goals making teams efficient with specific accounting needs
  • Dedicated teams provide quick solutions as they know the organization inside out 
  • In-house professionals can be trained for other in-house operations
  • Sensitive financial information remains undisclosed

Cons of In-House Accounting

  • Teams become a financial burden when workflow is limited
  • Hiring dedicated resources have a huge retention cost, including state taxes, benefits, training, and employee office supplies and equipment
  • Owning licensed accounting software for each employee is an added cost
  • There is a huge time burden for replacing employees that quit, plus you have to train a new employee from the ground-up

What is Outsourced Accounting?

Seeking professional assistance with accounting from certified firms rather than hiring dedicated in-house resources is referred to as outsourced accounting. Outsourcing projects to skilled firms equipped with resources to perform specific accounting tasks saves businesses from various managerial challenges. Business owners can also make calculated decisions based on information from finance experts.  THis is because many outsourced accounting firms offer more robust reporting, insights, and software. 

Pros of Outsourced Accounting

  • Outsourcing ensures you only pay for the workload you need to get done 
  • Proactive businesses outsource and get the job done helping in house employees focus on other pertinent tasks
  • Vulnerability to fraud is higher in small and medium-sized businesses, which businesses can avoid by working with a team of skilled experts
  • Access to top-level professionals who understand the latest trends in accounting and can apply their skills to your company’s finances 

Cons of Outsourced Accounting

  • Instructions and communication between a company and an outsourced account firm must be very clear for getting desired results within the approved budget 
  • Business owners have limited control over the processes of outsourced teams
  • In some cases, outsourced accounting teams are not as responsive as you would want them to be

In-House vs. Outsourced Accounting

It is vital to consider your business’ particular needs when looking for an accounting solution. Here is a list of things to consider when deciding between the two:

Cost Factor

Businesses need to calculate whether they have enough workload to justify hiring a full accounting team. A dedicated in-house accounting team can provide a lot of value but can be expensive when you consider the employee costs (salaries, benefits, overhead). Outsourced accounting can be a more cost-effective option, especially for seasonal work or big projects. 

Efficiency 

While in-house teams can do the same tasks assigned to outsourced teams, the latter can be more efficient. That is because an outsourced accounting firm’s sole focus is the accounting tasks at hand, whereas your in-house staff may have other responsibilities that require their focus and attention.   

Security

While it is unfortunate, there are instances where employee fraud can happen. Companies sometimes prefer outsourcing finances to avoid these situations. Non-disclosure agreements signed between the business owners and outsourced firms ensure protection against fraud. On the other hand, companies that deal with sensitive information may be more comfortable working with an in-house team.

Working Hours

Dedicated employees generally work regular office hours. However, accounting firms operate round the clock and deliver immediately if required. The nature of business is once again a factor of consideration that determines efficiency. 

In House Vs Outsourced Accounting – Which One Should You Choose

Both, in-house accounting and outsourcing accounting operations are viable solutions. Once again, business owners must review their business models and decide accordingly. The outsourcing industry is progressing rapidly as businesses are opting for outsourced services in different fields to simplify their operations. 

Outsourced accounting teams focus on the particular tasks provided by their clients. While in-house teams can also be highly effective, sometimes they don’t have the experience that some outsourced teams have. For some businesses, hiring outsourced talent is cheaper. At the end of the day, your business needs a professional touch to tackle laborious operations so that you can focus primarily on business development. 

Outsourcing projects can significantly reduce various hassles for your business that in-house teams may not be ready to handle. If you require assistance with accounting management services, financial reporting, strategic planning, as well as HR services, consider contacting Lavoie. We also provide cloud-based corporate performance management, accounting, and financial management software solutions that accurately meet the specific needs of small and medium-sized businesses. 

How Outsourced Accounting Saves Businesses Money

How Outsourced Accounting Saves Businesses Money

One of the biggest benefits of outsourced accounting is that it can save businesses money. In fact, businesses can save 30-40% by using an outsourced accounting partner. How? In this article, we dive deeper into the ways outsourced accounting can save companies money. 

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Prevent Missed Opportunity Costs

Businesses often miss out on revenue-generating opportunities when their employees are too focused on tasks that are outside of their core competencies, especially accounting tasks. By bringing in an outsourced accounting firm to focus on the accounting, your teams can concentrate on what they do best. This can include things like:

  • Engaging with new or existing clients
  • Improving your products or services
  • Creating new marketing strategies 

Eliminate Risk and Internal Fraud

Businesses lose an average of 5% (about $164,000) of their annual revenue due to internal fraud. Why? Many businesses lack the internal talent or resources to properly implement internal controls and sound accounting processes. 

With outsourced accounting, you can streamline your system of internal control over accounting and financial data, mitigating the risk of errors, omissions, or misstatements in financial statements. In turn, this reduces the threat of data security breaches and the misappropriation of assets. It also enhances the strength of accounting systems benefiting all stakeholders in a business.

Avoid Costly Fees 

When businesses don’t have the accounting skills or manpower in-house to adequately manage their accounting systems, they frequently encounter fees, penalties, and bank charges as a result. An outsourced accounting partner can eliminate these charges by streamlining cash disbursement, for example, or finding new ways to pay bills online to avoid traditional processing fees and delays in cash flow. By creating accurate processes and systems, outsourced account firms can eliminate costly fees. 

Sidestep Costly Business Decisions

In order to make smart business decisions, business leaders need a clear understanding of their current financial position. Without this clarity, leaders can make unprofitable decisions that can result in debt refinancing. Outsourced accounting firms help businesses have a clear understanding of the current financial position. This picture is painted with services like customized reports, accurate financial statements, and real-time access to software data. This enhanced financial visibility helps business leaders make smarter decisions that can save the company money, or even earn them new streams of revenue. 

Effectively Manage Payables & Receivables 

When businesses don’t effectively manage their payables and receivables, they can encounter costly interest charges and service fees. And they may lose valuable and cost-effective vendor relationships. An outsourced account firm can help businesses avoid cash flow issues and the need for additional financing by implementing secure and reliable accounting systems. Outsourced accounting firms can also make sure that customers are paying their bills on time, improving your cash flow. 

Take Advantage of New Opportunities With Smart Insights

Outsourced accounting firms offer businesses a team of experts with a broad skill-set, a skill-set that many businesses could not afford otherwise. With the help of an outsourced accounting firm, businesses can leverage timely, accurate financial reports and projections to seize on opportunities to scale their business, secure financing, or buy new equipment. By delivering accurate financial reports, outsourced accounting firms help instill businesses with the confidence to make strategic asset allocation decisions.

Pay for Services You Need 

Businesses may only need additional accounting support or expertise during certain times of the year or with short-term projects. Instead of hiring a full-time employee that you’d have to pay indefinitely, businesses can instead pay for additional accounting expertise when they need it if they hire an outsourced accounting firm. These firms help businesses save money by reducing their payroll and overhead expenses.

Cost of In-House Accounting vs. Outsourced Accounting

Many businesses struggle to justify the cost of outsourced accounting. If you are thinking of hiring an in-house accounting team (because you need a team, not one person, to effectively run your accounting), consider the associated costs: 

  • Salaries and Benefits
  • Training Costs
  • Recruitment Costs
  • Incentives/Bonuses
  • Fringe Benefits
  • Company Resources
  • Hiring and training
  • Managing

When you hire an outsourced accounting firm, you pay for the same services that an employee would deliver without having to pay all those other employee costs. 

In Summary

Whether you want to optimize your systems, reduce operating costs, or improve the accuracy and timeliness of financial reporting processes, an outsourced accounting firm can help. Outsourcing can also be the catalyst for growth and new levels of success. To learn more about Lavoie and the services offered, please contact us today. We are ready to tailor an engagement to meet your requirements.