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. 

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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. 

A CPA firm that does NOT provide Tax or Audit services?

A CPA firm that does NOT provide Tax or Audit services?

The value in not providing traditional accounting services

When most people hear CPA they immediately think tax and audit.  Lavoie CPA does NOT provide either service.  So, what do we do?  We provide world class accounting bundled with leading technology (Accounting as a Service) to help our clients succeed . But why don’t we provide tax or audit services?

  1. Our focus is helping grow your business.  We provide financial intelligence you can rely on to make informed financial decisions.
  2. We don’t want to become tax experts.  Staying on top of changes to tax laws and regulations is an exhaustive process. We rather partner with tax professionals and focus on what we do best – help grow your business!
  3. We can’t audit ourselves. Since we provide leading finance and accounting services, we can’t audit our own work.  However, our clients are always audit ready!

Why do clients come to Lavoie CPA since we don’t do tax or audit?

  1. We help grow sales.
  2. We turn finance into a strategic asset.
  3. We keep cost under control.
  4. We eliminate distractions and let our clients focus on what they do best.

Want to learn more? 

10 reasons to outsource Software Development

10 reasons to outsource Software Development

So, why outsource your software development?

Outsourcing will help you conduct a cost effective business by decreasing your payroll. It will help your company give a more specific oriented task to your executive employees.

1 – Cost Savings
Outsourcing makes sense for cutting costs while reducing workload on the employee. Outsourced labor may cost 90% less than the same labor performed in-house in Western Europe or North America, particularly for low-level tasks. You won’t need to make any upfront investment, which makes development projects much more attractive.

2 – Time Savings
Software development takes less time when people are working on your applications around the clock, so you can get your product to market more quickly than your competitors can.

3 – Lack of in house experience
When the internal resources of the company are not enough to globalize the company’s business, Outsourcing software development will bring new dimensions to manage a business worldwide. Business applications will be more sound and systematic for an overall performance.

4 – Flexibility
When you outsource, you don’t have to spend time recruiting, hiring, training, and housing employees for short-term projects.

5- Talented IT Professionals
You’ll have immediate access to some of the best and brightest information-technology professionals by going overseas and bypassing the gaps in hiring pools in more developed countries.

6- Focused Strategy
Outsourcing software development would streamline business processes. It will provide a focused strategy to have a competitive advantage in the technological race.

7 – Improved Compliance
Outsourcing software development would create an automated compliance system that will reduce human follow-ups in business processes.

8 – Enhanced Accuracy
Offshore development will improve work accuracy in terms of given deadlines on a project. Defined software will deliver accurate results in less turn around time.

9 – Technological Advances
Technology is evolving in different countries of the world. Companies thriving to gain competitive advantage are better off outsourcing software development. For technological prowess.

10 – Risk Mitigation
You can mitigate risks by choosing an outsourcing firm that has a high-quality project management system and a tried-and-true process for developing applications.

Several functions can be outsourced by a company in different departments. From management training to Accounting and Finance, outsourcing takes care of it all. Website development & web design are increasingly outsourced by almost all companies for better maintenance and timely upgrades. Outsourcing certain area of your business makes a lot of sense in order to maximize your profits in a small amount of time.

4 Things all Startups should consider Outsourcing

4 Things all Startups should consider Outsourcing

Founders create businesses because they have a passion or expertise in providing particular goods or services to market and often get caught up on focusing on items outside of their expertise. Being a startup means there’s always more work to do, and not enough time to do it. It is easy to get caught in numerous non-value add tasks that take anyway from working on the business. That’s why most success startups outsource certain tasks to companies or individuals who specialize in providing valuable time-saving services for a fee.

With all the advancements in technology, it’s easier and more convenient than ever to outsource. Here are five things you should consider outsourcing to experts.

1. Accounting & Finance
Most entrepreneurs are not Accountants. However, understanding cash flows or analyzing profitability of a business is vital to its success. Too often startups neglect building an accounting process until profits go downhill or cash slowly drains away. Setting up an accounting process for your startup is critical to the long-term success. An accounting process is also important because it allows your business to look forward. Startups or small businesses that that don’t have an accounting process in place find themselves trapped by past actions or constantly worried about having enough money to pay bills.

In addition to accounting process, setting up an accounting system is important for your startup as it will allow you to see how your business is doing and allow you to make decisions to strategically position your business for growth.

Look for a firm that does more than just bookkeeping. Partnering with someone that goes beyond debits and credits and gives advice on such things as cashflow will help set you up for success. Technology is vital to help provide necessary insights.

2. Graphic Design and Web Development.
Coming up with a brand-defining logo, an attractive website, and print materials can be extremely time consuming and difficult to get right. Using a professional graphic designer will help your business look its best. They understand a lot of things that you may overlook. Whatever your goals, there’s a graphic designer with the talent, aesthetic sensibilities, and visual skills to fulfill your vision and enhance your company brand.

Look for a graphic designer that offers web development to help streamline the process and provide a unified message.

3. Web Research.
Prospecting for new business and keeping up with the latest developments in your industry can be time consuming and daunting. A web researcher can research information you, whether it’s gathering information and statistics for an upcoming presentation or looking up the names of companies and contacts for a leads list. They can also organize this material in a form that’s easy to use and read.

4. Administrative Assistance.
If half your day is spent sifting through your overflowing email inbox, returning call and making travel arrangement, a virtual administrative assistant (VA) may be just what you need to streamline that frustrating process and keep you from being inundated by a constant stream of on administrative tasks that keep you from more value-added items.

Before you waste your time on something that is not in your expertise, consider outsourcing. This will make your to-do list shorter and free you up to focus on the things you’re best at and that generate the most income for your business.

Why startups need Finance and Accounting Outsourcing

Why startups need Finance and Accounting Outsourcing

Are you a startup and are considering hiring accounting and finance personal?

Having the right finance and accounting policy, procedures and technology in place could be critical to your success.  Lots of startups outsource many of the tasks not related to your company’s core competency, including accounting & finance.  Should you invest the money in hiring FTEs and purchase software or use an outsourced firm?  Let’s look at four ways hiring an outsourced firm can help your startup business.

  1. Select the right accounting package.

Too many startup businesses purchase off the shelf accounting packages that do not provide proper visibility into their business.  As a result, they either spend a lot of time with Excel spreadsheets to try and gain necessary information or they simply neglect items that inhibit growth and put the business at risk.

With the proper technology you have visibility into your business from anywhere, enabling you to spevd more time on the business instead of in the business.

  1. Help with investment capital.

Whether you’re applying for a business loan or seeking outside funding from angel investors or venture capital firms, accurate and up-to-date financials are essential.

Professional services firms will provide you with the up-to-date financial statements, along with explanations of the data in those financial statements, which can help your company standout amidst all those other businesses.

Be audit, partner and/or investor ready from day one.

  1. Trusted advice.

CFO guidance including advice, counsel and insight — providing you with financial statements, budgets, forecasts and dashboards to monitor all your financial data. It’s one thing to have all the financial data you need to run your business. But the real benefit is to have someone to explain exactly what the financial statements mean, and help you to make the decisions that will steer your company toward growth.

4 . Scale with your company.

With outsourced services your variable cost become a scalable fixed cost.  Why add non-revenue generating cost when you can gain resources, technology, quality and support all tailored to your needs? When your company grows the outsourced services company grows with you.

Lavoie CPA provides accounting & finance, technology and human resources support all as a service.

 

The right size company for AaaS?

The right size company for AaaS?

What Size Company Benefits the Most from AaaS?

Lavoie has had numerous conversations over the years with companies of all sizes regarding outsourcing or what we refer to as AaaS (Accounting as a Service).  AaaS is a form of outsourcing that combines people, process and technology to help companies gain a strategic advantage.  Some companies think they are too big to outsource any function. Others think they aren’t big enough.  So, what is the right answer?  They are both wrong!

FAO (finance and accounting outsourcing) started nearly 20 years with BP outsourcing its accounting functions to Accenture.  FAO has traditionally been a horizontal offering with a value proposition driven by cost reduction and efficiency gains targeted at large organizations.  So clearly the argument of an organization being too big has its flaws.

Smaller companies have been outsourcing payroll for years so they are already participating in a form of FAO outsourcing.  The next concern we hear from clients is that they will outgrow services.  This is certainly a possibility if you select the wrong partner that does not have the technology or staff to grow with you.  For example, if a company is only providing bookkeeping services, it is certainly likely you would outgrow them.  However, if a strategic partner is selected they will be able to grow with you and help you scale faster.

Large organizations are most often driven to outsourcing for cost reduction. However, as market requirements intensify, FAO solutions are increasingly becoming more industry-specific to provide strategic advantages and not strictly cost reduction.  In smaller companies outsourcing can also reduce costs, but more importantly it enables them access to a full finance and accounting team that leverages economies of scale.   Most SMBs can’t afford to hire an entire F&A department.  So, what often happens is the company may only have a senior level person and they are stuck doing daily tactical activities or they may only have a junior level person and they are responsible for critical items such as cashflow analysis.  Both have obvious weaknesses that prevent a company from reaching its potential.

AaaS solves this dilemma for SMBs.  Companies don’t have to worry about daily tactical items that keep them from focusing on the company.  In addition, they are provided with senior level advisory.  To further maximize efficiencies, Lavoie services also include access to the leading cloud technologies.  By combines people, process and technology we know AaaS can benefit companies of all sizes. info@lavoiepllc.com