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
- Pros of In-House Accounting
- Cons of In-House Accounting
- What is Outsourced Accounting?
- Pros of Outsourced Accounting
- Cons of Outsourced Accounting
- In-House vs. Outsourced Accounting
- Which Should You Choose
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 specialists. 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 specialists
- 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.