Sound financial management is vital to the success of any business. However, nowhere is it more critical than for startups – where margins are often tighter, and the risk of failure is much higher than in more established companies, Virtuzone said in their latest article.
We have all heard the statistics – that 80% of all startups fail. While the accuracy of these headline-grabbing figures is up for debate, one thing is certain: of the startups that do fail, poor money management is a significant reason.
Because no business wants to fall behind with their accounts.
However, with busy schedules and limited resources, it is not always possible to stay up-to-date. For businesses in this position, outsourcing can be an option. However, before we get on to the merits of outsourced accounting, let’s take a look at exactly what a stable accounting process should entail.
When we think of accounting, our minds usually go straight to bookkeeping, balance sheets and cash flow forecasts – the basics that every business should have covered.
The case for outsourcing
Fortunately, there is a right answer for the time- or resource-strapped business that needs to keep on top of its accounts: outsourcing.
According to Virtuzone, here are four great reasons to outsource your accounting.
1- Cost savings: Because you do not need to maintain your accounting software in-house, outsourcing allows you to reduce the costs of software subscriptions, computer hardware, training, and admin (including things like office supplies) as well as salary and benefits for in-house staff. Many businesses spend up to 5% of their revenue staffing and training their internal accounting department. These costs can be reduced by over half. What’s more, you might also save money by avoiding the negative consequences of an accounting mistake, which can lead to fines, regulatory costs and loss of reputation.
2- More expertise: Outsourcing puts the whole process in the hands of an expert. Not only does this ensure greater focus and knowledge on the accounting task, but it also frees you up, the business owner, letting you get back to what you do best – which is running your business. An expert in the field will not only ensure that your accounts are fully compliant, but most will also prepare your VAT return for you. The same is true of payroll. Hand over the necessary report and salary information and your payroll is taken care of every month – including any required calculations and issuing of payslips.
3- More resources and support: Dedicated accounting service will also have more resources at their disposal, making it easy to scale the level of service you require as your business grows. You can also benefit from expert support and guidance. Most reputable providers can advise on cash flow management, procurement, sales and marketing, inventory control and internal risk management.
4- More integration and flexibility: Outsourced software can sit on top of a business’s current accounting platform but still use the business’s accounting platform as the system of record. Moreover, outsourced software is very flexible: it can either do the processing itself or can be licensed back to the client to do it for themselves. It is intuitive and flexible as well as lower cost.
“So, don’t accept the headache of keeping on top of the books as part and parcel of running your business. Look to improve your process, free up valuable resource and save money by outsourcing every aspect of your company accounting,” Virtuzone said.