Small business owners and professionals are discovering that outsourcing your bookkeeping saves payroll, overhead cost and it's a giant step in freeing up valuable time. For many owners, just the effort of hiring, training and managing a bookkeeper can take as much as 5 hours a week and if you're doing the books yourself the numbers are even worse. As a business owner your time is best spent doing what you do well - working with customers.
There is a common misconception that an owner will lose control if they outsource the bookkeeping. In a properly designed system a local bookkeeper only takes over the process of tracking transactions such as sales, accounts payable and balancing the books, but only the business owner makes management decisions. Using online bill paying, the owner has the final word on who gets paid and when.
If you have great books or pretty sloppy books for the most part your customers never know. A generally accepted rule in business is to focus resources on tasks that add value to the customer relationship. Time spent on bookkeeping problems add little or no value to your customer
relationship. Yet, books that are inaccurate or do not reflect the true health of your business provide no clue to managing your business. - Being clueless at any level about where you are making money or who is a good customer is not being in control. Cash flow is never a problem in business - it is a symptom of other problems, an outsourced bookkeeper can provide the answers and you will end up with more control of your business
By outsourcing you solve the problem of hiring. Good bookkeepers with knowledge of accounting software are hard to hire and expensive to keep. New technology makes this possible for the outsourced bookkeeper to 'reach' into your network and do the bookkeeping tasks from their office. In most cases outsourcing will save you money as well. Not only do you save on salary but also you have no overhead, management, hiring or training cost when using an outsourced service. The overall annual savings can be up to 50%.
The reason a bookkeeper is able to take over an existing process and deliver it back more cheaply is due to leverage, the most common of which is economy of scale. If the supplier does not have to significantly alter the way its current business function is set up and standardisation has occurred, the opportunity for both supplier and buyer to benefit is great.
Technological advances have taken the cycle times in a business from several months to several hours, and our competitors no longer have geological restrictions or the hindrance of large bureaucracies. To remain competitive, it is imperative that a company rethinks its strategies, take a hard look at where they are creating value for their customers, and then focus on those processes. The most successful businesses of today have gone to outsourcing and now have time and money to spend on differentiating themselves in the marketplace.
The most common reasons management chooses to outsource certain business processes are to reduce operating costs, improve company focus, improve quality, free up capital, and increase capabilities not otherwise available and to reduce cycle time. If a buyer cannot receive an improved economic position as a result, then it should not outsource.
The decision to outsource can be an easy one. If there is a company or individual that can do it better, faster, and cheaper than you, then you do not want to keep the work in house. Outsourcing has become an accepted business tool worldwide. By turning over business processes to companies that consider these tasks their core competency, organisations now have the ability to become more profitable, more efficient and far more competitive by focusing on the tasks that are most important.
About the author: Tom Begley has been a practicing CPA in the Akron area for 26 years. His firm is an affiliate of Bridge21, a national network of 150+ accounting firms dedicated to helping clients increase profits through the correct use of technology. Thomas M. Begley Associates currently offers clients a wide range of outsourcing options varying from on-site services to outsourcedReprinted with permission from the Institute of Certified Bookkeepers.
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ABN Australian business number
FBT Fringe benefits tax
GIC General interest charge
GST Goods and services tax
PAYG Pay as you go withholding
SGC Superannuation guarantee charge
TFN Tax File Number