Deciding whether to use outsourced accounting services comes down to a few questions. Are you scaling your business and aren’t sure if you have the infrastructure to grow sustainably? Do you want to focus on more critical aspects of your business and leave the financial reporting to experts? Or, do you want to have complete control over your financial operations?
This article discusses the pros and cons of virtual accounting. Use it to decide whether you want to keep your accounting operations in-house or outsource them and focus on more pressing company directives.
Advantages of Financial Services
Successful businesses keep close track of their finances. Outsourcing financial services help you track your income and payments, simplify your payroll, expedite taxes, and even handle your utilities and other business expenses. Simply put, when you outsource your financial services, they take care of your books.
But that’s not all financial services do. Modern financial services aren’t glorified, bookkeepers. They offer advice for companies trying to expand. They also protect against future litigation by maintaining compliance and implementing ethical financial business practices. Lastly, these services act as consultants, helping executives and owners strategize and avoid potential obstacles in the future.
Why Virtual Firms?
Traditional brick and mortar firms can be expensive and make it difficult for smaller businesses to afford their services. This unfortunate circumstance can persuade business owners to rely on their financial prowess when making critical business decisions. However, given the responsibilities businesses already have, this often ends in disaster.
When business owners focus on accounting, they divert their attention from other, more pressing responsibilities. Business owners can’t do everything, and when they try, things go amuck. Virtual accounting firms give these smaller business owners the relief they need without overeating their pocketbooks.
Pro- Regulations and Compliance
If a company fails to stay compliant and follow laws, it will never be able to succeed. However, when you’re trying to expand your business and remain compliant at the same time, things can get lost in the shuffle. Tax laws are complex, and business laws continuously change.
Outsourced virtual accountants let you relax when it comes to compliance, so you don’t have to concern yourself with various regulations and shifting codes. With end-to-end compliance, you can focus on your core operations and how they will lead your business to success.
When you outsource accounting services, you free yourself to focus on other tasks that require your attention. These services give you the time and flexibility to pivot when you need to, no longer having to worry about mundane data entry and recordkeeping. Time is money, and virtual accountants give you more time.
Pro- Strategic Financial Data
Scaling your business requires data and analytics. However, if you analyze the wrong data and don’t have the correct KPIs in place, data and analytics are worthless. These metrics are instrumental in securing capital, taking loans, and overall financial planning for your company.
Additionally, you need services that can produce real-time analytics and data no matter your location.
Virtual accountants also give you the benefits of:
- Structured reports
- Financial budgeting
- Cost-benefit analysis
- FIxed-asset analysis
- Resource cost
- Tax structuring
Having access to these reports simplifies your financial strategy, allowing you to focus on more abstract problem solving rather than tedious reporting and recordkeeping.
Con- Less Control
There are a few drawbacks to outsourcing your accounting services. One of the most notable drawbacks to outsourcing your accounting services is losing your ability to oversee and control your financial processes.
Because you’re handing over responsibility to another company, you need to find a company you trust to take over these processes. Don’t unload the duty in a panic. Vet the companies you’re considering outsourcing your accounting services to, and make sure they understand your financial assistance.
Pro- Quality Service
Online accounting services can dedicate themselves to providing a seamless customer service experience. Simultaneously, in-house accountants may not have the people skills, knowledge, and availability to provide you with high-quality customer service. Since virtual accountants are fractional, they also understand that your business isn’t guaranteed, which holds them more accountable than someone on salary who has a set schedule and who won’t be as flexible.
Con- Offsite Coordination
In-house coordination has its benefits. You can coordinate more efficiently with your team and increase productivity because you have more contact with your team. As a result, reports such as inventory tracking and customer invoicing can be more efficient and less time-consuming.
However, the benefit of virtual accounting is that you can access fractional CFO services who consult which tasks you can outsource and keep in-house. So, if you prefer the in-office method, you can enjoy the best of both worlds by outsourcing simpler accounting processes.
Pro- Electronic Record Keeping
The days of keeping financial paper trails for your business are rapidly fading as cloud-based storage continues to simplify and streamline the archiving process. Having digitized records means you can locate your documents from anywhere. Mobile apps are even making it so you can recover records on your phone. Your days of shuffling through numerous file cabinets trying to locate a piece. You have everything at your fingertips.
Con- Proprietary Software
Some virtual bookkeepers require you to use their proprietary software. With in-house accountants, you have the freedom to choose which software you use. However, experienced virtual accountants will recommend software based on your company’s particulars. Whatever you decide, you need to make sure you can recover your data from the software company should you choose to leave at any point in the future.
Conclusion- The Pros and Cons of Virtual Accounting
While there are a few drawbacks to virtual accountants, the pros heavily outweigh the cons for most small businesses as long as they research the companies they’re considering. Companies should also consider which aspects of their business they want to outsource and what factors they want to keep in-house.
When you use outsourced, virtual accountants, you don’t only get bookkeeping services. You get a team of experts who can provide strategic financial advice so you can grow your business.