Outsourced accounting services are steadily gaining popularity among small businesses. Companies hire external firms to meet all accounting demands. This includes day-to-day transaction coding, accounts receivable, accounts payable, payroll, taxation, and managing financial reporting.

Choosing to outsource accounting services will free up valuable time and energy that you can rather invest into other avenues of your business.

If you are looking to grow your business, the management accounting services provided by an outsourced firm will be a hugely valuable aid.

Here, we will explore why businesses would choose to outsource accounting services as well as discuss the pros and cons of outsourced accounting services Dubai. We will also explore when your company might be ready to make the transition.

Why Do Businesses Outsource Their Accounting?

From increasing efficiency to reducing costs, there are various motivations behind making the switch to outsourced accounting services Dubai. There are some of the main reasons behind outsourcing:

Budgetary Constraints

Provided that accounting isn’t at the core of your business, hiring an external service provider is often cheaper than hiring a full-time, internal accountant.

Investor Attraction

To attract investors, businesses must be able to produce completed, accurate financial records. Outsourced accounting will ensure your documentation is thorough and professional.

Financing Requirements

If you need to approach banks for loans to grow your business, you will also need the proper financial documentation stated above.

Technological Advances

Accounting technology is continually updated. It can therefore be easy to fall behind, in which case hiring external experts might be the best solution. They stay up to date with the newest technology to ensure that your business gets the most out of their services.

Rapid Growth

If a company’s cash flow rapidly increases, it will require more resources to be able to handle the influx. This might require the resources and expertise of outsourced accounting services.

Legal Reasons

Regulations and laws governing accounting and finance are strict. This means that it might be in your company’s favor to hire an external expert to ensure that the job is done properly!

The Pros and Cons of Outsource Accounting Services

Pros

  • No workflow interruptions. Outsourced accounting services have a myriad of skilled employees waiting in the wings. This means you don’t have to worry about sick leave, parental leave, or breaks for the holidays. There is always someone available to get the work done!
  • Manage workload changes better. In-house bookkeepers may not possess the resources or manpower necessary to adapt to increased workloads associated with rapid business growth. With outsourced bookkeeping services, larger firms have the resources to tackle more time-consuming work.
  • Access to expertise. With outsourced accounting services, you are investing in accounting experts that have been specifically trained to perform financial services. They understand all the ins and outs and will be able to provide the best advice for your business.
  • Staying up to date. Tax requirements and governing legislations are constantly changing. Accounting firms make it their business to keep up with changes that in-house bookkeeping services might miss.
  • Time-saver. Free up time for your employees to focus on other tasks that will help grow your business. Leave the accounting to the accountants so that you can focus on driving business growth and revenue!
  • Cost-saver. With outsourced bookkeeping services, you don’t need to hire anybody, which saves on HR costs. You also don’t need to worry about the cost of updating IT systems to keep up with changing technologies – you can leave that up to the outsourced firm.

Cons

  • There may be some initial disrupt The initial move to outsourced accounting services will require some reorganizing. This can take a little time and could cause some disruption.
  • Relinquishing Control It can be difficult to entrust a firm with your business’ financials. But remember, they are the experts in this case and are the best equipped to manage your financials!

It is important to trust the process even if it feels scary to hand over control of your business’ finances. Just remember that outsourcing accounting for small businesses is a necessary step for growth and the pros definitely outweigh the cons.

When Is Outsourcing the Right Thing for Your Business?

When businesses are small, in-house bookkeeping services make sense. But, as your company grows, you will want to invest time and resources into other avenues if you are to maintain momentum.

When there simply aren’t enough hours in the day for you to oversee every business practice, it is likely time to hire an outsourced accounting service.

In addition, when a business enters a growth phase, simple bookkeeping isn’t enough. It will require management accounting. Management accounting requires meticulous reports, including real-time financial data tracking. This data will enable a business to identify key performance indicators. These KPIs will help inform important business decisions.

Compared to in-house bookkeeping services, accounting firms have more of the expertise and resources. This means that they can provide more impactful management accounting.

Indicators That It’s Time To Consider Outsourced Accounting

There are a few things to look out for that are good signals that your business should start considering outsourced accounting services:

  • Your business employs more than 8 people.
  • You have started attracting outside investor capital.
  • As the CEO, you have become physically unable to oversee every aspect of your business.
  • Your business is in the accelerated growth phase of the business lifecycle.
  • Accounting requirements have started to surpass billing and collection services.
  • You begin to require more sophisticated financial reports to help inform management decisions.
  • You are unable to keep up with accounting technology systems. Or, you require a more advanced interface between the programs.
  • You understand the importance of management accounting when it comes to making informed decisions to help grow your business.

In Conclusion

You have put in the work and built your business from the ground up, carefully overseeing each development. And you’ve done a great job! So great, in fact, that your small business is no longer so small.

Now is the time to consider allowing an outsourced accounting firm to take the financial responsibilities off your hands.

If you aren’t sure if your business needs outsourced accounting, book a free consultation session with a member of our team, and we’ll talk you through the process and help you decide what services will benefit your business.