Outsourcing exists because every company could use outside help with something. You may have mastered product development, sales and marketing—but what about vendor management? What about recruiting?
Many of those areas can be learned on the fly. But finance is different: Tax choices have serious legal consequences. Employees who aren't paid properly are liable to quit. Unpaid vendors may sue.
Fortunately, the gig economy has made finance experts easy to find. If the right firm isn't down the street, there's almost certainly help available online. Whichever option you prefer, consider contracting out the following functions:
Accounting isn't something the average entrepreneur should handle alone. Generally accepted accounting principles take years to learn, and new companies often make exceptions to them. Accounting also encompasses business taxation, including remittance, corporate tax payments, compliance and annual reporting. Those tasks take long hours to execute—hours that you could spend on the strategic, high-level aspects of your business where you excel. Be efficient with your time by outsourcing them to someone trained and certified to take care of it legally and efficiently.
Otherwise, errors are bound to happen. Ask any entrepreneur whose company has been audited: The IRS, not to mention state and local tax agencies, isn't always forgiving of honest mistakes.
You know you have to pay your team. But how, what and when you pay are tightly regulated by the U.S. Department of Labor, as well as state and local agencies. On top of that, you have to remit payroll taxes and document withheld funds carefully. Even with payroll software and apps, payroll takes time. Across even half a dozen employees, processing payroll can be a full-time job. Every hour you spend on it is one that you, the business owner, can't spend generating revenue. By hiring a provider for payroll outsourcing, you may free up tens of hours per pay period. More importantly, you help ensure that your team is compensated as promised while minimizing the risk of fraud. Although most in-house payroll departments operate legally, embezzlement is more common than you might think. Outsourcing payroll to a dedicated firm minimizes this risk because the company realizes its reputation is on the line.
Because financial processes are so important to your company's success, it's essential that you choose carefully. Before hiring external help, be diligent.
Bookkeeping covers the twin accounts payable and accounts receivable functions. Although they sound similar, they cover different aspects of a company's financial operations. Accounts payable is responsible for paying invoices in a timely manner and maintaining relationships with suppliers. This function also handles audits and reconciliations to ensure there are no overpayments or missing goods. Audits, in particular, balloon in terms of time required as the company grows. Outsourcing accounts payable has at least one more benefit: Because these professionals work with a huge range of vendors, they can often recommend suppliers that offer better products or lower prices. Add in skills like inventory management, cash flow analysis, and financial reporting and accounts payable makes sense for all but the largest firms to outsource.
Accounts receivable, on the other hand, takes care of billing, collecting revenue and following up on outstanding invoices. Accounts receivable also typically conducts credit checks on new customers who want to open an account. By outsourcing accounts receivable, you can expect professional-looking invoices that reflect your brand and deliver key details clearly. Leading accounts receivable professionals also use automation technologies to streamline day-to-day tasks like billing and reminders.
Finding the Right Finance Pro
Because financial processes are so important to your company's success, it's essential that you choose carefully. Before hiring external help, be diligent. Start with referrals. Do your investors have financial experts they can suggest? Check each out online. Consider their specialization, years of experience and online reviews. Compare costs, keeping in mind that neither the cheapest nor the most expensive is necessarily the right choice for your company. Once you've identified a promising candidate, ask what software the company uses. Are its tools compatible with what you're already using, or would you have to overhaul your suite? If you work with other financial firms, ask about compatibility with their applications as well.
Finance is a popular area to outsource for a reason. The stakes are high, and the skills take years to learn. Just be sure to do your homework: Your money depends on it.
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