Why are companies not outsourcing their accounting services?

Although outsourcing accounting services has become a rising trend, many companies have yet to explore these services. They do not consider outsourcing due to myths or issues clouding their judgment. Let us know about a few myths and their reality.

Accounting is integral to every business. Accounting forms the most critical layer of firms’ operations as they manage the bloodline- finances. Since its vitality is immense, companies need to optimize the procedures. Despite the activity being highly crucial for a company, it is not the core operation. Thus, firms cannot devote their entire time and attention to its issues. When the in-house accounting department becomes toxic for the organization’s growth, they look toward other potential options. One of the helpful options to infuse efficiency in accounting is outsourcing accounting services. When companies outsource their accounting services, they relieve themselves of any associated burden with the activity. 

However, not every company is a fan of outsourcing accounting and bookkeeping. Many businesses oppose the idea of outsourcing these services due to various reasons. While some fears may seem legitimate, others are plain myths and must get busted beforehand. Let us look into some of the issues or myths preventing businesses from outsourcing accounting services:

Myth #1: Only large-scale businesses can outsource accounting

It is a common thought among small and medium-sized businesses that outsourcing is only for firms with complex and scalable accounting needs. It may stand true for sole proprietors, micro ventures, and home-based owners with very few daily or weekly transactions. The small firm owners feel they can do these activities themselves with a bit of expert assistance from time to time.

Busting the myth:

It may seem straightforward to conduct accounting yourself, but accounting is a specialist skill. There can be no room for error, or the entire functioning will get disrupted. Small business owners get relieved of the accounting stress and related burdens and issues. Instead of wading through spreadsheets and balancing the accounts, firms can focus on maximizing their growth potential. Thus, small business owners are wrong to think that only large-scale firms can outsource their accounting services. 

Myth #2: Companies only outsource to save money

Many business owners think that the only benefit of outsourcing is saving money. Outsourcing offers cost-efficiency as companies need not manage an entire accounting department in-house. Moreover, there is no need to search and hire qualified employees and maintain them for a long time. The training expenses, administrative and other overheads, technology infrastructure, etc., reduce significantly. These points provide cost-efficiency in accounting functions. 

Busting the myth:

However, companies are wrong to assume that cost savings are the sole purpose of outsourcing accounting services. Various other benefits apply to outsourcing these operations. These include flexibility, scalability, tapping expertise and knowledge readily, meeting regulatory standards timely, etc. Outsourcing companies streamline accounting and bookkeeping procedures, further enhancing efficiency. Lower costs are just a part of the broad array of benefits offered by outsourcing. 

Myth #3: The current processes are going completely fine

Many businesses do not outsource accounting servicesbecause they don’t see any discrepancy in the current functions. They focus on fixing the arising problems rather than preventing or infusing efficiency. Their point of view states that if the existing operations are not causing any issues, why should we consider another option. 

Busting the myth:

Although the existing operations run well, the danger of being too comfortable with these operations keeps lingering. Companies need to consider Business Process Reengineering as a vital goal to grab opportunities and improve functions. It snatches the firm’s ability to look into more efficient and straightforward business processes. Knowing that an external party can undertake the accounting servicesbetter than an in-house department shows why firms should consider outsourcing. These companies reduce steps in handling accounting needs and simplify the process more than you had implemented. 

Myth #4: Firms fear losing control over their operations 

Many business owners fear losing control over their accounting operations due to outsourcing. It is because an external third party will be handling the functions from a remote location and not on-site. They get afraid of not having a say in managing one of the most critical aspects- finances. 

Busting the myth:

The level and services you choose to outsource depend on your needs. No business is under the obligation to outsource all the tasks and leave nothing in-house. Moreover, the contract states the communication points, monitoring access, grants, and controls over critical accounting areas. These aspects help businesses maintain adequate control, optimal for their operations. It neither prevents outsourcing firms from functioning smoothly nor leaves the firm empty-handed. 

Myth #5: Outsourcing will result in a data breach

Accounting data forms one of the most critical records for companies. They must prevent leakage, misuse, manipulation, or any other mishappening. Facilitating this requires companies to keep the information secured in-house. Since outsourcing involves sending and receiving data online with an external party accessing the accounting data, the risk of a data breach is considerably high. Dangers of cyber-security and human manipulations lurk around while outsourcing accounting services. 

Busting the myth:

Although cyber crimes like hacking and trojans can happen in in-house or outsourced services, the latter usually employ the best preventive and security measures to protect a firm’s sensitive data. They ensure up-to-date anti-virus, firewalls, multifactor authentication, other protective gear, and the latest technology. Moreover, they create backups regularly to prevent data loss in case of mishappenings, natural calamities, etc. Thus, firm owners must eliminate this fear from their minds and be sure of no data breaches. Companies can evaluate these terms before drawing a contract with the outsourcing vendor. 

Myth #6: The IT infrastructure requirements increase with outsourcing

Many businesses fear to outsource because they will require massive infrastructure to connect with the outsourcing vendor. It will enhance their cost prospects. 

Busting the myth:

Costly technological requirements to outsource accounting servicesare a thing of the past. Firms today can avail themselves of small business tools and applications at cost-affordable rates. The intense competition in the technology sector has reduced the prices and even provides some services for free. 

Conclusion:

Companies should understand that outsourcing accounting services after analyzing their needs and choosing the most suitable partner will reap many fruits. Myths arise due to the bad experiences of a few businesses. However, categorizing the activity as flawed due to a few experiences is wrong.