Accounting and bookkeeping are areas where many businesses struggle. It can be a complicated field characterized by high stakes and extreme complexity, but there’s no question that reliable accounting is fundamental to the success of your business. 

Without strong accounting, it’s extremely difficult for business leaders to make decisions with any level of confidence. That can lead to all kinds of missed opportunities: from failing to identify potential tax-saving strategies to not receiving investment from external partners that could take your business to the next level.

One potential solution to these common accounting challenges is to delegate your accounting needs to an outsourced accounting firm. But for many business leaders, that can feel like a leap of faith. Entrusting your financial data to a new partner can feel uncomfortable. Before doing so, business leaders should vet potential partners and establish trust. 

But before business leaders even get to that point, they must understand the advantages and disadvantages that come with working with an outsourced accounting provider. In this guide, we explore exactly what those pros and cons are and provide suggestions that can help you mitigate potential pitfalls in your next outsourced accounting relationship. 

What Are Outsourced Accounting Services, and Why Do Businesses Use Them? 

An outsourced accounting service is a third-party accounting solution provided by an external vendor, most often an established CPA firm. These services often have several levels, including outsourced bookkeeping, outsourced controller services, and even executive-level outsourced CFO solutions. Outsourced accounting services are sometimes referred to as Client Accounting Services (CAS). 

Businesses usually work with an outsourced accounting firm when they lack the resources to establish and manage an internal accounting and finance department. An outsourced accounting team often has plug-and-play accounting processes that can be implemented to bring a business’s accounting infrastructure up to speed. These processes make extensive use of accounting technologies that offer business leaders real-time insights into their business’s financial position. 

Interested in learning more about what you can expect from an outsourced accounting firm? Check out our Ultimate Guide to Outsourced Accounting for a full explanation. 

Pros and Cons of Outsourced Accounting Services

With the right approach, working with an outsourced accounting service can deliver all kinds of benefits for business leaders. 

Equally, a failure to understand the potential pitfalls of these engagements can lead to issues with your outsourced accounting relationship. With the right approach, however, it’s possible to design a partnership that addresses these potential challenges head-on. 

Cons of Working with an Outsourced Accounting Service

Working with an outsourced accounting service might not be the best fit for every kind of business. There are some barriers to success, however, with the right approach, many of these can be overcome. 

Businesses Have Less Control

When a business outsources its accounting function to an external partner, it can feel like they’re ceding some level of control of their finances to someone outside of their business. 

That can be a challenging mental hurdle for some business leaders to overcome. The best outsourced accounting firms proactively address this issue by promoting transparency and regularly communicating with their clients. Ultimately, it’s worth bearing in mind that your outsourced accounting team won’t make any important decisions on your behalf: they’ll simply provide you with the information you need to make the right choices for your business. 

Requires Use of Technology

Outsourced accounting solutions are heavily reliant on technology to deliver a seamless client experience. For some legacy businesses that have well-established processes, adapting to this change can be difficult. 

If your leadership team is uncomfortable with digital technologies, an outsourced accounting team may not be the best fit. 

Communication Challenges

Outsourced accounting teams aren’t part of your business: they are separate entities with staff in different cities, states, and even countries. That means you won’t be able to walk over to their desk and ask them a question; instead, you’ll have to pick up the phone or set up a Zoom call. 

Some outsourced accounting teams are based in local markets. At LBMC, we serve many clients based in Tennessee, Kentucky and Indiana: an area we’re proud to call home. 

Pros of Working with an Outsourced Accounting Service

Outsourcing your accounting needs to an external CPA firm often enables businesses to unlock a wide range of benefits. Together, these help business leaders make better decisions, boost financial performance, and work toward a better future for the business. 

Use of Best Practices

Outsourced accounting firms have a dedicated staff of qualified CPAs, controllers, bookkeepers, and more. Together, these professionals spend all day every day providing outsourced accounting services to businesses just like yours. 

This level of expertise not only offers your business access to proven accounting systems and frameworks, but also enables you to benefit from newly emerging best practices and trends that could significantly improve your business’s overall financial efficiency. 

Financial Benefits

There’s no escaping the fact that staffing an internal accounting and finance team is expensive. Between recruiting, training, and ongoing salary costs, maintaining a team of accounting staff is a big commitment for many business owners. 

By contrast, outsourced accounting services are often much more affordable. These services work on a fractional basis, meaning that businesses only pay for the services they require. 

More Efficient Use of Time

Besides the cost involved in managing an internal accounting team, there’s also a question of the time commitment this requires from business owners. In smaller businesses, owners themselves might handle all accounting and bookkeeping tasks by themselves. 

By outsourcing these tasks, business owners and leaders can claim hours back every week. This time can be used in service of all kinds of goals: from investing in building stronger relationships with key customers to engaging in deep strategic work about the future direction of the business. 

LBMC: A Leading Outsourced Accounting Firm

A partnership with an outsourced accounting firm can be a great fit for a wide variety of businesses, from well-established professional services firms to entrepreneurs taking on an emerging market with a bold new idea. These partnerships can unlock all kinds of benefits for business leaders, ultimately adding up to one thing: increased financial clarity. 

If you’re ready to explore a partnership with an outsourced accounting firm, the team at LBMC is here to help. We offer businesses a suite of closely-integrated outsourced bookkeeping, accounting, and CFO services, with every engagement designed for the unique needs of our clients. 

To learn more about working with our outsourced accounting team, contact an advisor today.